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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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l )         ISCR Case No. 09-06525
 )
)
Applicant for Security Clearance )
Appearances
For Government: Richard Stevens, Esquire, Department Counsel
For Applicant: Pro se
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Decision
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MASON, Paul J., Administrative Judge:
Applicant’s filing of the Chapter 7 bankruptcy petition in July 2010 weighs in his
favor. However, his student loan accounts are still delinquent. The fact that Applicant has
incurred no new debt since May 2006 also weighs in his favor, but is undermined by his
bad credit that thwarted his opportunities to take on new debt, and his failure to act on the
delinquent debts much sooner in the period between May 2006 and July 2010. Given the
large amount of debt Applicant incurred between 2003 and September 2009, inadequate
time has transpired for me to find in his favor under the financial guideline. Eligibility for
access to classified information is denied. 
 Department Counsel moved to have the “April 29, 2010" date stricken from the record. The motion was1
granted. (Tr. 5)
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Statement of the Case
Applicant completed and certified his Electronic Questionnaire for Investigations
Processing (e-QIP)(GE 1) on June 9, 2009. He was interviewed by an investigator from the
Office of Personnel Management (OPM) on July 27, 2009. A summary of his interview
appears in Applicant’s interrogatory answers dated November 30, 2009. Under question
4 (corrections to report of investigation), Applicant believed his credit debt was $68,373,
not $45,000, as he estimated in the July 2009 interview. The current balance on his student
loan is $69,663, not over $100,000 as he estimated in the July 2009 interview. Applicant
and his wife are currently unable to qualify for a car loan and purchased a van for cash.
Under question 6 of GE 2, Applicant indicated that with the additions or clarifications, the
investigator’s interview summary could be used at a hearing to determine his security
suitability.
On June 4, 2010,  DOHA issued a Statement of Reasons (SOR) detailing security1
concerns under financial considerations (Guideline F). 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 Clearance Review Program (January 2, 1992), as amended (Directive); and the
adjudicative guidelines (AG) implemented by the Department of Defense on September 1,
2006. 
Applicant submitted his answer to the SOR on June 29, 2010. DOHA issued a
Notice of Hearing on September 14, 2010, for a hearing on October 6, 2010. The hearing
was held as scheduled. At the hearing, five exhibits (GE 1 through 5) were admitted in
evidence (without objection) in support of the government’s case. Applicant testified. His
five exhibits (AE A through AE E) were admitted without objection. In the time allowed to
submit post-hearing exhibits, Applicant supplied one exhibit (AE F). Department Counsel
interposed no objection to the post-hearing exhibit. Applicant’s exhibits AE A through AE
F are now in the record. DOHA received the transcript (Tr.) on October 19, 2010. The
record closed on October 27, 2010. 
Rulings on Procedure
Before opening statements, Department Counsel moved to amend the SOR by
withdrawing the following allegations (Tr. 5-7): SOR ¶ 1.e, which refers to the same debt
as SOR ¶1.a; and SOR ¶1.k, which is the same debt as SOR ¶ 1.b. SOR ¶1.e and ¶ 1.k
are found in Applicant’s favor. During closing statements, Department Counsel suggested
 The handwritten page number appears in the lower right hand corner of the exhibit.2
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that SOR ¶1.g and SOR ¶ 1.f were the same account. (Tr. 57) A careful review of the
record shows this to be the case, and SOR ¶ 1.g is found for Applicant. 
Findings of Fact
The SOR lists 13 delinquent accounts under the financial considerations guideline.
As noted in Rulings on Procedure, three of those accounts have been found in Applicant’s
favor. The debts total $60,749. The student loan debt was 120 days past due in the amount
of $2,960, leaving a balance of approximately $71,000. Applicant was asked to make
modifications to the July 2009 interview summary. He stated the student loan balance was
$69,663 (GE 2 at 93)2
Applicant admitted SOR ¶ 1.a (judgment filed December 2004), SOR ¶ 1.b
(judgment filed April 2004), ¶ 1.d, ¶ 1.e, ¶ 1.f, ¶ 1.i, ¶ 1.k, and ¶ 1.l. Applicant denied SOR
¶ 1.c, claiming the debt is not his. (AE C) He denied SOR ¶ 1.g. SOR ¶ 1.e and SOR ¶ 1.g
have been found in Applicant’s favor. He denied SOR ¶ 1.h and provided documentation
claiming he was qualifying for an income-based repayment plan offered by the student loan
organization. Applicant denied SOR ¶ 1.j claiming the account was assigned to his first wife
under a divorce decree. SOR ¶ 1.k has been found in his favor. Applicant’s admissions in
his answer to the SOR are incorporated as findings of fact. The following represents
additional factual findings. 
Applicant is 36 years old. In October 1998, he married his first wife, and has two
children from that marriage. He divorced his first wife in May 2006 and married his current
wife in June 2006. He has one child from this marriage. Applicant received a bachelor of
arts degree in psychology in June 1996, and his master of science degree in September
2002. He has worked for his present employer since January 2005. In his current position
as customer service, level II, he manages accounts and does quality assurance for a
military internet system. Applicant is an instructor at an art institute in the local area. (GE
1) He was investigated for a confidential clearance in January 2005.  
Applicant’s financial problems surfaced during his first marriage. Neither he nor his
first wife managed their finances wisely. Remodeling their house, taking family vacations,
purchasing appliances and a second car were major expenditures that added to the
financial mismanagement. (GE 2; Tr. 31) After Applicant moved away from his first wife in
August or September 2002, the listed accounts started to become delinquent. (Tr. 51) GE
4 (credit report) and GE 5 (credit report) show that in June 2003, the first account to
become delinquent was SOR ¶ 1.f (telephone). Two additional accounts became delinquent
in 2003. Three accounts became delinquent in 2004. SOR ¶ 1.a became a judgment in
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December 2004. SOR ¶ 1.b became a judgment in April 2004. The apartment account
(SOR ¶ 1.i) became delinquent in March 2005. SOR ¶ 1.j was filed in March 2006. The
student loan account (SOR ¶ 1.h) became delinquent in September 2009.
In his July 2009 interview, Applicant stated that when he divorced his first wife in
May 2006, a stipulation required him to pay all the credit card debt totaling more that
$45,000. He stated that in the past three years he has taken no action to pay the large
debts because the creditors refused to accept small payments. (GE 2) No additional
information was provided. He and his wife currently have bad credit. He no longer uses
credit cards and has no additional debt. He cannot afford a bankruptcy attorney. (Id.)
The following two paragraphs, which are not duplicate allegations, address the
accounts that Applicant denies:
SOR ¶ 1.c, $2,164, credit card: Applicant offered AE C (one-page document from
a credit report) to support his claim that he never had an account with the creditor and he
never used the name that appears in the exhibit. Applicant’s two reasons for disputing the
debt are noted. However, at the bottom of the one-page exhibit in bold letters are the words
“Dispute File Information.” Underneath the heading are the words “if you believe any of the
information found on this report is incorrect, there are 3 ways to launch,” and the rest of the
sentence does not appear on the page. Other than his statements challenging responsibility
for this account, there is no documentation establishing that Applicant officially disputed this
account. The account remains his responsibility. 
SOR ¶ 1.h, $2,960, student loan 120 days past due, with a balance of approximately
$69,663 due. (GE 2 at 93): Initially, Applicant testified that he paid $360 and the student
loan officials indicated that his account was current. (Answer to SOR; Tr. 22) Later in his
testimony, Applicant stated that he was taking steps to qualify for an income based
repayment (IBR) plan. (Answer to SOR; AE A) He was submitting documentation to the
student loan organization to determine manageable repayment amounts. (Tr. 37-38) He
was told by officials that forbearance depended on his bankruptcy. (Id.) Applicant did not
believe his student loan account was in forbearance. (Tr. 50) On October 18, 2010,
Applicant was informed that the IBR was not processed because the student loan
organization received notice that he filed bankruptcy. (AE F) Applicant is seeking to have
the student loans discharged. (AE B) The student loan account remains delinquent
because student loans cannot be discharged in bankruptcy under most circumstances. 
¶ 1.j, $2,408, loan for first wife’s vehicle, account became a judgment in March 2006.
(GE 4): Applicant indicated the divorce decree assigned this debt to his former wife. (Tr.
25) However, he did not provide any corroborating documentation that supports his claim.
The judgment would still remain his responsibility. However, he listed the account 
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in Schedule F (unsecured creditors) and it will probably be discharged by his Chapter 7
petition. 
Applicant indicated in his Answer to the SOR that in the last several years, he
consulted with several financial services including debt consolidation programs, financial
management plans, and a bankruptcy attorney. They agreed his income was insufficient
to satisfy his debts. (Tr. 34) On July 23, 2010, he filed for Chapter 7 bankruptcy, including
eight of the 10 listed accounts. (AE B) Since his divorce from his first wife in May 2006,
Applicant has incurred no additional debt. (Answer to SOR) His child support has always
been current. (Tr. 29)
Policies
When evaluating an applicant's suitability for a security clearance, the administrative
judge must consider the AG. Each guideline lists potentially disqualifying conditions and
mitigating conditions, which are required to be used to the extent they apply in evaluating
an applicant's eligibility for access to classified information.
The administrative judge's ultimate goal is to reach a fair and impartial decision that
is based on common sense. The decision should also include a careful, thorough
evaluation of a number of variables known as the "whole-person concept" that brings
together all available, reliable information about the person, past and present, favorable
and unfavorable, in making a decision. 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
about the potential, rather than actual, risk of compromise of classified information.
Under Directive ¶ E3.1.4., the Government must present evidence to establish
controverted facts alleged in the SOR. Under Directive ¶ E3.1.l5., 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 for obtaining a favorable security decision.
Analysis
Financial Considerations 
The security concern for financial considerations is set forth 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
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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.
There are two disqualifying conditions under AG ¶ 19 that may apply:
AG ¶ 19(a) (inability or unwillingness to satisfy debts); and 
AG ¶ 19(c) (a history of not meeting financial obligations). 
AG ¶¶ 19(a) and 19(c) apply. Applicant owes 10 creditors $60,749 in delinquent
debt. Applicant owes the student loan association a past due amount of $2,960, on a
balance of $69,663 in delinquent debt. Applicant is unable to pay the debt. Applicant has
a history of not meeting financial obligations that dates to 2003.
Five conditions under AG ¶ 20 could potentially mitigate Applicant’s delinquent
indebtedness: 
AG ¶ 20(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); 
AG ¶ 20(b) (the conditions that resulted in the financial problem were largely
beyond the person’s control, and the person acted responsibly under the
circumstances); 
AG ¶ 20(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); 
AG ¶ 20(d) (the individual initiated a good-faith effort to repay overdue
creditors or otherwise resolve debts); and
AG ¶ 20(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 to resolve the issue).
AG ¶ 20(a) does not apply. Most of the accounts became delinquent in 2003, 2004,
and 2005. However, the student loan account became delinquent in 2009. Waiting until
after he received the SOR in June 2010 to file his Chapter 7 bankruptcy petition and pursue
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a resolution of the student loan arrearage continues to cast doubts on Applicant’s current
reliability, trustworthiness and good judgment. 
Notwithstanding his financial irresponsibility during the marriage, Applicant receives
some mitigation under AG ¶ 20(b) for his divorce in May 2006, acquiescing to a stipulation
in the decree requiring him to pay all the credit card debt. However, the favorable weight
that Applicant receives for filing the Chapter 7 bankruptcy petition in July 2010 is decreased
by the passage of more than four years before filing the petition. 
Applicant receives some mitigation under AG ¶ 20(c) for consulting with several
financial services and a bankruptcy attorney. In addition, the fact he has filed a Chapter 7
petition indicates that he is resolving most of the delinquent accounts except for SOR 1.c
and 1.h. On the other hand, while Applicant has taken some documented steps to bring the
student loans to a current or forbearance status in July 2010, they still remain delinquent.
Filing a Chapter 7 petition is a legitimate method of handling a person’s financial
debts when they discover they can no longer pay the debt. Applicant receives some
mitigation under AG ¶ 20(d) by taking action to “otherwise resolve debts.” However, the
discharge of debts in this manner does not merit the same mitigation as a sustained track
record of good-faith repayment of debts under AG ¶ 20(d). To Applicant’s credit, he has
incurred no new debt since May 2006. However, it is reasonable to conclude that part of
the reason he incurred no new debt was his inability to obtain credit. 
AG ¶ 20(e) requires a reasonable basis to dispute the delinquent debt and
documented proof to substantiate his reasons for the dispute. Applicant has not provided
documented proof to reinforce his claims regarding SOR 1.c. Having considered the
adverse evidence under AG ¶ 19(a) and ¶ 19(c) with the mitigating evidence under AG ¶¶
20(b), 20(c), 20(d), and 20(e), Applicant has not carried his burden of persuasion under the
financial considerations guideline. 
Whole-Person Concept 
In evaluating Applicant’s security clearance worthiness, I have examined the
evidence under the disqualifying and mitigating conditions of the financial guideline. I have
also weighed the circumstances within the context of nine variables known as the whole-
person concept. In evaluating the relevance of an individual's conduct, the administrative
judge should consider the following factors:
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
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which the participation was 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.
Appellant readily admitted that he lived beyond his means during his first marriage.
After he moved away from his former wife in August or September 2002, his credit card
accounts began to become delinquent. Three of the listed debts became delinquent in
2003. Additional accounts fell delinquent in 2004. Two judgments were filed in 2004, and
one was filed in March 2006. Besides the remaining accounts that became delinquent in
2005, Applicant’s student loans converted to a delinquent status in September 2009. 
Applicant has been employed by his current employer since January 2005. After his
divorce in May 2006, he admittedly took no action on the larger debts. His claims of trying
to work out payment plans is undocumented. While consulting with several financial
services, including a bankruptcy attorney about consolidating or discharging his debt, he
waited until after he received the SOR to begin activity to repair his financial problems.
Filing the Chapter 7 petition earlier would have meant a discharge and given Applicant
more time to chart a course leading to qualifying for the IBR program (or some other plan)
to bring the delinquent student loan accounts back to a current or forbearance status.
Without a sustained track record of financial responsibility, and the lack of character
evidence, Applicant has not met his burden of persuasion under the financial
considerations guideline. 
Formal Findings
Paragraph 1 (Guideline F): AGAINST APPLICANT
Subparagraphs 1.a, 1.b, 1.d, 1.e, 1.f, 1.g, 1.i, 1.j, 1.k, and 1.m: For Applicant
Subparagraphs 1.c, 1.h: Against Applicant
Conclusion
In light of all the circumstances presented by the record in this case, it is not clearly
consistent with the national interest to grant Applicant access to classified information.
Eligibility for access to classified information is denied. 
Paul J. Mason
Administrative Judge