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                           DEPARTMENT OF DEFENSE
         DEFENSE OFFICE OF HEARINGS AND APPEALS
          
            
In the matter of: )
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[NAME REDACTED] )       ISCR Case No. 15-00682
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Applicant for Security Clearance )
Appearances
For Government: Adrienne M. Strzelczyk, Esq., Department Counsel
For Applicant: Pro se
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Decision
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MALONE, Matthew E., Administrative Judge:
Applicant’s long history of multiple bankruptcy petitions precludes a finding that
he has resolved his debts. He did not mitigate the security concerns raised by his
financial problems. His request for a security clearance is denied.
Statement of the Case
On August 31, 2012, Applicant submitted an Electronic Questionnaire for
Investigations Processing (EQIP) to obtain or renew eligibility for a security clearance
required for his employment with a defense contractor. Based on the results of the
ensuing background investigation, Department of Defense (DOD) adjudicators could not
  Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended.1
 The adjudicative guidelines were implemented by the Department of Defense on September 1, 2006. These2
guidelines were published in the Federal Register and codified through 32 C.F.R. § 154, Appendix H (2006).
 At Department Counsel’s request, I have included, as Hearing Exhibit (Hx.) 1, a copy of the December 2,3
2015 letter that forwarded Gx. 1- 5 to Applicant, in accordance with Directive Section E3.1.13.
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determine that it is clearly consistent with the national interest for Applicant to continue
to receive a security clearance.  1
On August 17, 2015, DOD issued a Statement of Reasons (SOR) alleging facts
which raise security concerns addressed under the adjudicative guidelines  for financial2
considerations (Guideline F). Applicant timely responded to the SOR (Answer) and
requested a hearing. The case was assigned to me on January 8, 2016, and I convened
the requested hearing on February 10, 2015. The parties appeared as scheduled.
Department Counsel presented Government Exhibits (Gx.) 1 - 9.  Applicant testified and3
presented Applicant’s Exhibits (Ax.) A - C. All exhibits were admitted without objection.
A transcript of the hearing (Tr.) was received on February 22, 2016.
Findings of Fact
Under Guideline F, the Government alleged that between 1995 and 2012,
Applicant filed five Chapter 13 bankruptcy petitions (SOR 1.a - 1.e); and that, as of the
date of the SOR, he owed $288,114 for 24 past-due or delinquent debts (SOR 1.f -
1.cc). In response to the SOR, Applicant admitted, with explanations, all of the
allegations. (Answer; Tr. 14 - 19) In addition to the facts established through Applicant’s
admissions, I make the following findings of fact.
Applicant is 54 years old and works as an electronic equipment technician  for a
defense contractor, a job for which he was hired in June 2010. From October 1985 until
October 2005, he served as in the United States Navy, retiring as a first class petty
officer. Applicant had hoped to continue his Navy career beyond 2005. However, he
was unable to advance beyond his final rank because, although he had passed all of
the advancement exams, the aviation warfare skill set in which he worked was
overcrowded, making it nearly impossible to advance to chief petty officer. Under the
Navy’s high-year tenure policy, Applicant had to retire rather than stay on as a first class
petty officer. Applicant held a security clearance throughout his Navy career. (Gx. 1; Gx.
2; Tr. 42, 65)
Applicant and his wife have been married since June 1994. When they married,
Applicant did not have any financial problems and was able to pay his debts on time.
However, his wife came to the marriage with significant personal debt from her previous
marriage. In July 1995, after struggling to meet some of his regular obligations while
paying down his wife’s debts, Applicant filed for Chapter 13 bankruptcy protection and
started making monthly payments through an approved wage earner’s plan. However,
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when the monthly payment increased to accommodate modifications to the petition,
Applicant was unable to keep up. In March 1997, Applicant’s bankruptcy was converted
to a Chapter 7 liquidation, which resulted in a discharge of his debts in July 1997. (Gx.
1; Gx. 2; Gx. 5; Tr. 42 - 43, 45)
In December 2004, while still on active duty, Applicant filed a second Chapter 13
bankruptcy petition. He took this action after falling behind on his truck payments and
after his wife, who has had medical problems over the years, was unable to qualify for
disability benefits. After retiring from the Navy in October 2005, Applicant was unable to
find work that paid enough to meet his regular financial obligations. He was increasingly
unable to make his Chapter 13 payments and converted the petition to a Chapter 7
liquidation petition in July 2005. His debts were discharged in October 2005. (Gx. 2; Gx.
6; Tr. 42 - 44, 46 - 49)
Applicant was unemployed until August 2006, when he found part-time work as a
courier. In May 2007, he also started working full time for a landscaping company. He
was laid off from that job in March 2009, but continued his part-time job until February
2010, when he was hired by a staffing agency for the position he now occupies as a
direct employee of the defense contractor sponsoring his request for clearance.
(Answer; Gx. 1; Gx. 2; Tr. 66 - 69)
After Applicant was laid off in 2009, he fell behind on his mortgage and other
obligations. While trying unsuccessfully to work with his mortgage lender for a mortgage
modification, Applicant filed for Chapter 13 bankruptcy protection in November 2009.
That petition, alleged at SOR 1.c and still in place through various modifications and
dismissals alleged at SOR 1.d and 1.e, was dismissed in May 2011 for failure to make
payments required under the plan. That dismissal was vacated in September 2011 and
a new, modified Chapter 13 petition was approved. The new petition addressed the
same debts declared in the November 2009 petition. Applicant resumed making the
required monthly payments. (Gx. 1; Gx. 2; Gx. 6; Gx. 7; Tr. 51 - 56)
In July 2012, Applicant’s September 2011 Chapter 13 petition was dismissed for
failure to make required payments. That petition was revived in August 2012, only to be
dismissed again in June 2015 for failure to make payments. In August 2015, the
dismissal of Applicant’s August 2012 petition was vacated and Applicant is making $450
monthly payments through a wage earner’s plan that addresses, inter alia, the debts
alleged at SOR 1.f - 1.z, 1.bb and 1.cc. (Gx. 9; Ax. A - C)
The debt at SOR 1.aa represents Applicant’s mortgage, which was removed from
the latest modification of the original 2009 petition after Applicant was ultimately
unsuccessful in obtain a modification to the mortgage that was a condition of an August
2013 order granting Applicant’s request to modify the August 2012 version of his
bankruptcy petition. Applicant’s home mortgage has since gone to foreclosure. Aside
from decisions related to Applicant’s attempts to salvage his mortgage, Applicant
averred that the dismissals and re-filings of his bankruptcy petitions were due to
 See Directive, 6.3.4
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changes in, and alleged malfeasance by, the bankruptcy lawyers he retained. Another
reason for the revision to Applicant’s 2012 petition was the perfection of a lien against
him by a homeowners association (HOA) for $1,200 in unpaid HOA dues. He made six
payments on this debt outside the Chapter 13 plan between June and November 2015.
(Answer; Gx. 2; Gx. 9;  Ax. A - C; Tr. 43 - 44, 49 - 51, 57 - 58, 71 - 73)
Also complicating Applicant’s bankruptcy cases have been debts for unpaid taxes
arising from miscalculations of his federal tax returns after he retired from the Navy.
Taxes were not being withheld from his retired pay resulting in a tax bill he was unable
to pay. Applicant also miscalculated the tax reporting requirements of wife’s disability
income and incurred another tax debt. His past-due tax obligations are included in his
Chapter 13 repayments. (Gx. 2; Gx. 9; Tr. 55 - 56)
Applicant has been making monthly payments as required by the current version
of his Chapter 13 petition, through which his debts will be satisfied in September 2017.
Applicant characterized his current finances as sound, in that, he has not accrued new
delinquent debts since he has worked for his current employer; he and his wife live
frugally and well within their means, and he has about $1,500 remaining each month
after making his Chapter 13 payment and meeting all of his regular monthly expenses.
Other than the financial counseling associated with bankruptcy filings, he has not
obtained financial counseling or other professional financial assistance. (Ax. B; Tr. 59 -
61, 74 - 78)
Policies
Each security clearance decision must be a fair, impartial, and commonsense
determination based on examination of all available relevant and material information,4
and consideration of the pertinent criteria and adjudication policy in the adjudicative
guidelines (AG). Decisions must also reflect consideration of the factors listed in ¶ 2(a)
of the guidelines. Commonly referred to as the “whole-person” concept, those factors
are:
(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. 
The presence or absence of a disqualifying or mitigating condition is not
determinative of a conclusion for or against an applicant. However, specific applicable
 See Department of the Navy v. Egan, 484 U.S. 518 (1988).5
 See Egan, 484 U.S. at 528, 531.6
 See Egan; AG ¶ 2(b).7
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guidelines should be followed whenever a case can be measured against them as they
represent policy guidance governing the grant or denial of access to classified
information.
A security clearance decision is intended only to resolve whether it is clearly
consistent with the national interest  for an applicant to either receive or continue to5
have access to classified information. The Government bears the initial burden of
producing admissible information on which it based the preliminary decision to deny or
revoke a security clearance for an applicant. Additionally, the Government must be able
to prove controverted facts alleged in the SOR. If the Government meets its burden, it
then falls to the applicant to refute, extenuate or mitigate the Government’s case.
Because no one has a “right” to a security clearance, an applicant bears a heavy
burden of persuasion.  A person who has access to classified information enters into a6
fiduciary relationship with the Government based on trust and confidence. Thus, the
Government has a compelling interest in ensuring each applicant possesses the
requisite judgment, reliability and trustworthiness of one who will protect the national
interests as his or her own. The “clearly consistent with the national interest” standard
compels resolution of any reasonable doubt about an applicant’s suitability for access in
favor of the Government.7
Analysis
Financial Considerations
Available information is sufficient to support the SOR allegations under this
guideline. The facts established reasonably raise a security concern about Applicant’s
finances that is addressed, in relevant part, at AG ¶ 18, as follows:
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.
More specifically, this record supports application of the disqualifying conditions
at AG ¶ 19(a) (inability or unwillingness to satisfy debts) and AG ¶ 19(c) (a history of not
meeting financial obligations). For more than 20 years, Applicant’s finances have been
characterized by excessive debt that has been addressed only through multiple
bankruptcy petitions.
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I have also considered the following pertinent AG ¶ 20 mitigating conditions:
(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;
(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
(d) the individual initiated a good-faith effort to repay overdue creditors or
otherwise resolve debts.
The mitigating condition at AG ¶ 20(a) does not apply because Applicant is still in
bankruptcy and his debts have not yet been resolved. Application of AG ¶ 20(b) is
limited. Applicant experienced unforeseen events that impacted his financial health. His
military career ended, not abruptly, but certainly sooner than he had planned; and he
was unable to find employment for the better part of a year after retiring. However, his
financial problems pre-dated his retirement by at least ten years. Most recently,
Applicant was laid off in 2009 and only had part-time employment for almost a year. In
assessing whether Applicant acted responsibly under those circumstances, I conclude
he has not. Bankruptcy is a legitimate means of resolving indebtedness under certain
circumstances, but it should not to be used unless other avenues have been explored
and exhausted. This record shows that bankruptcy has been Applicant’s first and only
response to financial problems. I am mindful of the fact that the three bankruptcies
alleged in SOR 1.c - 1.e are more properly viewed as one action. Nonetheless,
altogether Applicant has resorted to bankruptcy protection three times in the last 20
years. His first two attempts to complete Chapter 13 repayment plans failed. For the last
seven years, he has been unable to complete a Chapter 13 repayment plan. Although
he is now engaged in a repayment plan with manageable payments, Applicant’s past
performance does not inspire confidence that he will actually complete this plan without
interruption. 
Applicant did not submit information to corroborate his claim that his current
finances are sound and his debts are under control. Nor has he sought professional
counseling or financial assistance not related to his bankruptcy petitions. Finally,
Applicant has not made good-faith efforts over the years to pay his debts. Rather than
contact his non-mortgage creditors directly to resolve his debts, he forced his creditors
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to comply with bankruptcy procedures to accept far less than what they are owed. AG
¶¶ 20(c) and 20(d) do not apply. 
In summary, Applicant has not, given his long bankruptcy history, established a
satisfactory track record of payments that supports a conclusion he will actually
complete his current repayment plan. On balance, he has failed to mitigate the security
concerns raised by his financial problems.
I also have evaluated this record in the context of the whole-person factors listed
in AG ¶ 2(a). Specifically, I have considered Applicant’s military service, as well as the
various difficulties he has encountered since he left the Navy. However, that information
is not sufficient to satisfy the doubts raised by the adverse information about his
finances. Because protection of the national interest is the principal focus of these
adjudications, any remaining doubts must be resolved in favor of the Government.
Formal Findings
Formal findings 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
Subparagraphs 1.a - 1.cc: Against Applicant
Conclusion
In light of all of the foregoing, it is not clearly consistent with the national interest
for Applicant to have access to classified information. Applicant’s request for a security
clearance is denied.
                                       
MATTHEW E. MALONE
Administrative Judge