DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 09-07930 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Paul M. DeLaney, Esquire Department Counsel 
For Applicant: Pro Se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
In 2003, Applicant had $20,000 in liabilities discharged in bankruptcy. He 
currently has $17,000 in past-due accounts or accounts placed for collection. He has 
failed to rebut or mitigate the security concerns under financial considerations. 
Clearance is denied. 
 
Statement of the Case 
 
 Applicant contests the Department of Defense’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 Statement of Reasons (SOR) on April 30, 2010, detailing security concerns under 
financial considerations. 
                                                          
1 Executive Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), as 
amended; Department of Defense Directive 5220.6, Defense Industrial Personnel Security Clearance 
Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG).  
1 
  On June 28, 2010, Applicant answered the SOR and elected to have the matter 
decided without a hearing. Department Counsel submitted the Government's case in a 
File of Relevant Material (FORM), dated September 21, 2010. The FORM contained 13 
attachments. On October 1, 2010, Applicant received a copy of the FORM, along with 
notice of his opportunity to file objections and submit material to refute, extenuate, or 
mitigate the potentially disqualifying conditions.  
 
On November 1, 2010, Applicant responded to the FORM. Department Counsel 
did not object to the material. Applicant's response was admitted into the record. On 
November 24, 2010, I was assigned the case.  
 
Findings of Fact 
 
 In Applicant’s Answer to the SOR, he denied the factual allegations in SOR ¶ 1.s, 
the $1,407 debt owed to a government agency, which he stated had been paid with his 
tax return. He admitted the remaining factual allegations, with explanations. I 
incorporate Applicant’s admissions to the SOR allegations. After a thorough review of 
the record, pleadings, and exhibits, I make the following findings of fact: 
 
 Applicant is a 30-year-old electronic technician who has worked for a defense 
contractor since May 2008, and is seeking to obtain security clearance. From April 2005 
to May 2008, Applicant was employed in a similar position with a different defense 
contractor. From August 1998 to August 2004, Applicant served on active duty as an 
enlisted member in the U.S. Marine Corps. He separated with an honorable discharge. 
In January 1999, Applicant married and has two children, ages 10 and 14.  
 
In 2003, Applicant’s Chapter 7 bankruptcy discharged his debts including total 
liabilities of $22,000, which included $20,000 of credit account debt.  
 
In May 2009, Applicant was interviewed by a DoD investigator. The only 
explanation Applicant gave for his financial difficulties was the low-paying job he held 
following his August 2004 separation from the Marine Corps. He stated his bankruptcy 
was due to his failure to understand income and debt. Following the discharge in 
bankruptcy, he has accumulated an additional $17,000 in delinquent accounts.  
 
In his June 2010 SOR answer, Applicant asserted he had made payment 
arrangements on six delinquent accounts, had restarted payment on two additional 
accounts, and had made payment on an additional delinquent account (SOR ¶ 1.t, $40). 
However, the documents provided indicate: a creditor who was owed $4,041 agreed to 
accept $60 monthly payments on his educational loan debt and a collection agency 
agreed to accept $75 monthly payments on two accounts with balances of $766 and 
$958. Applicant provided documentation that the $958 bill had been $1,033 the previous 
month. The FORM, informed Applicant he had not produced sufficient evidence 
supporting the payment of his debts.  
In 2006, Applicant purchased a used car for $9,000. He asserts that two days 
after purchasing the car, it overheated and was towed back to the dealership. The 
2 
dealership refused to negate the contract. In early 2008, in anticipation of a home 
purchase, Applicant reviewed his credit bureau report (CBR) and discovered this debt 
and other debts were listed. Applicant’s March 2009 CBR (Item 12) lists $4,563 as past 
due on this debt. In his May 2009 interview, he stated he would pay the debt if required 
to do so to obtain a clearance. (Item 6) At that time, he was going to contact the creditor 
to attempt to negotiate a settlement on this debt and establish a repayment plan. He 
provided no documentation showing the creditor was contacted or that a repayment 
plan was established.  
In 2007, Applicant’s daughter required medical treatment. Applicant thought his 
company provided medical insurance had paid the medical bills. A collection company 
is attempting to collect the unpaid medical bills listed in: SOR ¶ 1. c ($157), SOR ¶ 1. d 
($264), SOR ¶ 1. e ($411), SOR ¶ 1. f ($604), and SOR ¶ 1. g ($294). 
 
Although Applicant had reviewed his CBR in 2008 and noted a number of 
delinquencies were reported in that CBR, he failed to list those delinquencies when he 
completed his security clearance questionnaire. In March 2009, when Applicant 
completed his electronic Questionnaires for Investigations Processing (e-QIP) (Item 5), 
he listed his 2003 bankruptcy, but failed to indicate he was delinquent on any debt.  
 
In November 2009, Applicant responded to the SOR. (Item 7) He included a 
November 2009 account statement from the creditor listed in SOR ¶ 1.k ($ 1,276). He 
asserts, and it is documented, that this debt was included in his 2003 bankruptcy 
discharge. (Item 13) He asserted he was paying $50 monthly to his creditor online. 
(Item 7)  
 
 Applicant had two students loans of $3,000 and $4,000, on which he was at one 
time more than 120 days past due. His October 2010 CBR lists these debts (SOR ¶¶ 
1.q and 1.r) as zero past due and with a balance of zero. (FORM Answer) His CBR 
gave the cryptic entry of “Student loan perm assign government”.  
 
 A copy of his delinquent accounts and their current status follows: 
 
 Creditor Amount  Current Status 
b Credit Card account 
placed for collection. 
(Item 9) 
$2,012 
 
Unpaid. Same amount listed as past 
due on his October 2010 CBR. 
(FORM Answer) 
c Delinquent medical 
account. (Item 9)  
 
$157 
 
Unpaid. Now being collected by the 
collection agency listed in e. The 
same balance is listed as past due on 
his October 2010 CBR. (FORM 
Answer) 
 
 
3 
 Creditor Amount  Current Status 
d Delinquent medical 
account. (Item 9)  
 
$264 Unpaid. Now being collected by the 
collection agency listed in e. The 
same balance is listed as past due on 
his October 2010 CBR. (FORM 
Answer)  
e Medical account placed 
for collection. (Item 9) 
 
 
$411 Unpaid. In November 2009, Applicant 
asserted he had worked out a 
payment plan with the creditor. (Item 
7) Same amount is listed as past due 
on his October 2010 CBR. (FORM 
Answer) 
f Medical account placed 
for collection. (Item 9) 
$604 Unpaid. Now being collected by the 
collection agency listed in e. The 
same balance is listed as past due on 
his October 2010 CBR. (FORM 
Answer) 
g Medical account placed 
for collection. (Item 9) 
$294 Unpaid. Now being collected by the 
collection agency listed in e. The 
same balance is listed as past due on 
his October 2010 CBR. (FORM 
Answer) 
h Delinquent medical 
account. (Item 9)  
$20 Unpaid.  
i Account placed for 
collection by utilities 
company. (Item 12) 
$185 Paid. (FORM Answer) 
j Returned check. 
 
$44 March 2009 CBR (Item 12) indicates 
nothing is past due on this account.  
k Line of credit was 120 
days or more past due. 
$1,276 Included in Applicant’s September 
2003 bankruptcy discharge.  
l Account charged off. 
(Item 12) 
$934 
 
Unpaid. Same amount is listed as past 
due on his October 2010 CBR. 
(FORM Answer) 
m Returned check that was 
the downpayment on a 
vehicle. (Items 9,10, and 
12) 
 
$1,025 
 
Unpaid. In November 2009, Applicant 
asserted he would pay this debt by 
January 2010. (Item 7) Same amount 
is listed as past due on his October 
2010 CBR. (FORM Answer) 
 
4 
 Creditor Amount  Current Status 
n Account placed for 
collection on a relocation 
loan. (Items 9 and 10) 
 
$2,591 Unpaid. In November 2009, Applicant 
asserted he had set up a $75 monthly 
repayment agreement on this debt. 
(Item 7) Same amount is listed as past 
due on his October 2010 CBR. (FORM 
Answer) 
o Account placed for 
collection. (Items 9 and 
10) 
 
 
 
$809 
 
Balance has been reduced by $145. 
Applicant had forgotten about this debt 
until he saw in on his 2008 CBR. At that 
time, he owed $1,200. (Item 6) As of 
October 2010, the balance due had 
been reduced to $645. (FORM Answer) 
p Account placed for 
collection. (Item 10) 
$994 
 
Balance has been reduced by $48. As 
of October 2010, the balance due had 
been reduced to $846. (FORM Answer) 
q State student loan was 
120 days or more past 
due. (Item 10) 
 
$166 
 
Applicant’s October 2010 CBR report 
lists this debt as “Student loan perm 
assign government” with a zero 
balance. (FORM Answer) 
r State student loan was 
120 days or more past 
due. (Item 10) 
$134 
 
Zero balance. See Q. above 
s Account placed for 
collection. (Item 10) 
$1,407 
 
Paid. (FORM Answer) 
t Medical account placed 
for collection. (Item 12) 
 
$40 Applicant asserted, but failed to 
document that this debt had been paid 
in full.  
u Account placed for 
collection. (Item 12) 
 
$292 Unpaid. Applicant said it would be paid 
by December 2009. (Item 7) He 
provided no documents showing it has 
been paid. It does not appear in his 
October 2010 CBR. 
v Account placed for 
collection by water 
company. (Item 12) 
 
 
$103 Unpaid. Applicant asserted he would 
pay this debt by December 2009. (Item 
7) He has provided no documents 
showing it has been paid. It does not 
appear in his October 2010 CBR. 
 
 
5 
 Creditor Amount  Current Status 
w Charged-off vehicle 
account. (Item 12)  
 
 
$3,358 Unpaid. In 2006, Applicant purchased a 
$9,000 vehicle and returned it two days 
later due to an engine overheating 
problem. In 2008, he learned this debt 
was on his CBR. 
 Total debt listed in SOR $17,120  
 
 
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 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 
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, 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 of obtaining 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 
6 
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. 
 
An individual who is financially irresponsible may also be irresponsible, 
unconcerned, negligent, or careless in properly handling and safeguarding classified 
information. Behavior 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 
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 so as to meet his financial obligations. 
 
 The record evidence supports a conclusion Applicant has a history of financial 
problems. In 2003, Applicant had to resort to bankruptcy protection. At that time, 
$20,000 in debt was discharged. Currently he has approximately $14,000 in charged-off 
accounts, accounts placed for collection, or unpaid returned checks. The evidence 
supports application of disqualifying conditions AG ¶ 19(a), “inability or unwillingness to 
satisfy debts” and AG ¶ 19(c), “a history of not meeting financial obligations,” apply.  
 
 Five financial considerations mitigating conditions under AG ¶¶ 20(a) – (e) are 
potentially applicable: 
 
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(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; or 
 
(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 factors listed in AG ¶ 20(a) do not apply. The debts were not 
incurred long ago. In 2003, his debts were discharged in bankruptcy and he received a 
fresh start. I do not find against Applicant because he had to resort to bankruptcy. I find 
for him as to SOR ¶ 1.a. The debts in question have all arisen since then. There are 18 
debts so they can not be considered infrequent. Since the debts have yet to be paid, 
they are considered recent. There is nothing in the record to indicate that like debts are 
unlikely to recur in the future.  
 
The mitigating factors listed in AG & 20(b) do not apply. There is nothing in the 
file indicating the financial problems were caused by factors beyond his control. In 
August 2004, he experienced two jobs which paid less than his Marine Corps’ pay. But 
since April 2005, he has been gainfully employed. There is no evidence Applicant has 
received counseling or that this financial problems are being resolved. AG ¶ 20(c) does 
not apply. 
 
Applicant paid the debt listed in SOR ¶ 1. s ($1,407). The debt listed in SOR ¶ 1. 
k ($1,276) was discharged in his 2003 bankruptcy. His student loans have a zero 
balance. For these four debts I find the mitigating factors listed in AG & 20(d) apply. 
This is a good-faith effort to repay creditors. The debt listed in SOR ¶ 1. o ($809) has 
been reduced by $154 and the debt listed in SOR ¶ 1. p ($994) has been reduced by 
$48. Applicant was first questioned about his delinquent debts in a May 2009 interview. 
Having paid approximately $200 in a year and a half is insufficient for me to find he has 
entered into a good-faith effort to repay these two creditors.  
 
8 
For the mitigating factors listed in AG & 20(e) to apply Applicant has to have a 
reasonable basis to dispute the legitimacy of the past-due debt and provide 
documented proof to substantiate the basis of the dispute or provides evidence of 
actions to resolve the issue. He disputes the vehicle repossession debt (SOR 1.w, 
$3,358), but has provided no evidence of his attempt to resolve the issue. He first 
learned of the debt in early 2008, when he was attempting to buy a house. During his 
May 2009 interview, he said he would contact the creditor and establish a repayment 
plan. He asserted he would pay this debt if he had to in order to obtain a security 
clearance. He has failed to provide any documentation showing he has contacted the 
creditor or set up a repayment plan. AG & 20(e) does not apply.  
 
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 
the facts and circumstances surrounding this case. In 2003 all of his debts were 
discharged in bankruptcy. Following the bankruptcy, his accounts again went 
delinquent, past due, and were referred for collection. In the year and a half since being 
questioned about his delinquent debts he has done too little to address those 
obligations. He asserted he had established repayment plans, was making payment on 
some of the debts, or would contract his creditors to establish repayment plans. He 
produced little documentation to establish he had made regular, periodic, monthly 
payments on his delinquent debts.  
 
Overall, the record evidence leaves me with questions and doubts about 
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I 
conclude Applicant has not mitigated the security concerns arising from financial 
considerations.  
 
9 
10 
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: AGAINST APPLICANT 
 
  Subparagraph 1.a:   For Applicant 
  Subparagraphs 1.b –1.j:  Against Applicant    
  Subparagraph 1.k:   For Applicant 
  Subparagraphs 1.l –1.p:  Against Applicant 
  Subparagraph 1.q –1.s  For Applicant 
  Subparagraph 1.t –1.w:  Against Applicant 
   
Conclusion 
 
 In light of all of the circumstances presented by the record in this case, it is not 
clearly consistent with the national interest to grant Applicant eligibility for a security 
clearance. Eligibility for access to classified information is denied.  
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge