DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 10-04483 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: William T. O'Neil, Esquire, Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
CREAN, Thomas M., Administrative Judge: 
 
 Based on a review of the pleadings, exhibits, and testimony, eligibility for access 
to classified information is granted.  
 
Statement of the Case 
 
On January 28, 2010, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) to obtain a security clearance required for a position 
with a defense contractor. After an investigation conducted by the Office of Personnel 
Management (OPM), the Defense Office of Hearings and Appeals (DOHA) issued an 
interrogatory to Applicant to clarify or augment potentially disqualifying information in 
her background. After reviewing the results of the background investigation and 
Applicant's response to the interrogatory, DOHA could not make the preliminary 
affirmative findings required to issue a security clearance. DOHA issued a Statement of 
Reasons (SOR), dated October 18, 2010, to Applicant detailing security concerns for 
financial considerations under Guideline F. These actions were taken under Executive 
Order 10865, Safeguarding Classified Information within Industry (February 20, 1960), 
as amended; Department of Defense Directive 5220.6, Defense Industrial Personnel 
 
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Security Clearance Review Program (January 2, 1992), as amended (Directive); and 
the adjudicative guidelines (AG) effective within the Department of Defense on 
September 1, 2006. Applicant acknowledged receipt of the SOR on October 23, 2010. 
 
 Applicant answered the SOR on October 23, 2010. She admitted the five 
allegations under Guideline F. Department Counsel was prepared to proceed on 
February 7, 2011, and the case was assigned to me on February 22, 2011. DOHA 
issued a Notice of Hearing on April 18, 2011, scheduling a hearing for May 2, 2011. I 
convened the hearing as scheduled. The Government offered seven exhibits that I 
marked and admitted to the record without objection as Government Exhibits (Gov. Ex.) 
1 through 7. Applicant testified on her behalf and offered seven exhibits that I marked 
and admitted to the record without objection as Applicant Exhibit (App. Ex.) A through 
G. I left the record open for Applicant to submit additional documents. Applicant timely 
submitted two documents which I marked and admitted to the record as App. Ex. H and 
I. Department Counsel had no objection to the admission of the two documents. (Gov. 
Ex. 8, Memorandum, dated May 16, 2011) DOHA received the transcript of the hearing 
(Tr.) on May 10, 2011. 
 
Procedural Issues 
 
 Applicant received the Notice of Hearing on April 25, 2011. She discussed the 
hearing date with Department Counsel prior to the mailing of the Notice of Hearing on 
April 18, 2011. Applicant is entitled to 15 days advance notice of a hearing. (Directive 
E3.1.8.). Applicant was ready to proceed at the hearing on May 2, 2011, and she had 
sufficient time to prepare. She waived the 15-day notice requirement. (Tr. 5-7) 
 
Findings of Fact 
 
 After a thorough review of the pleadings, transcript, and exhibits, I make the 
following essential findings of fact.   
 
Applicant is 38 years old and is required to be eligible for access to classified 
information for a position as a human resource specialist with a defense contractor. She 
is a college graduate with a degree in health care administration. She married in 2000, 
divorced in 2005, and has a teenage college son who lives with her. (Tr. 38-42) 
 
Applicant's previous employer relocated her from one city to another In July 
2006. She owned a home in her original location, which she was able to sell when she 
moved. Her company helped her with some, but not all, of her moving expenses. When 
her employer restructured the company, transferring functions to a main headquarters 
eliminating regional positions, Applicant was terminated with other employees on 
December 31, 2008. She received a severance payment. She was unemployed from 
January 1, 2009, until July 28, 2009. During this time, she worked part time on an as 
needed basis. She found full time employment as an administrative assistant supervisor 
for another company making $19-per-hour in July 2009. In September 2010, that 
company eliminated all supervisory positions, and Applicant's job was downgraded and 
 
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her salary lowered to $16 per hour. At present, she is still employed with this company 
at the $16-per-hour salary. She also has a part-time position as a medical assistant 
instructor which she took on November 15, 2010. Applicant experienced delinquent 
debts from her unemployment, the expenses from her move, and her lower salary. 
Applicant admits she used credit cards during her unemployment to meet her bills. After 
becoming unemployed, Applicant contacted her creditors to inform them of her financial 
situation and to establish payment plans. (Tr. 22-28) 
 
Credit reports (Gov. Ex. 4, dated February 13, 2010; Gov. Ex. 5, dated May 13, 
2010; Gov. Ex. 6, dated September 15, 2010; and Gov. Ex. 7, dated February 3, 2010) 
show the following delinquent debts for Applicant: $6,293 on a bank credit card for a 
retail store (SOR 1.a); $773 past due on another bank credit card (SOR 1.b); a credit 
union credit card charged off for approximately $8,637 (SOR 1.c); another bank credit 
card past due for approximately $350 (SOR 1.d); and $24,899 in mortgage payments 
past due on a $161,000 mortgage (SOR 1.e). Her delinquent debts amount to $15,000 
of unsecured debts, and $24,000 in mortgage arrears. 
 
The credit card debt at SOR 1.a is for a card Applicant used for living expenses 
when she was unemployed. Applicant settled the debt for four payments of $550.57. 
(App. Ex. A, Letter, dated February 3, 2011) Applicant paid the debt in full by making 
early and extra payments. (Tr. 14-16, 28-29; App. Ex. B, Letter dated March 29, 2011) 
 
The actual amount of the debt for the credit card account at SOR 1.b was 
approximately $2,500. The SOR is for the past due amount of $773. Applicant agreed to 
pay $75 monthly to pay the entire debt at SOR 1.b. She has consistently made her 
monthly payments and the debt is now approximately $1,200. (Tr. 16-17, 29-30; App. 
Ex. C, Letter, dated July 19, 2010; App. Ex. H, Payments, various dates)  
 
Applicant attempted to negotiate a settlement plan with the creditor for the debt 
at SOR 1.c. However, the creditor is seeking two large payments of over $2,000 each 
that Applicant can not afford. She is still negotiating with the creditor to arrive at an 
acceptable payment plan. (Tr. 17-18, 30-31) 
 
Applicant agreed to make $75 monthly payments on the overdue debt at SOR 
1.d. Applicant established an automatic deduction from her checking account for the 
monthly payments. She has consistently made the agreed payments and her debt is 
now in the status of being paid as agreed. She continues to make the required monthly 
payments to keep the account as pays as agreed and the balance is approximately 
$2,313.24. (Tr. 18-20, 31-32; App. Ex. D, Letter to establish automatic deduction, dated 
July 28, 2010; App. Ex. E, Letter of agreed payments, dated August 3, 2010; App. Ex. 
F, Cancelled checks, various dates; App. Ex. I, Electronic payments, various dates) 
 
The debt at SOR 1.e pertains to Applicant's mortgage for the house she 
purchased when she was transferred by her previous employer. She met the mortgage 
payments of $1,243 when she first moved but was unable to continue making timely 
mortgage payments after her company laid her off. Applicant still lives in the house. The 
 
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allegation at SOR 1.e is for past due mortgage payments of $24,899 with a total 
balance of $161,000. Applicant tried to modify the mortgage for a lower monthly 
payment but the mortgage holder would not agree. She sought help from Government 
mortgage agencies to help with modifying her mortgage. Applicant's mortgage holder 
did agree to a short sale of the house to satisfy the mortgage. The appraised value is 
approximately $148,000. Her mortgage holder will not accept any mortgage payments 
pending the short sale. Applicant listed the house for sale but it has not yet sold. 
Applicant is unsure if she will still owe a debt on the remaining mortgage debt if the 
house is sold at a short sale. (Tr. 20-22, 32-36, 37-38; App. Ex. G, Sale documents and 
short sale agreement, dated September 1, 2010) 
 
Applicant has paid other outstanding debts. She paid her student loans, another 
bank account, and some back state taxes. Applicant understands the debts are her 
problem even though they were incurred during difficult economic time. She hopes to 
work for a defense contractor overseas in a war zone, anticipating the additional pay will 
help her with her past due debts. (Tr. 36-37, 43-47) 
 
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 
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 in seeking a favorable security decision. 
 
 
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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 that the applicant may deliberately or inadvertently fail to 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 
 
Financial Considerations: 
 
 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. 
(AG ¶ 18) Similarly, an individual who is financially irresponsible may also be 
irresponsible, unconcerned, or careless in his or her obligations to protect 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 her creditors is a private matter until evidence is 
uncovered demonstrating an inability or unwillingness to repay debts under agreed 
terms. Absent evidence of strong extenuating or mitigating circumstances, an applicant 
with a history of serious or recurring financial difficulties is in a situation of risk 
inconsistent with the holding of a security clearance. An applicant is not required to be 
debt free, but is required to manage her finances in such a way as to meet her financial 
obligations. Applicant's delinquent debts established by credit reports and Applicant's 
admissions raise Financial Considerations Disqualifying Conditions (FC DC) AG ¶ 19(a) 
(inability or unwillingness to satisfy debts); and FC DC AG ¶ 19(c) (a history of not 
meeting financial obligations). The evidence indicates an inability and not an 
unwillingness to satisfy debt. Applicant's testimony concerning her finances was candid 
and forthright. She provided financial information concerning her attempts to resolve her 
financial obligations. 
 
 I considered Financial Considerations Mitigating Condition (FC MC) 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) and FC MC AG ¶ 20(b) (the 
conditions that resulted in the financial problems 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). These mitigating conditions apply. Applicant was transferred 
 
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by her company and purchased a house at her new location. About two years later, her 
company restructured and Applicant's job was eliminated. Up until this time, she was 
current with payment on her debts. She was unemployed for approximately eight 
months, fell behind on some debt payments, and used credit cards to pay debts and 
living expenses. About a year after finding new employment her new company 
restructured, her position was downgraded, and she lost hourly pay. Applicant found a 
part-time position to help with her finances. Her delinquent debts happened under 
unlikely circumstances of losing a job and having another job downgraded in pay. 
Theses circumstances were beyond her control. Applicant acted responsibly under the 
circumstances by notifying her creditors of the issues and reaching settlement 
agreements with some of the creditors. She paid one of the SOR debts in full and is 
current with agreed payments on two other debts. She also paid other debts not listed 
on the SOR. Her mortgage holder agreed to a short sale and the house has been 
placed on the market. Only one creditor refused to negotiate a reasonable payment 
plan.  
 
 I considered FC MC ¶ 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). Applicant noted that she sought help from some Government agencies 
to understand and modify her mortgage. While these companies undoubtedly provided 
her some credit counseling, she did not present evidence of financial counseling to 
meet the requirements of this mitigating condition.  
 
I considered FC MC AG ¶ 20(d) (the individual has initiated a good-faith effort to 
repay the overdue creditors or otherwise resolve debts). For FC MC AG ¶ 20(d) to 
apply, there must be an “ability” to repay the debts, the “desire” to repay, and “evidence” 
of a good-faith effort to repay. Good faith means acting in a way that shows 
reasonableness, prudence, honesty, and adherence to duty and obligation. A 
systematic method of handling debts is needed. Applicant must establish a "meaningful 
track record" of debt payment. A "meaningful track record" of debt payment can be 
established by evidence of actual debt payments or reduction of debt through payment 
of debts. An applicant is not required to establish that she paid each and every debt 
listed. All that is required is that Applicant demonstrates an established plan to resolve 
her financial problems and show she has taken significant actions to implement that 
plan.  
 
Applicant took a part-time job, in addition to her regular full-time position, to gain 
additional income. She paid one SOR debt in full. She paid other debts not listed in the 
SOR in full. She has payment plans on two SOR debts and the debts are now current 
and being paid as agreed. She and her mortgage holder have agreed to permit a short 
sale of her house. It is unclear if she will still owe a mortgage debt after a short sale. 
Only one creditor would not negotiate a reasonable settlement plan. If granted eligibility 
for access to classified information, Applicant hopes to work overseas earning more 
money to pay her debts. Applicant's actions in paying and resolving her delinquent 
debts provide significant and credible information to establish a meaningful track record 
of debt payment. These actions are reasonable and prudent under Applicant's financial 
 
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circumstances and show honesty and an adherence to her financial duties and 
obligations. She established her good-faith efforts to repay her creditors and resolve 
debt. Her actions show she is acting reasonably and responsibly to resolve her financial 
problems, so her past delinquent debts do not now reflect adversely on her 
trustworthiness, honesty, and good judgment. She has mitigated security concerns 
based on financial considerations. 
 
Whole-Person Analysis  
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s security eligibility by considering the totality of the applicant’s conduct and all 
relevant circumstances. An 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 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. I considered that Applicant's 
financial problems arose from conditions beyond her control. She was laid off from a job 
that paid well and was unemployed for over eight months. Her position was downgraded 
and she lost some hourly salary a year after finding employment. She took a second job 
to earn more funds to pay her debts. She established a "meaningful track record" of 
payment of her delinquent debts. She paid one SOR debt and other non-SOR debts in 
full. She is paying two other SOR debts by payment plan. She and her mortgage holder 
agreed to permit her house to be sold at a short sale and the house is on the market. 
Only one debt remains because the creditor is demanding large payments Applicant 
cannot reasonably afford. Applicant's actions to pay her past financial obligations and 
resolve her debts indicate she will be concerned, responsible, and careful regarding 
classified information. Overall, the record evidence leaves me without questions and 
doubts as to Applicant’s eligibility and suitability for a security clearance. For all these 
reasons, I conclude Applicant mitigated security concerns arising from financial 
considerations, and she should be granted access to classified information.  
 
 
 
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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, Guideline F:   FOR APPLICANT 
 
  Subparagraphs 1.a - 1.e:  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. 
 
 
 
_________________ 
THOMAS M. CREAN 
Administrative Judge