1 
 
 
                                                              
                        DEPARTMENT OF DEFENSE    
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
) 
  )  ISCR Case No. 12-07204 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Eric H. Borgstrom, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
After his divorce, Applicant was legally liable to repay approximately $24,093 in 
delinquent credit card debt incurred during his marriage and a home equity loan charged off 
with a balance of $89,991. He made small payments on three credit card debts in 
September 2014 after a collection agency filed for judgments. Applicant filed a Chapter 7 
bankruptcy petition in October 2014, but his case was still pending as of the close of the 
record. The financial considerations concerns are not sufficiently mitigated. Clearance is 
denied. 
 
Statement of the Case 
 
 On July 15, 2014, the Department of Defense Consolidated Adjudications Facility 
(DOD CAF) issued a Statement of Reasons (SOR) to Applicant, detailing the security 
concerns under Guideline F, Financial Considerations, and explaining why it was unable to 
find it clearly consistent with the national interest to grant a security clearance for him. The 
DOD CAF took the action under Executive Order 10865, Safeguarding Classified 
Information within Industry (February 20, 1960), as amended; Department of Defense 
(DOD) Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program 
 
 
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(January 2, 1992), as amended (Directive); and the adjudicative guidelines (AG) effective 
within the DOD on September 1, 2006. 
 
Applicant responded to the SOR allegations on August 1, 2014. He requested a 
hearing before an administrative judge from the Defense Office of Hearings and Appeals 
(DOHA). On September 11, 2014, the case was assigned to me to conduct a hearing to 
determine whether it is clearly consistent with the national interest to grant or continue a 
security clearance for Applicant. On September 24, 2014, I issued a Notice of Hearing 
scheduling the hearing for October 14, 2014. 
 
I convened the hearing as scheduled. Five Government exhibits (GEs 1-5) and 
seven Applicant exhibits (AEs A-G) were admitted into evidence without objection. 
Applicant and his supervisor testified, as reflected in a transcript (Tr.) received on October 
23, 2014. At Applicant’s request, I held the record open for two weeks for him to submit 
additional documentary evidence. On October 21, 2014, Applicant submitted evidence of a 
Chapter 7 bankruptcy filing. Department Counsel filed no objections by the October 27, 
2014 deadline, so the document was admitted into evidence as AE H. On October 27, 
2014, Applicant forwarded three additional documents, which were entered without 
objection as AEs I-K. 
 
Summary of SOR Allegations 
 
 The SOR alleges under Guideline F that as of July 15, 2014, Applicant owed 
charged-off credit card debts of $10,722 (SOR 1.a) and $5,729 (SOR 1.d); debts of $8,871 
(SOR 1.b), $6,802 (SOR 1.c), and $3,089 (SOR 1.e) held by a collection agency; a $47 
delinquent balance with a telecommunications company (SOR 1.f), and a $90,111 
charged-off home equity loan balance (SOR 1.g). Applicant admitted the debts in SOR 1.b, 
1.d, and 1.g, but explained that the home equity debt was supposed to have been resolved 
in a past foreclosure action. Applicant denied the debts alleged in SOR 1.a, 1.c, and 1.e in 
that the debts were his ex-wife’s obligations. At his hearing, he testified that he could find 
no evidence to indicate that the debts in SOR 1.c and 1.e belonged to his spouse so he 
had assumed responsibility for them. (Tr. 33.) 
 
Rulings on Evidence and Procedure 
 
  At the hearing, prior to the introduction of any evidence, the Government moved to 
withdraw SOR 1.a because Applicant had no legal liability as an authorized user of the 
account. Applicant did not object, and the motion was granted.  
 
Findings of Fact 
 
 After considering the pleadings, exhibits, and transcript, I make the following 
findings of fact: 
 
Applicant is a 41-year-old systems engineer, who has worked for his current 
employer, a defense contractor, since July 2000. His current position is that of systems 
 
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engineer field tech support associate manager at an annual salary of $108,000. Applicant 
was granted a secret clearance around September 2000, and it was upgraded to top secret 
in 2006. Applicant previously served in the United States military from January 1992 to 
December 1994, and he held a top-secret clearance and access to sensitive 
compartmented information (SCI) for his military duties. (GEs 1, 2; Tr. 39-41.) 
 
Applicant earned his bachelor’s degree in information technology in July 2008. (GEs 
1, 5; Tr. 39-40.) He took out student loans totaling $30,625 between November 2003 and 
August 2007 for his education, although his employer reimbursed some of the cost. (GEs 
4, 5.) He earned his Master of Business Administration degree in August 2013. (AE E.) 
 
Applicant and his ex-wife married in June 1993 and divorced in June 2011. They 
share custody of their two sons and a daughter. (GE 5; AEs A, B; Tr. 42.) Applicant paid 
his ex-wife $600 a week in support from October 2009 until June 2011, when their divorce 
was finalized. For the next two years, he paid her allocated alimony and child support at 
$475 per week.  (GEs 1, 2, 5; AE A; Tr. 35-36.)  In June 2014, his support obligation was 
reduced to $375 per week ($250 in child support and $125 in alimony) because his ex-wife 
began working part time as a waitress. (AE A; Tr. 35-36, 59, 63-64.) Applicant has had to 
maintain health insurance coverage for his dependents as well. (Tr. 53.) 
 
Applicant’s ex-wife handled the finances during their marriage. (GEs 1, 5; Tr. 47.) In 
December 2003, Applicant and his ex-wife took on a joint mortgage of $166,250 for their 
home. In April 2005, they opened a home equity loan of $50,000. Around July 2007, 
Applicant refinanced the home equity loan through a larger loan of $90,111 taken out 
individually. Additionally, Applicant opened some consumer credit cards individually and 
some jointly with his ex-wife during their marriage. Applicant was an authorized user as well 
on some of her credit card accounts. (GE 4.) 
 
Around July 2009, Applicant learned that his ex-wife was having an extramarital 
affair. He filed for divorce, although they continued to cohabitate while undergoing marital 
counseling. Applicant obtained his credit report and discovered that she had stopped 
paying on several of his consumer credit accounts. Additionally, his ex-wife had been using 
tuition reimbursement funds received from his employer for other expenses so his student 
loans were seriously past due. (GEs 1, 4, 5; Tr. 46.) They stopped paying on their 
mortgage in late summer 2010 as it became clear that they were not going to reconcile. 
(GE 4.) 
 
In October 2010, Applicant moved out of the marital home into an apartment at rent 
of $950 per month. (GE 1; Tr. 44, 54.) He had to purchase household goods. (Tr. 53.) 
Additionally, he began paying his ex-wife $600 a week to cover her and their children’s 
expenses while having to cover his own expenses. (Tr. 36, 44-45.) In 2011, Applicant was 
required by the court to attend counseling following a domestic violence incident involving 
his ex-wife. He attended 16 sessions at a cost to him of $125 per session. (GE 1; Tr. 55.) 
 
As of December 2011, the primary mortgage on Applicant and his ex-wife’s marital 
home was $24,177 past due on a balance of $151,118. The home equity loan balance of 
 
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$89,991 was charged off in March 2011 (SOR 1.g). (GE 4.) After the primary lender 
initiated foreclosure proceedings, Applicant’s ex-wife entered into foreclosure mediation. 
(GE 5; Tr. 61.) 
 
On January 23, 2012, Applicant completed and certified to the accuracy of an 
Electronic Questionnaire for Investigations Processing (e-QIP). In response to the financial 
delinquency inquiries, Applicant disclosed the mortgage and home equity loans on the 
marital home, which totaled approximately $269,000. He explained that the loans were in 
foreclosure mediation because his ex-wife had not made a payment since July 2009. 
However, he had signed a quitclaim deed relinquishing his interest in the home. Applicant 
listed delinquent credit card debt totaling approximately $34,000 in his name or held jointly 
with his ex-wife;
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 a $1,600 line of credit; and a $10,000 credit card debt of his spouse on 
which he was an authorized user. Applicant indicated that he was in the process of filing for 
bankruptcy around February 2012 to resolve the debts. He added that his student loans 
were currently deferred because of his financial difficulties. (GE 1.) 
 
As of February 11, 2012, Applicant had several delinquent consumer credit 
accounts on his credit record: 
 
 A Visa card account opened individually in January 2003 had been 
charged off in the amount of $8,870 and sold in August 2010 (SOR 
1.b). 
 
 A Visa card account opened individually in October 2005 was in 
collection with a past-due balance of $6,405 with no payments after 
January 2010 (SOR 1.c). 
 
 A MasterCard account opened individually in June 2007 was in 
collection with a $5,729 balance as of September 2010 with no 
payments after January 2010 (SOR 1.d). 
 
 A retail charge account opened in January 1995 was placed for 
collection in the amount of $3,089 in October 2010 with no payments 
since January 2010 (SOR 1.e). As of January 2012, the assignee was 
reporting a $3,393 balance.  
 
 The home equity loan opened in July 2007 had been charged off in 
the amount of $89,991 and was in collection as of March 2011 with no 
payments after October 2010 (SOR 1.g). 
 
Applicant was listed as an authorized user on three other charge accounts with respective 
collection balances of $7,212 (on e-QIP as $8,500), $5,933 (not on e-QIP), and $10,722 
                                                 
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Applicant included a $2,500 MasterCard debt. The account was reportedly closed and current as of June 
2004. (GE 4.) It is unclear whether Applicant owes a balance on that account. Applicant also listed on his e-
QIP a delinquent Visa card debt of $8,500. His February 2012 credit report shows that he was an authorized 
user on that account. (GE 4.) 
 
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(on e-QIP as ex-wife’s $10,000 debt). Applicant’s student loan balances, totaling $37,642, 
were reportedly in deferment. They had been 180 days delinquent as recently as 
November 2011. (GE 4.) 
 
On April 12, 2012, Applicant was interviewed by an authorized investigator from the 
Office of Personnel Management (OPM) partially about his finances. He indicated that he 
first learned of the delinquent accounts in July 2010, when he checked his credit. 
Moreover, he had direct deposit of his pay and he never saw the household bills, which 
were handled by his ex-wife during their marriage. Applicant surmised that his ex-wife had 
bought clothing, shoes, and expensive handbags rather than paid their bills. Applicant 
expressed his intent to file for bankruptcy at some future date. He indicated that the 
lenders holding the mortgage and home equity loans on his marital home were pursuing 
his ex-wife for the debts because he had quitclaimed his interest to her. (GE 5.) 
 
Applicant consulted with a lawyer in 2012 about filing for bankruptcy, but he could 
not afford the quoted fee. (Tr. 50, 55.) He made no effort to resolve his delinquent credit 
card accounts at that time. (Tr. 50.) Between 2009 and 2013, Applicant incurred about 
$26,000 in legal fees related to his divorce. He worked overtime to pay the fees and also 
borrowed from his 401(k) and a savings plan account. (Tr. 51-52, 73.) Applicant is repaying 
the loans at $64 and $34-$35 per week. At his security clearance hearing, he did not recall 
the amount remaining to be paid on the two loans. (Tr. 63.) Sometime in 2013, a lawsuit 
was filed against Applicant to recover the balance of the home equity loan (SOR 1.g). (AE 
I; Tr. 57, 76-77.) 
 
In February 2014, the agency collecting the debt in SOR 1.c offered to settle for 
75% of the original $6,366.49 balance if payment was made by March 14, 2014. The 
assignee offered to settle the $3,088.58 original balance of SOR 1.e for 70% if paid by 
March 7, 2014, or for 80% if paid by March 28, 2014. (AE C.) Applicant did not make the 
lump-sum payments. (GE 3.) 
 
As of May 2014, Equifax was reporting outstanding collection balances of $8,871 on 
SOR 1.b, $6,802 on SOR 1.c, and $3,089 on SOR 1.e; a charged-off credit card balance of 
$5,729 on SOR 1.d; a $47 telephone debt in collection since July 2013 (SOR 1.f). The 
lender of the home equity loan was reporting a zero balance on the account after a charge 
off in March 2011, although a lawsuit had been filed against Applicant in 2013 to collect the 
debt. (AE I.) The primary mortgage was still on Applicant’s credit report. His ex-wife was 
paying $1,102 a month on the loan after a modification. (GEs 3, 4.) Applicant reportedly 
owed $40,000 on the student loans opened between November 2003 and August 2007, 
although his credit report also shows $35,187 in outstanding federal student loans opened 
in 2012.
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 (GE 3.) Applicant’s student loans are currently deferred until July 2015. (Tr. 77.) 
                                                 
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Applicant’s performance evaluation for 2012 reflects that he earned 20 credits in 2012 toward his Master in 
Business Administration degree. (AE E.) It is unclear whether the two loans totaling $35,187 are new student 
loans for his master’s education or whether they are consolidations of his previous student loans. Applicant’s 
May 2014 credit report (GE 3) shows that Applicant will have to make payments totaling at least $400 per 
month on his student loans. If the federal loans opened in March 2012 and December 2012 are new loans for 
his graduate study and not consolidations of his old student loans, then he will be required to make another 
$403 in payments per month. (GE 3.) 
 
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Applicant was paying $256 per month for his car, which he financed in November 2009 
through a $13,053 loan. As of May 2014, his loan was current with a balance of $1,331, 
although it had been delinquent in September 2011. (GE 3.) 
 
Around August 2014, the creditor holding the debts in SOR 1.b, 1.c, and 1.e filed for 
judgments against Applicant to collect SOR 1.b and 1.c. In September 2014, Applicant 
made three payments of $46.25 each toward the debt in SOR 1.b, five payments totaling 
$143 toward the debt in SOR 1.c, and five $25 payments toward the debt in SOR 1.e. (AEs 
C, D.) The creditor unilaterally withdrew the court cases against Applicant. (AEs J, K.) 
Applicant testified that he paid $47.75 by debit on September 2, 2014, to resolve the 
telephone debt in SOR 1.f. (Tr. 59-60.) Available bank records (AE D) do not corroborate 
the payment, but it is such a minor amount that it likely has been paid. As of October 2014, 
Applicant had not attempted to resolve the credit card debt in SOR 1.d. (Tr. 61.) Any 
correspondence for that account continued to be sent to his marital address. (Tr. 78.) 
 
On October 6, 2014, Applicant paid $1,150 to an attorney to file a Chapter 7 
bankruptcy for him. (AE G.) He borrowed $2,000 from a friend to cover the cost. (Tr. 73-
74.) He is required to repay the private loan when he is financially able to do so. (Tr. 74.) 
Applicant stopped his payments on the debts in SOR 1.b, 1.c, and 1.e because of the 
pending bankruptcy. (Tr. 57.) Applicant completed the financial counseling required for a 
bankruptcy filing on October 9, 2014. (AE G.) On October 14, 2014, he filed a Chapter 7 
bankruptcy petition. The filing of the petition stayed a lawsuit pending against him to collect 
the home equity loan on the marital home. (AEs H, I; Tr. 56.) Listed creditors have until 
January 20, 2015, to object to a discharge. (AE H.) Applicant did not present the schedules 
for my review, although his primary reason for filing bankruptcy was to alleviate the 
financial burden of the home equity loan. (Tr. 83.) 
 
Applicant believes he owes no delinquent federal taxes, although he may owe state 
taxes for tax year 2011. (Tr. 64.) Applicant thought he had filed his state income tax return 
for tax year 2011 but learned in June 2014 that the state had no record of a filing. His state 
income tax refund for tax year 2013 was taken and applied to taxes owed for 2011. He 
received a federal income tax refund of $8,000 for tax year 2013. He apparently used the 
funds to catch up on bills (i.e., heating oil, car repairs), although he did not provide any 
documentation showing that the entire amount went toward debts. Applicant has requested 
a copy of his 2011 federal tax return from the IRS so that he can file his missing state 
return. (Tr. 65-69.) 
 
Applicant no longer uses any credit cards. (Tr. 73.) As of October 14, 2014, he had 
$100 in his savings account, which is the minimum required to maintain the account. (Tr. 
84.) Applicant has not been delinquent on his child support and alimony payments. As of 
October 2014, he was current on his rent and utility payments. (Tr. 70.) He paid off his car 
loan and received the vehicle title in early October 2014. (Tr. 77.) 
 
Applicant works overtime when it is available if family obligations do not conflict. (Tr. 
72.) Applicant and his ex-wife share custody of their children. He has his children every 
other weekend and every Wednesday to Friday (AE B) and incurs extra expenses of $150 
 
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to $200 per week for their care. For the past ten years, Applicant has also paid half of his 
daughter’s gymnastics fees at $158 a month. (Tr. 80.) 
 
Character reference letters (AE F), Applicant’s work performance evaluations (AE 
E), and the testimony of Applicant’s manager (Tr. 88-98) attest that he is a valuable 
employee with a strong work ethic. Applicant has committed no security violations. Nor has 
he been reprimanded or disciplined for his work performance. (Tr. 88.) Applicant recently 
had to step up and take on a leadership role with little notice. Applicant has continued to be 
one of his manager’s top performers. (Tr. 89.) Applicant has worked many weekends to 
ensure a quality product on time for the U.S. military customer. (Tr. 95-96.) Applicant has 
not asked his manager for any financial advice, but he has advised his manager that his 
credit record is not in good shape. (Tr. 98.) His manager has no reservations about 
Applicant holding a security clearance. (Tr. 98-99.) 
 
Policies 
 
The U.S. Supreme Court has recognized the substantial discretion the Executive 
Branch has in regulating access to information pertaining to national security,  emphasizing 
that “no one has a ‘right’ to a security clearance.” Department of the Navy v. Egan, 484 
U.S. 518, 528 (1988). 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 required to 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 overall 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 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 
 
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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 about 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 about 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 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. 
 
 As of his divorce in June 2011, Applicant was legally liable to repay approximately 
$24,093 in delinquent credit card debt on four accounts. As of May 2014, the credit card 
balances had accrued to $24,491. The mortgage on Applicant and his ex-wife’s marital 
residence went into foreclosure mediation, but it did not resolve the outstanding home 
equity loan, which was later charged off in March 2011 for $89,991. As of September 2014, 
Applicant was being pursued in court for the debt. He also owed a $47 telephone debt in 
collection since July 2013. Two disqualifying conditions under AG ¶ 19 apply: 
 
(a) inability or unwillingness to satisfy debts; and 
 
(c) a history of not meeting financial obligations. 
 
Concerning the mitigating conditions, AG ¶ 20(a), “the behavior happened so long 
ago, was so infrequent, or occurred under circumstances that it is unlikely to recur and 
does not cast doubt on the individual’s current, reliability, or good judgment,” applies only in 
that the consumer credit debts were incurred during his marriage, which ended in June 
2011. However, Applicant’s failure to address the debts before September 2014 is recent 
evidence of questionable financial judgment that is not mitigated under AG ¶ 20(a). 
 
Applicant’s unrebutted testimony is that his ex-wife incurred the credit card debts 
during his marriage and that she spent his tuition reimbursements on consumer items for 
herself and their children. If so, Applicant still had an obligation to monitor her use of his 
credit and he failed in that regard. Yet, his divorce is a circumstance that implicates 
mitigating condition AG ¶ 20(b): 
 
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(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. 
 
Applicant incurred substantial costs to maintain a separate residence (i.e., housing, food, 
and household items), to pay a divorce attorney, and to support his ex-wife and children. 
Between 2009 and 2013, he paid his divorce lawyer $26,000. After his divorce, his weekly 
support payments dropped from $600 to $475, but he still had to cover the medical 
insurance costs for his dependents. Applicant’s divorce negatively affected his finances. 
 
 On the other hand, AG ¶ 20(b) also requires that an individual act responsibly under 
the circumstances, and Applicant was not proactive in addressing known debts. Applicant 
learned about the credit card debts around July 2010. He did not follow through on his plan 
to file for bankruptcy in February 2012 because he could not afford the attorney’s fees. 
There is no evidence that he tried to find a more affordable attorney or that he tried to 
negotiate repayment arrangements with his creditors until September 2014, when he was 
faced with the potential loss of his security clearance and with collection actions in court. 
Applicant received a federal income tax refund of $8,000 in 2014, which he explained went 
toward bills, such as for heating and car repairs, although he provided no documentation to 
corroborate that the entire $8,000 went toward existing bills. Around that time, his support 
obligation for his ex-wife and children was lowered by $100 a week because of his ex-
wife’s part-time work. It is unclear where the extra funds went. Applicant owes student 
loans, although the evidence shows that in recent years, they have been either delinquent 
or deferred. Applicant has paid $158 per month for the last ten years toward his daughter’s 
gymnastics fees, but neither those fees nor his work obligations justify or mitigate his 
inattention until very recently to his $24,000 plus in delinquent consumer credit card debt. 
Applicant’s explanation for not contacting the lender in SOR 1.d is that correspondence 
about the debt was mailed to his marital home, and he had changed his address. However, 
presumably his ex-wife would have received mail sent to him at that address since she still 
lives in the home. It is possible that she did not inform him about any correspondence. 
Even so, Applicant should have kept his creditors apprised of his current address. At least 
with respect to the creditor in SOR 1.d, he did not do so. 
 
 Mitigating conditions 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,” and AG ¶ 20(d), “the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts,” are implicated because of Applicant’s October 14, 
2014 Chapter 7 bankruptcy filing. As required for a bankruptcy discharge, Applicant 
attended an approved financial training program on October 9, 2014, so he satisfies the 
counseling component of AG ¶ 20(c). The concept of good faith under AG ¶ 20(d) requires 
a showing that a person acts in a way that shows reasonableness or adherence to duty or 
obligation. Reliance on a legally available option such as a Chapter 7 bankruptcy does not 
carry the same mitigating weight as repayment arrangements or negotiated settlements. 
Creditors covered by a bankruptcy discharge are left without a legal remedy. That being 
 
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said, absent fraud, all unsecured, non-priority debts are dischargeable in a Chapter 7 
bankruptcy. However, the bankruptcy schedules were not submitted for the record, so it is 
unclear which debts are included. The creditors have until January 20, 2015, to file any 
objections to a discharge, so his bankruptcy is still pending. 
 
 Assuming that Applicant is granted a discharge of those debts in the SOR, concerns 
persist about his financial situation. Despite gross annual income of $108,000, Applicant 
had to borrow the money to pay his bankruptcy attorney. As of September 30, 2014, 
Applicant had $1,182.04 in checking deposits and $100 in a savings account. Most of 
those assets went to his bankruptcy attorney’s fee of $1,150, which was paid on October 6, 
2014. In Applicant’s favor, he is not incurring any new delinquent debt. There is no set 
repayment schedule for the $2,000 personal loan at this point, and he would no longer 
have to make payments on the debts in SOR 1.b, 1.c, and 1.e if the debts are discharged. 
In September 2014, Applicant paid between $96 and $105 per week toward those debts. In 
addition, he recently paid off his car loan, so he should have another $256 per month in 
income for other expenses. However, Applicant’s student loans come out of deferment in 
July 2015, and available credit record information shows that he will have to pay $400 a 
month, if not more, toward his student loans. With his bankruptcy still pending and the fact 
that he had to borrow from a friend to pay his bankruptcy attorney, it would be premature to 
conclude that his financial problems are safely behind him. 
 
Whole-Person Concept 
 
Under the whole-person concept, the administrative judge must consider the totality 
of an applicant’s conduct and all relevant circumstances in light of the nine adjudicative 
process factors in AG ¶ 2(a).
3
 
 
Applicant trusted his ex-wife to handle their debts during their marriage with little to 
no involvement or oversight on his part. He is now dealing with the adverse consequences 
of that decision through a Chapter 7 bankruptcy filed on the same day as his security 
clearance hearing. The pending nature of his bankruptcy does not necessarily bar a 
favorable security decision. At the same time, he has been consistently employed by a 
defense contractor since July 2000. Applicant indicated on his e-QIP that he planned to file 
for bankruptcy in February 2012 to resolve the debts that stem from his divorce. His 
inattention to his debts until September 2014 is inconsistent with the sound judgment that 
must be demanded of him, who holds a top-secret security clearance. It is well settled that 
once a concern arises regarding an applicant’s security clearance eligibility, there is a 
strong presumption against the grant or renewal of a security clearance. See Dorfmont v. 
                                                 
3 
The factors under AG ¶ 2(a) are as follows: 
 
(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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Brown, 913 F. 2d 1399, 1401 (9
th
 Cir. 1990.). Indications of recent financial stress, such as 
his student loan delinquency in November 2013 and December 2013, the private loan in 
September 2014 to file for bankruptcy, and his $8,000 federal tax refund going to bills like 
home heating oil, make it difficult to conclude that his financial problems are behind him.  
 
Applicant may be a good candidate for a security clearance in the future should he 
be able to show that his old delinquencies have been discharged in bankruptcy or 
otherwise resolved, and that his financial situation has improved to where he can be 
counted on to pay his current obligations on time. Based on the record before me and the 
adjudicative guidelines that I am required to consider, I am unable to conclude that it is 
clearly consistent with the national interest to continue Applicant’s security clearance 
eligibility at this time. 
 
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:  AGAINST APPLICANT 
 
Subparagraph 1.a:  Withdrawn 
Subparagraph 1.b:  Against Applicant 
Subparagraph 1.c:  Against Applicant 
Subparagraph 1.d:  Against Applicant 
Subparagraph 1.e:  Against Applicant 
Subparagraph 1.f:  For Applicant 
Subparagraph 1.g:  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 or continue Applicant’s eligibility for a 
security clearance. Eligibility for access to classified information is denied. 
 
 
________________________ 
Elizabeth M. Matchinski 
Administrative Judge