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                              DEPARTMENT OF DEFENSE
               DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
-----------, -------- --------- )       ISCR Case No. 09-05047
SSN: ------ ---- -------- )
)
Applicant for Security Clearance )
Appearances
For Government: Fahryn E. Hoffman, Esquire, Department Counsel
For Applicant: Pro se
______________
Decision
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WHITE, David M., Administrative Judge:
Applicant assumed responsibility for the large majority of the family debt in
connection with his separation and divorce. Shortly thereafter, his business failed due to
circumstances beyond his control. He found new employment and negotiated
settlements for three of the six delinquent debts alleged against him. One of the
remaining creditors sued him, so he ultimately had to file for Chapter 13 bankruptcy
relief. He has done so, and has both the means and every intention to remain solvent in
the future. He is a responsible and trustworthy individual, and met his burden to mitigate
security concerns arising from his financial situation. Based upon a review of the case
file, pleadings, exhibits, and testimony, eligibility for access to classified information is
granted. 
Applicant submitted a security clearance application (SF 86) on February 24,
2009. On April 12, 2010, the Defense Office of Hearings and Appeals (DOHA) issued a
Statement of Reasons (SOR) to Applicant, detailing security concerns under Guideline
F (Financial Considerations). The action was taken under Executive Order 10865,
Safeguarding Classified Information within Industry (February 20, 1960), as amended;
Department of Defense Directive 5220.6, Defense Industrial Personnel Security
Tr. 66-67, 122-127; AR; GE 1.1
AR.2
GE 3.3
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Clearance Review Program (January 2, 1992), as amended (Directive); and the
Adjudicative Guidelines for Determining Eligibility for Access to Classified Information
that went into effect within the Department of Defense on September 1, 2006. 
Applicant answered the SOR in writing (AR) on April 20, 2010, and requested a
hearing before an administrative judge. Department Counsel was prepared to proceed
on May 19, 2010, and the case was assigned to me on May 27, 2010. DOHA issued a
Notice of Hearing on July 9, 2010, and I convened the hearing as scheduled on August
18, 2010. The Government offered exhibits (GE) 1 through 6, which were admitted over
Applicant’s objection that the credit reports were obtained more than six months before
issuance of the SOR. The objection was factually accurate, but went to the weight of the
evidence rather than its admissibility. Applicant offered exhibits (AE) A through F, which
were admitted without objection, and testified on his own behalf. I granted Applicant’s
request to leave the record open until September 7, 2010, for submission of additional
evidence. DOHA received the transcript of the hearing (Tr.) on August 26, 2010.
Applicant timely submitted AE G through J, which were admitted into evidence without
objection, and the record was closed. 
Findings of Fact
Applicant is a 42-year-old employee of a defense contractor, where he has
worked since October 2008. Before that, he was unemployed for five months after being
laid off from a part-time job with a county health district that he held for about seven
months. From about October 2000 to October 2007, he owned and operated a
storefront computer sales and services business. He earned an associate’s degree in
electronics, has no military service, and has never held a security clearance. He and his
wife separated in 2006 and divorced in 2008. They have two children, ages 14 and 16,
of whom they share custody.  In his response to the SOR, Applicant denied the factual1
allegations in SOR ¶¶ 1.a through 1.f, with explanations.   Applicant’s explanations and2
admissions, including his statements in response to DOHA interrogatories,  are3
incorporated in the following findings.
Applicant’s financial problems began when he and his wife separated in May
2006. Her income was essential to maintaining their family budget, and the $4,000 per
month that Applicant earned from his computer store business was inadequate to meet
all of their combined bills, for which he remained responsible. By late summer 2007, due
to increased market competition and the loss of several major customers, Applicant’s
business failed and closed. He was able to obtain a temporary full-time position with a
county health district, which became half-time after three months due to budgetary
problems. After another three or four months, he was laid off from that job as part of an
agency reduction in force. Five months of unemployment while job hunting followed,
AR; GE 2; AE H; Tr. 122-128, 144-146.4
AR; GE 3; AE F; 105-112.5
AR Ex. 1.e; GE 2; GE 4; GE 5; Tr. 48-55.6
AR Ex. 1.a; AE B at 10; Tr. 55-60.7
AR Ex. 1.d; Tr. 61-62.8
AR Ex. 1.b, 1.c, 1.f; AE C; AE D; AE E; Tr. 63-65, 73-101. 9
AE D; AE E; AE I; Tr. 101-104.10
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until he was finally hired into his current position. As part of the divorce settlement,
Applicant agreed to accept responsibility for the marital debts as listed in the SOR, so
that he could keep possession of the home they had purchased.     4
Once Applicant obtained his current job, he began addressing his delinquent
debts. He successfully renegotiated his mortgage loan to reduce his monthly payments
to a level he could afford, and he remains current on that loan. He also obtained
financial counseling during April 2009, after which he created a budget and contacted
four of his outstanding creditors to negotiate settlements.  In May 2009, Applicant sold5
his truck and used the proceeds to settle the delinquent debt alleged in SOR ¶ 1.e.  In6
February 2010, he reached a settlement agreement and paid off the delinquency listed
in SOR ¶ 1.a, using proceeds from his 2009 income tax refund.  He also settled the7
debt listed in SOR ¶ 1.d during February 2010, with funds from his tax refund and
savings from his reduced mortgage payments.8
While Applicant was attempting to negotiate a settlement of the debt alleged in
SOR ¶ 1.f, the creditor filed suit against him. He hired an attorney who continued
attempting to negotiate a settlement from November 2009 through April 2010. Finally, it
became apparent that the creditor would not accept a settlement that Applicant could
afford to pay. The creditor reinstated the court action in late April 2010, forcing Applicant
to accept his attorney’s recommendation to file for bankruptcy protection. He filed a
Chapter 13 bankruptcy action on May 3, 2010, and included the debts alleged in SOR
¶¶ 1.b, 1.c, and 1.f, in order to avoid a judgment-based garnishment that would ruin his
ability to meet his new mortgage payments and regular living expenses. Applicant had
also been actively communicating with the creditors alleged in SOR ¶¶ 1.b and 1.c,
since November 2009 and May 2009 respectively, but had not succeeded in negotiating
resolution of those debts before his bankruptcy filing.9
Applicant has made all of the scheduled $286 monthly payments to his
bankruptcy trustee. The Chapter 13 plan will be completed in July 2013. Although he
qualified to file for discharge of his debts under Chapter 7, he chose to file under
Chapter 13 so he could repay as much of his debt as possible.  His monthly budget10
reflects sufficient funds, after making bankruptcy and child support payments as well as
his mortgage and other regular expenses, for a $200 retirement contribution and about
AE G; Tr. 112-118, 128-131.11
AE J.12
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$500 in personal allowances and other savings. His fiancee works and helps with
household expenses as well.11
Nine friends and coworkers, including his fiancee and her parents, wrote letters
expressing their high esteem for Applicant’s character, dependability, and
trustworthiness.  He was extremely credible, organized, and well informed about his12
financial situation during the hearing.
Policies
When evaluating an applicant’s suitability for a security clearance, the
administrative judge must consider the adjudicative guidelines (AG). In addition to brief
introductory explanations for each guideline, the adjudicative guidelines list potentially
disqualifying conditions (DCs) and mitigating conditions (MCs), which are to be used in
evaluating an applicant’s eligibility for access to classified information. 
These guidelines are not inflexible rules of law. Instead, recognizing the
complexities of human behavior, these guidelines are applied in conjunction with the
factors listed in AG ¶ 2 describing the adjudicative process. The administrative judge’s
overarching adjudicative goal is a fair, impartial, and commonsense decision. According
to AG ¶¶ 2(a) and 2(c), the entire process is a conscientious scrutiny of applicable
guidelines in the context of a number of variables known as the whole-person concept.
The administrative judge must consider all available, reliable information about the
person, past and present, favorable and unfavorable, in making a decision.
The protection of the national security is the paramount consideration. AG ¶ 2(b)
requires that “[a]ny doubt concerning personnel being considered for access to
classified information will be resolved in favor of the national security.” In reaching this
decision, I have drawn only those conclusions that are reasonable, logical, and based
on the evidence contained in the record. Likewise, I have avoided drawing inferences
grounded on mere speculation or conjecture.
Under Directive ¶ E3.1.14, the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, “[t]he applicant is
responsible for presenting witnesses and other evidence to rebut, explain, extenuate, or
mitigate facts admitted by the applicant or proven by Department Counsel, and has the
ultimate burden of persuasion as to obtaining a favorable clearance decision.” Section 7
of Executive Order 10865 provides: “[a]ny determination under this order adverse to an
applicant shall be a determination in terms of the national interest and shall in no sense
be a determination as to the loyalty of the applicant concerned.”
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A person applying for access to classified information seeks to enter into a
fiduciary relationship with the Government predicated upon trust and confidence. This
relationship transcends normal duty hours and endures throughout off-duty hours. The
Government reposes a high degree of trust and confidence in individuals to whom it
grants access to classified information. Decisions include, by necessity, consideration of
the possible risk the applicant may deliberately or inadvertently fail to protect or
safeguard classified information. Such decisions entail a certain degree of legally
permissible extrapolation as to potential, rather than actual, risk of compromise of
classified information.
Analysis
Guideline F, Financial Considerations
The security concerns relating to the guideline for financial considerations are set
out in AG ¶ 18:      
Failure or inability to live within one’s means, satisfy debts, and meet
financial obligations may indicate poor self-control, lack of judgment, or
unwillingness to abide by rules and regulations, all of which can raise
questions about an individual’s reliability, trustworthiness and ability to
protect classified information. An individual who is financially overextended
is at risk of having to engage in illegal acts to generate funds. 
The evidence raised security concerns under two Guideline F DCs, as set forth in
AG ¶ 19(a) “inability or unwillingness to satisfy debts”; and ¶ 19(c) “a history of not
meeting financial obligations.” Applicant’s history of delinquent debt stretches back
about four years, and continues, in part, at present. The burden accordingly shifts to
Applicant to rebut, explain, extenuate or mitigate these facts and the resulting security
concerns.
The guideline includes four conditions in AG ¶ 20 that could mitigate security
concerns arising from Applicant’s financial problems:
(a) the behavior happened so long ago, was so infrequent, or occurred
under such circumstances that it is unlikely to recur and does not cast
doubt on the individual’s current reliability, trustworthiness, or good
judgment; 
(b) the conditions that resulted in the financial problem were largely
beyond the person’s control (e.g., loss of employment, a business
downturn, unexpected medical emergency, or a death, divorce or
separation), and the individual acted responsibly under the circumstances;
ISCR Case No. 06-12930 at 2 (App. Bd. Mar. 17, 2008) (quoting ISCR Case No. 04-09684 at 2-3 (App.13
Bd. Jul. 6, 2006)). 
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(c) the person has received or is receiving counseling for the problem
and/or there are clear indications that the problem is being resolved or is
under control; and
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
Applicant’s delinquent indebtedness is ongoing in part, albeit under the control
and supervision of proper Chapter 13 bankruptcy proceedings. He knowingly incurred
most of the debts in question, and was able to meet his financial obligations until his
former wife left him and his business failed shortly thereafter. He volunteered to assume
responsibility for the large majority of their joint debt in return for being able to keep their
home. He found new employment, and successfully negotiated better and affordable
new terms on his mortgage. He is current on that and all other debts, except those listed
in SOR ¶¶ 1.b, 1.c, and 1.f, which are being resolved through his bankruptcy. Applicant
had fully resolved the debts alleged in SOR ¶¶ 1.a, 1.d, and 1.e well before the
issuance of the SOR. Applicant has good-paying and steady work, and has surplus
income again. He therefore established substantial mitigation under AG ¶ 20(a)
because his debts arose under circumstances that are unlikely to recur and do not cast
doubt on his current reliability, trustworthiness, or good judgment. 
Partial mitigation under AG ¶ 20(b) was also established. Applicant’s delinquent
debts were not caused by matters outside his control, but his inability to pay them as he
originally intended resulted from his separation and divorce, as well as the unforseen
failure of his business. Applicant has acted responsibly throughout these problems, and
has filed for bankruptcy relief as a last resort to resolve his remaining unsecured debts.
He successfully renegotiated his mortgage loan terms, and is fully current in paying his
regular living expenses. He consulted both a credit counseling service and two
attorneys for assistance in resolving his debts. Three accounts were resolved by mutual
agreement, but one creditor forced him to seek bankruptcy protection by suing him. He
is current on all required payments under his Chapter 13 plan, and has sufficient income
to avoid any future delinquencies with a comfortable monthly surplus. Thus, additional
mitigation was established under AG ¶¶ 20(c) and (d).
  
As the Appeal Board has ruled concerning the successful mitigation of security
concerns arising from financial considerations, “[a]n applicant is not required to show
that [he] has completely paid off [his] indebtedness, only that [he] has established a
reasonable plan to resolve [his] debts and has ‘taken significant actions to implement
that plan.’”  This applicant has established and substantially implemented an effective13
plan to resolve the debts that could formerly have given rise to security concerns. He
also demonstrated his commitment to avoiding future financial problems, and a solvent
budget that will permit him to do so.
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Whole-Person Concept
Under the whole-person concept, the administrative judge must evaluate an
applicant’s eligibility for a security clearance by considering the totality of the applicant’s
conduct and all relevant circumstances. The administrative judge should consider the
nine adjudicative process factors listed at AG ¶ 2(a): 
(1) the nature, extent, and seriousness of the conduct; (2) the
circumstances surrounding the conduct, to include knowledgeable
participation; (3) the frequency and recency of the conduct; (4) the
individual’s age and maturity at the time of the conduct; (5) the extent to
which participation is voluntary; (6) the presence or absence of
rehabilitation and other permanent behavioral changes; (7) the motivation
for the conduct; (8) the potential for pressure, coercion, exploitation, or
duress; and (9) the likelihood of continuation or recurrence. 
Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a security
clearance must be an overall commonsense judgment based upon careful consideration
of the guidelines and the whole-person concept.   
I considered the potentially disqualifying and mitigating conditions in light of all
pertinent facts and circumstances surrounding this case. Applicant incurred a moderate
amount of delinquent debt in connection with his divorce and the failure of his business.
He obtained new employment and actively attempted to negotiate resolution of those
debts with his creditors. Three were resolved in that manner, and he was also
successful in renegotiating the terms of his mortgage to improve his ability to meet other
obligations. One creditor sued him, however, which compelled him to seek bankruptcy
protection under advice of his attorney. He chose to file under Chapter 13, rather than
Chapter 7 for which he also qualified, in order to repay his remaining creditors as much
as he could. He is a mature and responsible individual, and the recurrence of financial
problems is quite unlikely. His proactive efforts to achieve resolution of his debts have
eliminated any ongoing potential for pressure, coercion, exploitation, or duress. 
Overall, the record evidence creates substantial confidence as to Applicant’s
present eligibility and suitability for a security clearance. He fully met his burden to
mitigate the security concerns arising from his financial considerations.
Formal Findings
Formal findings for or against Applicant on the allegations set forth in the SOR,
as required by ¶ E3.1.25 of Enclosure 3 of the Directive, are:
Paragraph 1, Guideline F: FOR APPLICANT
Subparagraphs 1.a through 1.f: For Applicant
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Conclusion
In light of all of the circumstances presented by the record in this case, it is
clearly consistent with the interests of national security to grant Applicant eligibility for a
security clearance. Eligibility for access to classified information is granted.
                                              
DAVID M. WHITE
Administrative Judge