1
 
                                                             
                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
)
)       ISCR Case No. 12-01311
)
Applicant for Security Clearance )
Appearances
For Government: Braden Murphy, Esq. Department Counsel
For Applicant: Alan V. Edmunds, Esq.
______________
Decision
______________
HENRY, Mary E., Administrative Judge:
Based upon a review of the pleadings, exhibits, and testimony, Applicant’s
eligibility for access to classified information is granted.
Statement of the Case
Applicant completed and certified an Electronic Questionnaire for Investigations
Processing (e-QIP) on October 6, 2011. The Department of Defense (DOD) issued
Applicant a Statement of Reasons (SOR) on June 20, 2013, detailing security concerns
under Guideline F, financial considerations. The action was taken under Executive
Order 10865, Safeguarding Classified Information within Industry (February 20, 1960),
as amended; DOD Directive 5220.6, Defense Industrial Personnel Security Clearance
Review Program (January 2, 1992), as amended (Directive); and the Adjudicative
Guidelines For Determining Eligibility for Access to Classified Information (AG),
implemented on September 1, 2006. 
 
GE 1; AE A; AE D; Tr. 16-17, 29.1
GE 2, GE 4; GE 5; Tr. 32-33, 51.2
2
Applicant received the SOR on June 28, 2013, and he answered it on July 9,
2013. Applicant requested a hearing before an administrative judge with the Defense
Office of Hearings and Appeals (DOHA). Department Counsel was prepared to proceed
on August 19, 2013, and I received the case assignment on August 27, 2013. DOHA
issued a Notice of Hearing on September 16, 2013 for a hearing scheduled on October
8, 2013. Due to the Government shutdown, the hearing was cancelled. A second Notice
of Hearing was issued on October 30, 2013, and I convened the hearing as scheduled
on November 19, 2013. The Government offered exhibits (GE) marked as GE 1 through
GE 4, which were received and admitted into evidence without objection. Applicant
testified. He submitted exhibits (AE) marked as AE A through AE O, which were
received and admitted into evidence without objection. DOHA received the hearing
transcript (Tr.) on November 27, 2013. I held the record open until December 2, 2013,
for Applicant to submit additional matters. Applicant timely submitted AE P, which was
received and admitted without objection. The record closed on December 2, 2013.
      
Findings of Fact
The SOR alleges six debts, totaling $14,277 and a bankruptcy discharge in 2000.
(SOR ¶¶ 1.a through 1.g) In his Answer to the SOR, Applicant admitted all the factual
allegations in the SOR. His admissions are incorporated herein as findings of fact. He
also provided additional information to support his request for eligibility for a security
clearance. After a complete and thorough review of the evidence of record, I make the
following findings of fact.  
Applicant, who is 60 years old, works as a supervisor for a contractor for the
Transportation Safety Administration (TSA). He began working for his employer in 2002
as a checkpoint screener and later became a lead checkpoint screener. He previously
worked in the medical profession and as a intranet administrator. Applicant received an
associate’s degree in 1980.1
Applicant’s long-term partner died in January 2010. Applicant assumed
responsibility for some of his partner’s debts upon his death as well as the cost of their
rental property. In his personal subject interview in December 2011, Applicant
discussed 10 debts, three of which belonged to his deceased partner. He had user
authority on his partner’s accounts, but he denied using the accounts. Applicant
acknowledged to the investigator that seven debts were his. He admitted that many of
the debts had been past due. He then advised that he had closed the seven accounts
and paid the balances. The October 2011 credit report supports his statement
concerning the seven accounts discussed with the investigator. None of the seven
debts are listed on the SOR. Of the three debts belonging to his deceased partner, the
two largest debts are listed on the October 1, 2013 credit report as past due, but are not
listed in the SOR. Applicant paid the large dental bill listed on his e-QIP.2
Tr. 20-22, 30-31.3
GE 2; AE L; Tr. 34-36, 41, 45.4
Applicant’s debts were discharged under Chapter 7 in 2000.5
AE E; AE M; Tr. 23, 36-37, 45-46.6
AE C; AE E; Tr.20, 22-23, 37-38, 43-44. 7
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Applicant’s primary hobby is photography. In 2011, he entered a photography
contest some distance from his home. He did not win the contest. From this event
participation, he understood that if he wanted to win, he needed to submit a much more
elaborate presentation. When he entered the same photography contest in 2012, he
spent at least five thousand dollars on his photographic presentation, believing he would
win a substantial cash prize. He used his credit cards to pay for his materials for the
presentation. He did not win, and his efforts created financial problems for him. He no
longer participates in large-scale competitions and is limiting his photographic hobby
presentation to note cards and other smaller items.3
After his participation in the photograph contest, Applicant realized that his
finances were out of control. He contacted his employee assistance program (EAP) for
help. His EAP office referred him to a credit counseling and debt resolution company.
He first contacted this company on April 24, 2013, and he scheduled a telephone
conference for April 30, 2013. In addition, he either met with or talked by telephone with
a counselor from this company on May 2, 2013, May 7, 2013, May 15, 2013, and May
28, 2013. Through these meetings, Applicant began to work on a payment plan with
some of his creditors.  4
While working with the credit counseling company, Applicant decided to meet
with a bankruptcy attorney and did so on May 20, 2013. After meeting with the
bankruptcy attorney and upon the attorney’s advice, Applicant decided to proceed with
filing a Chapter 7 bankruptcy petition, his second Chapter 7 bankruptcy,  and retained5
legal counsel. He also followed the attorney’s advice and stopped making payments on
all of his accounts.6
Applicant paid the required retainer fee to his bankruptcy attorney by August
2013, then worked with his attorney to identify his debts. After completing this process,
Applicant, through his attorney, filed his Chapter 7 bankruptcy petition on November 1,
2013. The court scheduled a meeting of his creditors on November 27, 2013. His
bankruptcy case is proceeding through the court, but is not yet resolved. As required by
the bankruptcy court, Applicant took an online credit counseling program on June 3,
2013. He found this program “very helpful” with budgeting and managing his finances.
Applicant continues to work with a money coach from the credit counseling company.7
Applicant submitted a full copy of his Chapter 7 bankruptcy petition, including the
schedules listing his debts. The debts identified in SOR ¶¶ 1.b through 1.g are listed in
AE P; Tr. 24, 41.8
AE K; Tr. 24, 43.9
GE 2; Tr. 46-47.10
4
Applicant’s bankruptcy petition, schedule F. Most debts are noted with a date of last
activity in 2012 or 2013. Applicant pays his monthly expenses, and he no longer uses
credit cards. He only uses his debt card. At the hearing, he indicated that he was
current with his taxes, but his bankruptcy petition shows approximately $1,500 in back
taxes for 2010 on Schedule E. The Chief U.S. Attorney, tax division, is listed in
Schedule F for notification purposes only. This listing is not explained. None of the
credit reports show a tax lien has been filed by the Internal Revenue Service for these
taxes.8
With the help of his money coach, Applicant prepared a personal financial
statement on September 30, 2013. His listed gross income as $5,557 a month and his
net monthly income as $4,421. His monthly expenses include $2,200 for rent, $300 for
groceries, $600 for utilities, $500 for car expenses, $100 for medical expenses, and
$100 for miscellaneous items, leaving a $621 a month for unexpected expenses. He
owns two old cars. He does not owe any debts on these cars. He has sufficient income
to meet all his monthly expenses.  9
Applicant submitted a personal financial statement with his answers to
interrogatories in May 2013. This statement reflected $137 a month more in gross
income and $82 a month more in net income. At the hearing, Applicant acknowledged
that his income has decreased slightly. His May 2013 personal financial statement also
listed his total monthly expenses at $3,000, leaving $1,500 a month to pay his debts. In
the May 2013 statement, Applicant listed his monthly food costs at $100, his utilities at
$300, and his car expense at $200. These expenses are much lower than his
September statement. I find the September statement more representative of his
expenses. At the hearing, he did indicate that his utility costs had decreased, but that
his medical expenses are now $160, which is closer to the estimate on his May 2013
personal financial statement. He also stated that he continued to reduce his expenses,
and he gave as two examples: 1) he now has only one cable box, not four, which
reduced his cable expense, and 2) he turns his heat thermostat down when he is away
from home during the day.10
As part of his bankruptcy petition, Applicant submitted an income and expense
statement. His gross monthly income is listed as $6,215 and his net monthly income is
listed at $5,283. His expenses are more detailed and include $2,200 for rent, $75 for
electric, $125 for water, $25 for garbage pickup, $250 for cable, $100 for internet, $200
for phone, $550 for food, $100 for car insurance, $200 for home and auto repairs, $500
for car expense, $200 for laundry, dry cleaning, and clothing, $250 for medical
expenses, $100 to charity, and $335 for personal and entertainment, resulting in a
negative remainder each month. For purposes of this decision, the personal financial
AE P.11
AE A; AE F; AE I; Tr. 23-24.12
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statement prepared in May and September 2013 reflect his current income and
expenses.11
Applicant submitted nine letters of recommendation from co-workers, one letter
from a shift manager of another company, and four letters of recommendation given by
previous employers in the past. All view Applicant as a highly competent worker and
shift supervisor. Applicant has been supportive of several co-workers in their career
development, and he inspires his co-workers. He provides emergency assistance to the
public, when needed, using his prior medical training. His co-workers view him as
honest and hard working. They trust him. His employer is aware of the reasons for the
SOR. His performance evaluations reflect an above average performance.12
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 are used 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, an applicant is
responsible for presenting “witnesses and other evidence to rebut, explain, extenuate,
or mitigate facts admitted by applicant or proven by Department Counsel. . . .” An
applicant has the ultimate burden of persuasion for obtaining 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 an applicant may deliberately or inadvertently fail to protect or
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.
 
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 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).  
Analysis
Guideline F, Financial Considerations
The security concern relating to the guideline for Financial Considerations is set
out 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 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 ¶ 19 describes the disqualifying conditions that could raise security concerns.
I have considered all the conditions, and the following are potentially applicable: 
(a) inability or unwillingness to satisfy debts; and
(c) a history of not meeting financial obligations. 
Applicant developed significant financial problems following his expenditures to
participate in a photography contest. He spent beyond his means when he incurred
these debts. Most of the debts have not been resolved. These two disqualifying
conditions apply.
The Financial Considerations guideline also includes examples of conditions that
can mitigate security concerns. I have considered mitigating factors AG ¶ 20(a) through
¶ 20(f), and the following are potentially applicable:
There is some duplication of debts in Applicant’s bankruptcy schedules. In a bankruptcy filing, most debtors13
list potential creditors, even when the debt may have been resold or transferred to a different collection agent
or creditor, to ensure notice, and reduce the risk of subsequent dismissal of the bankruptcy. If Applicant failed
to list some debts on his bankruptcy schedule, this failure to list some debts does not affect their discharge.
Absent fraud, in a no-asset bankruptcy, all unsecured, nonpriority debts are discharged when the bankruptcy
court grants a discharge, even when they are not listed on a bankruptcy schedule. See Judd v. Wolfe, 78 F.3d
110, 114 (3d Cir. 1996); Francis v. Nat’l Revenue Service, Inc., 426 B.R. 398 (Bankr. S.D. FL 2010), but see
First Circuit Bucks Majority on Discharge of Unlisted Debt in No-Asset Case, American Bankruptcy Institute,
28-9 ABIJ 58 (Nov. 2009). There is no requirement to re-open the bankruptcy to discharge the debt. Collier
on Bankruptcy, Matthey Bender & Company, Inc., 2010, Chapter 4-523, ¶ 523(a)(3)(A). Not all debts are
discharged through bankruptcy. Priority debts, such as tax debts, student loan debts, and child support
obligations, are generally not discharged through bankruptcy. Secured debts such as home mortgages and
car liens are not discharged unless the security (home or car) is foreclosed or repossessed.
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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.
As required by the bankruptcy court, Applicant took a financial counseling course
in June 2013 prior to filing his bankruptcy. He also met with counselors at a credit
counseling company and has a financial coach, who is working him on a realistic and
manageable budget. He has filed a Chapter 7 bankruptcy petition, which includes his
SOR debts, which are unsecured, nonpriority debts that will be discharged under
Chapter 7 of the Bankruptcy Code, and a small amount of taxes owed. His unpaid SOR
debts will be resolved through bankruptcy early next year. His tax debt is not
dischargeable in bankruptcy, but given that this debt has not appeared on his credit
reports, I draw an inference that he was resolving this debt until he filed his bankruptcy
petition. He pays his current bills and has developed a rational and manageable
budget.  AG ¶ 20(c) applies.13
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 an 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. The decision to grant or
deny a security clearance requires a careful weighing of all relevant factors, both
favorable and unfavorable. In so doing, an administrative judge must review all the
evidence of record, not a single item in isolation, to determine if a security concern is
established and then whether it is mitigated. A determination of an applicant’s eligibility
for a security clearance should not be made as punishment for specific past conduct,
but on a reasonable and careful evaluation of all the evidence of record to decide if a
nexus exists between established facts and a legitimate security concern. 
In assessing whether an Applicant has established mitigation under Guideline F,
the Appeal Board provided the following guidance in ISCR Case No. 07-06482 at 3
(App. Bd. May 21, 2008):
In evaluating Guideline F cases, the Board has previously noted that the
concept of “‘meaningful track record’ necessarily includes evidence of
actual debt reduction through payment of debts.” See, e.g., ISCR Case
No. 05-01920 at 5 (App. Bd. Mar. 1, 2007). However, an applicant is not
required, as a matter of law, to establish that he has paid off each and
every debt listed in the SOR. See, e.g., ISCR Case No. 02-25499 at 2
(App. Bd. Jun. 5, 2006). All that is required is that an applicant
demonstrate that he has “. . . established a plan to resolve his financial
problems and taken significant actions to implement that plan.” See, e.g.,
ISCR Case No. 04-09684 at 2 (App. Bd. Jul. 6, 2006). The Judge can
reasonably consider the entirety of an applicant’s financial situation and
his actions in evaluating the extent to which that applicant’s plan for the
reduction of his outstanding indebtedness is credible and realistic. See
Directive ¶ E2.2(a) (“Available, reliable information about the person, past
and present, favorable and unfavorable, should be considered in reaching
a determination.”) There is no requirement that a plan provide for
payments on all outstanding debts simultaneously. Rather, a reasonable
plan (and concomitant conduct) may provide for the payment of such
debts one at a time. See, e.g., ISCR Case No. 06-25584 at 4 (App. Bd.
Apr. 4, 2008). Likewise, there is no requirement that the first debts actually
paid in furtherance of a reasonable debt plan be the ones listed in the
SOR.
The evidence in support of granting a security clearance to Applicant under the whole-
person concept is more substantial than the evidence in support of denial. In reaching a
conclusion, I considered the potentially disqualifying and mitigating conditions in light of
all the facts and circumstances surrounding this case. The record clearly supports
Applicant’s statements that he paid past-due debts in 2010. His action indicates a track
record for paying debts. He continued to manage his money for another two years,
when he decided to spend a significant amount of money to compete in a photography
contest. This decision increased his financial pressures, and eventually resulted in his
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inability to pay all his debts. When he realized that he could not manage his debts, he
sought assistance from his employer’s EAP office. This office referred him to a credit
counseling and debt resolution company. In late April 2013, several months before the
issuance of the SOR, he began meeting with a company counselor. He then met with a
bankruptcy attorney and accepted the attorney’s recommendation that he file for a
Chapter 7 bankruptcy, which would eliminate all his debts, except the unexplained tax
debt. By his actions, Applicant has taken control of his debts and sought a reasonable
solution to manage his debts and to decrease his monthly expenses. He has a plan,
and he has sufficient income each month to pay his ordinary and necessary living
expenses and to pay for reasonable unexpected expenses. With the aid of the credit
counseling courses and his money coach, he is learning how to reduce his monthly
living expenses and live within his income. His one small tax debt 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. In assessing all the evidence of record and noting the high regard in
which he is held at work, his financial problems are insufficient to raise security
concerns. (See AG & 2(a)(1).)
Overall, the record evidence leaves me without questions or doubts as to
Applicant’s eligibility and suitability for a security clearance. For all these reasons, I
conclude Applicant mitigated the security concerns arising from his finances under
Guideline F.
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
Subparagraph 1.a: For Applicant
Subparagraph 1.b: For Applicant
Subparagraph 1.c: For Applicant
Subparagraph 1.d: For Applicant
Subparagraph 1.e: For Applicant
Subparagraph 1.f: For Applicant
Subparagraph 1.g: For Applicant
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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.
                                                              
MARY E. HENRY
Administrative Judge