DEPARTMENT OF DEFENSE 
  DEFENSE OFFICE OF HEARINGS AND APPEALS 
  
  
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 10-08477 
  ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric H. Borgstrom, Esq., Department Counsel 
For Applicant: Pro se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
HEINY, Claude R., Administrative Judge: 
 
Until January 2010, Applicant paid all of his financial accounts in a timely 
manner. A lack of overtime pay, his separation agreement, and advice from a law firm 
he employed to address his financial problems resulted in him stopping payments to 
three credit card companies and, instead, making payments thereafter to the law firm. 
Actions by the law firm were ineffective and Applicant had to seek bankruptcy 
protection. In July 2011, the three debts were discharged. Applicant has rebutted or 
mitigated the security concerns under financial considerations. Clearance is granted. 
 
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 
                                                          
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 
 
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a Statement of Reasons (SOR) on September 21, 2011, detailing security concerns 
under Guideline F, financial considerations. 
 
 On October 5, 2011, 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 November 26, 2011. The FORM contained 12 
attachments. On December 26, 2011, 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.  
 
Responses to the FORM are due 30 days after receipt of the FORM. Applicant’s 
response was due on January 25, 2012. As of February 13, 2012, no response had 
been received. On February 13, 2012, I was assigned the case.  
 
Findings of Fact 
 
In Applicant’s Answer to the SOR, he admitted all of the factual allegations in the 
SOR, and his admissions are incorporated herein. After a thorough review of the 
pleadings and exhibits, I make the following findings of fact. 
 
 Applicant is a 66-year-old customer service representative who has worked for a 
defense contractor since November 1969. In his Electronic Questionnaires for 
Investigations Processing (e-QIP), he indicates he was issued a top secret clearance in 
October 2008 and a confidential level clearance in February 2009. Applicant offered no 
documents and no work or character references.  
 
Applicant owed approximately $50,000 on three charged-off credit card accounts. 
Specifically, he owed $13,694 (SOR 1.a), $10,959 (SOR 1.b), and $25,849 (SOR 1.c) 
on credit card accounts that were charged off. (Item 5, 6, 7, 8) 
 
 In September 2001, Applicant and his spouse separated. (Item 4) The separation 
agreement2 required him to make payments to his spouse of half of his base pay. In 
October 2009, his financial problems started when lack of overtime pay reduced his 
wages. (Item 4) As of August 2010, his net monthly income (income less deductions 
and payments) was $2,402. (Item 4) Per his separation agreement he paid his spouse 
$2,454. He asserts his divorce resulted in him depleting his 401(k) retirement fund 
($20,000) and savings ($12,000) before he started using credit cards to meet his daily 
needs. (Item 2 and 4) 
 
 Applicant’s October 2005 credit bureau report (CBR) lists 16 accounts being 
“paid as agreed” and 2 accounts being too new to rate. (Item 9) None of his accounts 
                                                                                                                                                                                           
Clearance Review Program (January 2, 1992), as amended (Directive); and the adjudicative guidelines 
(AG) effective within the DoD on September 1, 2006. 
 
2 The record fails to contain any divorce decree, but there are indications the division of Applicant’s base 
pay continued following his divorce.  
 
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were delinquent. His November 2008 CBR lists 28 accounts being “paid as agreed” and 
3 accounts being too new to rate. (Item 8) None of his accounts were delinquent. His 
June 2010 CBR lists 19 accounts being “paid as agreed” and 1 account being too new 
to rate. (Item 7) The three accounts listed in the SOR are listed as 120 days or greater 
past due. The last timely payment on these three accounts was made in January 2010. 
(Item 7) The three charged-off accounts are listed in his December 2010 and April 2011 
CBRs. (Items 5, 6) 
 
 As of August 2010, the amounts owed on the three delinquent accounts were: a 
credit card account (SOR 1.a) past due in the amount of $1,345 with a balance due of 
$12,694; a credit card account (SOR 1.c) past due in the amount of $2,277 with a 
balance due of $25,351; and a credit card account (SOR 1.b) past due in the amount of 
$1,849 with a balance due of $12,911. (Item 4) He last used the three credit cards in 
October 2009. He listed all three delinquent accounts when he completed his 
Questionnaire for National Security Positions, Standard Form (SF) 86. (Item 3)  
 
In December 2009, he sought financial assistance from a law firm that was to 
negotiate lower payments on his three credit card accounts, for which the firm was paid 
$9,000. He had agreed to pay the law firm $650 monthly for 42 months to pay his debts. 
These payments started in January 2010. (Item 4) The law firm instructed him to stop 
paying his credit card accounts. (Item 4) As referenced above, it was January 2010, 
when he made his last timely payment on the three delinquent accounts. The firm was 
to negotiate with the creditors to reduce the principal owed on the three delinquent 
accounts to approximately 40%. The services provided by the firm were negligible. 
Applicant now acknowledges, with hindsight, that it would have been better to have paid 
the $9,000 on his debts and not to have engaged the law firm. (Item 2)  
 
In February 2011, Applicant talked with a bankruptcy attorney. (Item 2) In June 
2011, he filed for Chapter 7 bankruptcy protection and in July 2011, his debts were 
discharged. (Items 2, 4, 11) The only liabilities listed in his bankruptcy were the three 
delinquent credit card accounts listed in the SOR. (Item 11)  
 
 In August 2010, during a personal subject interview (Item 4) Applicant indicated 
he was spending approximately $134 monthly for satellite TV, a fitness club, and videos 
through the mail. He estimated he was paying $100 to $200 monthly for trips/vacations, 
not further described. (Item 4) At that time, he was sending $650 monthly to the law firm 
anticipating the money would address his three delinquent credit card accounts.  
 
 He asserted in his answer to the SOR (Item 2) that in October 2011, he was 
moving to an apartment closer to work, which was a 15-mile-round-trip commute 
instead of his previous 130-mile commute. He also asserted that in December 2011, he 
would start receiving full Social Security benefits. He asserted he had no debts, no 
credit cards, and his vehicle (a 2003 Jeep) was paid for. (Items 2, 11)  
 
 
 
 
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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 interests of 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 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 (EO) 10865 provides that decisions shall be “in 
terms of the national interest and shall in no sense be a determination as to the loyalty 
of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple 
prerequisites for access to classified or sensitive information).  
 
 
 
 
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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 
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, which started in January 2010. 
Applicant has had to resort to bankruptcy protection to address the three delinquent 
credit card accounts listed in the SOR. 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 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; 
 
 
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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; 
 
(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. 
 
Applicant=s separation agreement in which his spouse was entitled to half of his 
base pay and his loss of overtime pay contributed to his financial problems. These 
events resulted in him using credit cards to meet his daily living expenses. In October 
2009, he stopped using the cards. He was able to pay all of his credit accounts until 
January 2010 as evidenced by his 2005 and 2008 CBRs. In these CBRs no 
delinquencies are noted. In January 2010, following the advice of a law firm he 
employed to help him with the three delinquent accounts, he stopped making payments 
to the credit card companies and started paying the law firm $650 monthly by allotment. 
His June 2010 CBR is the first time any delinquencies were shown. It is in that CBR that 
the three SOR accounts are first listed as being more than 120 days past due. He 
received little for the $9,000 paid to the law firm and acknowledged he would have been 
better served simply applying that amount to the three SOR debts. In 2011, he sought 
and received Chapter 7 bankruptcy protection. The three SOR debts have been 
discharged.  
 
Under AG ¶ 20(a), Applicant’s delinquent accounts were limited to three 
accounts. Until January 2010, he was paying all of his accounts, including the three 
SOR debts, “as agreed.” He was following the advice of the law firm he employed when 
he stopped making payments on the three credit card account and started sending 
monthly payments to the law firm. The debts were discharged in July 2011. The 
financial difficulties in Applicant’s life may have started with his 2001 separation, but he 
was able to pay his debts in a timely manner until January 2010. His inability to meet his 
financial obligations was limited to the 19-month time period between January 2010 and 
July 2011. AG ¶ 20(a) applies. 
 
Under AG ¶ 20(b), his separation, divorce, and lack of overtime pay were factors 
beyond his control. He must also act in good-faith and in a reasonable manner in 
addressing his delinquent debts. Good-faith requires a showing that a person acts in a 
way that shows reasonableness, prudence, honesty, and adherence to duty or 
obligation. Accordingly, an applicant must do more than merely show that he relied on a 
legally available option (such as bankruptcy or the statute of limitation) in order to claim 
the benefit of the good-faith mitigating condition. ISCR case No. 02-30304 at 3 (App. 
Bd. April 20, 2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. June 4, 2001).  
 
 
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Applicant has acted reasonably by exhausting his 401(k) retirement plan and his 
savings to pay his debts. It was also reasonable that he stopped using the credit cards 
in 2009 and made timely payments on all his credit accounts until January 2010. It was 
not unreasonable for him to follow the advice he received from the law firm he employed 
to stop paying the credit card companies and start paying the law firm so that 
negotiations could be made with the credit card companies. Applicant has acted 
reasonably and AG & 20(b) applies. 
 
Applicant is no longer financially overextended. The three debts have been 
discharged in bankruptcy. His only delinquent accounts were the three SOR debts and 
with their discharge there are no indications of any other financial problems and it 
appears his finances are under control. He has no credit cards, his vehicle is paid, and 
he is not living beyond his means. AG & 20(c) 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. 
 
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. Due to Applicant’s separation 
agreement and the lack of overtime pay, he was unable to meet his living expenses 
without resorting to the use of credit cards. He was unable to make timely payments on 
his debts during the 19 months from January 2010 until July 2011. This is a short period 
of time when considering the financial history of a 66-year-old individual. In his 
bankruptcy he did not have numerous delinquent accounts. The only obligations listed 
were the three SOR debts. Since the bankruptcy, he has no outstanding debt, no credit 
cards, no car payments, no loan payments, and is attempting to lower his living costs by 
moving to an apartment closer to his job. He has not and is not living beyond his means. 
His vehicle is a 2003 Jeep.  
 
 
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The debts having been discharged cannot 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).) 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.c:  For Applicant   
 
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 a security 
clearance. Eligibility for access to classified information is granted.  
 
 
 
_______________________ 
CLAUDE R. HEINY II 
Administrative Judge