DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 09-07935 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Stephanie Hess, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Applicant owed approximately $43,000 on two vehicle repossessions and 18 
accounts charged off or placed for collection. He has paid the majority of the debts. 
Applicant has mitigated the security concerns under financial considerations. Clearance 
is granted. 
 
Statement of the Case 
 
 Applicant contests the Defense Department’s (DoD) intent to deny or revoke his 
eligibility for an industrial security clearance. Acting under the relevant Executive Order 
and DoD Directive,1 the Defense Office of Hearings and Appeals (DOHA) issued a 
 
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1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as 
amended; Department of Defense (DoD) Directive 5220.6, Defense Industrial Personnel Security 
Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines 
(AG) effective within the DoD on September 1, 2006. 
 
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Statement of Reasons (SOR) on May 17, 2010, detailing security concerns under 
financial considerations. 
  
 On June 6, 2010, Applicant answered the SOR and requested a hearing. On July 
13, 2010, I was assigned the case. On July 30, 2010, DOHA issued a Notice of Hearing 
for the hearing held on August 17, 2010. At the hearing, the Government offered 
Exhibits (Ex.) 1 through 6, which were admitted without objection. Applicant testified on 
his own behalf and submitted Exhibits A through R, which were admitted without 
objection. On August 25, 2010, DOHA received the hearing transcript (Tr.). 
 
Findings of Fact 
 
 In Applicant’s Answer to the SOR, he admitted the debts, with explanations, but 
denied the factual allegations SOR in ¶ 1.a. He. He also provided additional information 
to support his request for eligibility for a security clearance. Applicant’s admissions to 
the SOR allegations are incorporated herein. After a thorough review of the record, 
pleadings, exhibits, and testimony, I make the following additional findings of fact: 
 
Applicant is a 42-year-old principal systems engineer who has worked for a 
defense contractor since January 2008, and is seeking to obtain a security clearance. 
He was in the Navy for six years working in aviation maintenance administration. (Tr. 
29) Applicant’s supervisor states Applicant has been a valuable asset whom he trusts. 
His supervisor has been impressed by Applicant’s duty performance and attitude. (Ex. 
J)  
 
The majority of Applicant’s unpaid delinquent accounts occurred during a period 
of 24 months when he was going through a separation and then divorce. In July 2006 
he separated and in June 2007, he divorced after 11 years of marriage. (Ex. 4, Tr. 27) 
There were two children from the marriage, a son age 13 and a daughter age 9. (Ex. 1, 
Tr. 27) In April 2008, his wages were garnished due to a $1,810 monthly child support 
obligation when his ex-wife claimed he had not paid all of his child support. A portion of 
her assertion was valid. (Ex. 1, Tr. 50) He currently pays $680 child support every two 
weeks plus $100 monthly to repay a $5,000 child support obligation. He is now current 
on his monthly child support payments of $1,480. (Ex. 4, Tr. 28)  
 
The divorce awarded Applicant his car and his ex-wife was awarded her car. 
Each was to pay their own debts. (Tr. 36) He and his then wife purchased a 2005 
Hyundai automobile for $24,000 with $412 monthly payments. In April or May 2008, his 
ex-wife was unable to make the payments and the vehicle was repossessed. The 
vehicle was sold and a balance remains of $13,693 (SOR ¶1.p). Applicant was a co-
signer on the loan. The vehicle was granted exclusively to his ex-wife in the divorce 
decree. She is currently seeking bankruptcy protection which will include this obligation. 
(Ex. N)  
 
Applicant and the creditor agreed to settle the repossession debt for $5,000. (Tr. 
52) When he informed his ex-wife he planned to settle the debt, she told him not to do 
 
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so because her lawyer had informed her the bankruptcy would remove this debt from 
both her credit report and his credit report. (Tr. 53) If the bankruptcy does not remove 
this debt from his credit bureau report, he will pay the $5,000. (Tr. 53) 
 
When Applicant separated, his then spouse stayed in the home and was 
supposed to pay the utility bills, but failed to do so. (Ex. 4) His ex-wife also failed to pay 
a $224 (SOR ¶1.a) telephone account, which has now been paid. (Ex. A). He has paid a 
$53 (SOR ¶1.c) electric bill, a $159 (SOR ¶1.e) gas bill, and two cable bills (SOR ¶1.i, 
$524 and SOR ¶1.j, $359).  
 
From May 2005 through December 2007, Applicant was paying two rents. During 
this period, he experienced periods of unemployment and under employment. He used 
a credit card to pay his living expenses during a six month period of unemployment. (Ex. 
4, Tr. 26) In August or September 2008, the account became delinquent with a balance 
owing of $10,000 to $11,000. In February 2009, he was interviewed concerning his 
financial obligations. The previous month, he had called the creditor who agreed to 
settle for $4,000 to $5,000. (Ex. 4)  
 
In May 2006, Applicant incurred a $1,200 telephone bill while working for a 
contractor. He was to be reimbursed for this expense, but the contract ended and he 
was not reimbursed. (Ex. 4) The debt of $3,070 (SOR ¶1.r) was settled for $1,535. (Ex. 
K) In August 2006, he purchased a 2003 Infiniti automobile for $18,000. He made 
monthly payments on the car for two years. After having made $10,000 in monthly 
payments, he was informed he owed $17,000 on the car. (Ex. 4)He asked the lender to 
repossess the car. The car sold for $8,000. He is attempting to negotiate a settlement 
on the $7,856 (SOR ¶1.k) owed.  
 
 In July 2006, Applicant opened a credit card account that went delinquent in 
June 2007. (Ex. 3, 4) He owed $1,116 (SOR ¶1.t) on the account, which was settled for 
$601. (Ex. T)  
 
 In January 2008, he moved to his current location. (Tr. 31) When he made the 
move, his company paid for one month of hotel expenses. He incurred an additional two 
months of living expenses, which he put on his corporate credit card incurring $10,975 
(SOR ¶1.n) debt. (Tr. 45) The creditor offered to settle the debt for $4,000, but settling 
the account would require that it be closed. Since he needs to maintain this corporate 
account, he is negotiating with the credit card company on the repayment of this debt. 
(Tr. 45) There were two accounts with this creditor. He settled one of the accounts 
(SOR ¶1.o, $2,309) for $1,501. (Ex. M)  
 
Applicant’s current yearly salary is $112,000. (Tr. 31) He owns a $390,000 home, 
which he purchased in March 2008. He has no mortgage on this house. (Ex. 4, Tr. 19) 
He did not explain how he was able to pay off the mortgage on this house so quickly. 
He does not have any credit cards. He is also the beneficiary of a real estate trust. The 
fair market value of one farm is more than $850,000. His grandmother controlled the 
property until her death in August 2009. The estate will be divided between Applicant, 
 
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his sister, and his mother. The estate involves nine farms and a million dollars in cash. 
(Tr. 30) The farms generate approximately $500,000 yearly in income. (Tr. 31)  
 
Applicant’s mother is the executor of his grandmother’s estate. His mother 
provided him a $20,000 advance on his inheritance from the estate to make payment on 
his outstanding obligations. (Tr. 32) He currently is not receiving calls or letters from 
creditors demanding payment. (Tr. 35)  
 
A summary of Applicant’s two repossessions and 18 charged off or placed for 
collection accounts, which totaled approximately $43,000 and their current status 
follows: 
 
 Creditor Amount Current Status 
a Telephone account.  $224 Paid. (Ex. A, Tr. 34) 
b Medical account.  $159 Paid. (Ex. B, Tr. 34) 
c Electrical utility bill 
account.  
$53 
 
Paid. (Ex. C, Tr. 34) 
d Insurance account. $180 Paid. (Ex. D, Tr. 35) 
e Gas utility bill account.  $159 Paid. (Ex. E, Tr. 39) 
f Bad check. $81 Paid. (Ex. F, Tr. 39)  
g Medical collection 
account. 
 
$205 Applicant has requested a point of contact 
from the credit bureau for this creditor. (Tr. 
40) 
h Collection account. $104 Paid. (Ex. H, Tr. 40) 
I 
j 
Two cable service 
accounts ($524 and 
$359).  
$883 Paid. (Ex. I, Tr. 41) 
k Collection account. 
 
$3,070 Paid. The account was settled for $1,535. 
(Ex. K, Tr. 42) 
l Bank card charged-off 
account. 
$415 
 
Paid. (Ex. L, Tr. 43) 
m Collection account. 
 
 
$1,526 
 
Applicant has requested a point of contact 
from the credit bureau for this creditor. (Tr. 
44)  
n  Credit card collection 
account. 
$10,975 Creditor offered to settle for $4,000, but 
Applicant needs to maintain this account. He 
is negotiating to repayment the debt. (Tr. 45) 
 
 
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 Creditor Amount  Current Status 
o Credit card collection 
account. 
$2,309 Paid. The account was settled for 
$1,501. (Ex. K, Tr. 47) 
p Vehicle repossession. 
 
 
$13,693 
 
Ex-spouse was awarded the car in the 
divorce and is now seeking bankruptcy 
protection as to this debt. (Ex. N, Tr. 52) 
The creditor offered to settle for $5,000. 
He will pay the settlement amount if the 
bankruptcy does not remove the debt 
from his credit reports. (Tr. 53)  
q Collection account. 
 
$44 
 
Paid. (Ex. O, Tr. 53) 
r Vehicle repossession. 
 
$7,856 
 
Paid. The account was settled for 
$3,000. (Ex. P, Tr. 54) 
s Collection account for 
insurance bill. 
$207 
 
Paid. (Ex. Q, Tr. 55) 
t Collection account on a 
credit card account. 
$1,116 
 
Paid. The account was settled for $601. 
(Ex. R, Tr. 55) 
 Total debt listed in SOR $43,259  
 
 
Policies 
 
 When evaluating an applicant’s suitability for a security clearance, the 
administrative judge must consider the adjudicative guidelines. In addition to brief 
introductory explanations for each guideline, the adjudicative guidelines list potentially 
disqualifying conditions and mitigating conditions, which must be considered 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 the adjudicative process. The administrative judge’s overarching 
adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 
2(c), the entire process is a conscientious scrutiny 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 national security.” In reaching this 
 
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decision, I have drawn only those conclusions that are reasonable, logical, and based 
on the evidence contained in the record.  
 
Under Directive ¶ E3.1.14, the Government must present evidence to establish 
controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is 
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, 
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” The 
applicant has the ultimate burden of persuasion to obtain a favorable security decision.  
 
A person who seeks access to classified information enters 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 safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation of potential, rather than actual, risk of compromise of classified 
information. 
  
Section 7 of Executive Order 10865 provides that decisions shall be “in terms of 
the national interest and shall in no sense be a determination of the loyalty of the 
applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites 
for access to classified or sensitive information).  
 
Analysis 
 
Guideline F, Financial Considerations 
 
 Adjudicative Guideline (AG) ¶ 18 articulates the security concerns relating to 
financial problems: 
 
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. 
 
Additionally, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, negligent, or careless in properly handling and 
safeguarding classified information. Behaving responsibly or irresponsibly in one aspect 
of life provides an indication of how a person may behave in other aspects of life.  
 
A person’s relationship with his creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts as agreed. Absent 
 
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substantial evidence of extenuating or mitigating circumstances, an applicant with a 
history of serious or recurring financial difficulties is in a position of risk that is 
inconsistent with holding a security clearance. An applicant is not required to be debt 
free, but is required to manage his finances to meet his financial obligations. 
 
 Applicant has a history of financial problems. He owed approximately $43,000 on 
20 delinquent and charged-off accounts. Disqualifying Conditions AG ¶ 19(a), “inability 
or unwillingness to satisfy debts” and AG ¶ 19(c), “a history of not meeting financial 
obligations,” apply.  
 
 Applicant’s history of delinquent debt is documented in his credit report, his 
interview by an Office of Personnel Management (OPM) investigator, his SOR 
response, his response to interrogatories, and his FORM response. Throughout this 
process, he had admitted responsibility for two delinquent debs, totaling about $9,000. 
These two debts are currently delinquent. He has provided insufficient documentation to 
show significant progress resolving these two debts. The Government established the 
disqualifying conditions in AG ¶¶ 19(a) and 19 (c). 
 
 Five Financial Considerations Mitigating Conditions under AG ¶¶ 20 are 
potentially applicable: 
 
(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; 
 
(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; 
 
(d) the individual initiated a good-faith effort to repay overdue creditors or 
otherwise resolve debts; and 
 
(e) the individual has a reasonable basis to dispute the legitimacy of the 
past-due debt which is the cause of the problem and provides 
documented proof to substantiate the basis of the dispute or provides 
evidence of actions to resolve the issue. 
 
The mitigating conditions listed in AG ¶ 20(a) only partially apply. The debts were 
incurred some years ago, but only recently have they been paid. There were 20 
obligations so the conduct was not infrequent. The majority of the debts arose at the 
 
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time of Applicant’s separation and divorce. I can not find his separation and divorce to 
be event which are unlikely as to recur. However, I find that since the majority of the 
debts have been paid, the debts no longer cast doubt on his current reliability, 
trustworthiness, or good judgment. AG ¶ 20(a) partially applies. 
 
Under AG & 20(b), Applicant experienced both separation and divorce, along 
with the financial burden associated with each. Additionally, he was unemployed for six 
months in the recent past. These are events beyond his control. He has now addressed 
the debts indicating some responsibility under the circumstances. AG & 20(b) applies. 
 
Under AG & 20(c) there is no evidence Applicant has received financial 
counseling, but there is evidence the problem is being resolved. AG & 20(c) applies. 
 
Applicant has paid 16 of the delinquent accounts. He has asked the credit bureau 
to provide him points of contact for two additional accounts (SOR ¶1.g, $205 and SOR 
¶1.m, $1,526) so that he can pay those accounts. The corporate credit card company 
offered to settle his $11,000 (SOR ¶1.n) debt for $4,000, but would require him to close 
the account. He wants to maintain the account and is attempting to negotiate a 
repayment plan on this account.  
 
As to the remaining obligation, he and the creditor have reached a settlement 
agreement concerning his ex-wife’s repossessed vehicle. He was going to pay $5,000 
to settle the matter, but his ex-wife told him her attorney believes her bankruptcy will 
remove this debt from both his credit report and hers. If the bankruptcy fails to do so, he 
will pay this debt. Having paid 16 accounts, he is in a position to pay two more accounts 
once he knows who to pay. He also negotiated the repossession debt, and is currently 
negotiating on the remaining credit card debt. The paying of the 16 accounts 
establishes a good-faith effort to repay his bills. Having paid the majority of his debts, I 
am confident he will actively pursue paying the four remaining accounts yet to be paid. 
AG & 20(d) applies. 
 
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. 
 
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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 
the facts and circumstances surrounding this case. Applicant has paid the majority of 
his debts and is actively attempting to address the four remaining debts. These four 
debts are unlikely to be a source of improper pressure or duress. Of course, the issue is 
not simply whether all his debts are paid—it is whether his financial circumstances raise 
concerns about his fitness to hold a security clearance. (See AG & 2(a)(1).) The 
Applicant was divorced and out of work for six months. He has now paid the majority of 
the debts. Paying the remaining debts will not be a problem considering he, his sister, 
and his mother are about to inherit a large distribution from his grandmother’s estate. 
Even without the inheritance, his annual income is $112,000, which is sufficient to 
address the two creditors ($1,731) he is trying to locate. It is also sufficient to pay the 
two settlement offers ($4,000 and $5,000).  
 
Overall, the record evidence leaves me without questions or doubts about 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant mitigated 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 section E3.1.25 of Enclosure 3 of the Directive, are: 
 
 Paragraph 1, Financial Considerations: FOR APPLICANT 
 
  Subparagraphs 1.a – 1.l:  For Applicant 
  
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is 
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance. Eligibility for access to classified information is granted.  
 
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge