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               DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
 
 
 
In the matter of:  ) 
 ) 
  Redacted   )    ISCR Case No. 14-03745 
   ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Eric H. Borgstrom, Esq., Department Counsel 
For Applicant: Pro se 
 
 
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Decision 
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MATCHINSKI, Elizabeth M., Administrative Judge: 
 
As of late June 2016, Applicant had paid $21,102 under a Chapter 13 bankruptcy 
plan confirmed in early February 2015. A $4,863 medical debt in collection had been 
cancelled by the creditor and reported by Applicant as income on his 2013 federal income 
tax return. While his bankruptcy will not be completed until mid-January 2020, his 
consistent payments provide adequate assurance that he will continue with his plan, 
provided he has the income. Clearance is granted. 
 
Statement of the Case 
 
 On November 30, 2015, 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 or continue security 
clearance eligibility for him. The DOD CAF took the action under Executive Order (EO) 
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 
 
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Determining Eligibility for Access to Classified Information (AG) effective within the DOD on 
September 1, 2006. 
 
On December 31, 2015, Applicant answered the SOR allegations and requested a 
hearing before an administrative judge from the Defense Office of Hearings and Appeals 
(DOHA). On April 22, 2016, the case was assigned to a DOHA administrative judge 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 May 23, 2016, the case was 
transferred to me because of my jurisdictional responsibilities. On May 31, 2016, I 
scheduled a hearing for July 11, 2016. 
 
I convened the hearing as scheduled. Six Government exhibits (GEs 1-6) and two 
Applicant exhibits (AEs A-B) were admitted into evidence without objection, and Applicant 
testified, as reflected in a transcript (Tr.) received on July 15, 2016. I held the record open 
for two weeks after the hearing for Applicant to supplement the record. On July 22, 2016, 
Applicant submitted by electronic mail two documents (AEs C-D) that I was unable to print. 
At my request, Applicant mailed copies on July 29, 2016. On August 2, 2016, I gave 
Department Counsel a deadline of August 12, 2016, for any comments. The deadline 
passed without any objection from the Government. AEs C and D were admitted into the 
record. 
 
Findings of Fact 
 
 The SOR alleges that, as of November 30, 2015, Applicant had a Chapter 13 
bankruptcy case pending (SOR ¶ 1.a), and he owed a medical collection debt of $4,863 
(SOR ¶ 1.b). In his response to the SOR, Applicant admitted the bankruptcy case filed in 
July 2014 to help him and his spouse satisfy their outstanding debt. He indicated that they 
were current on all payments under a confirmed plan. Applicant also admitted the medical 
collection debt, but added that he was “currently setting up a payment plan with them.” 
After considering the pleadings, exhibits, and transcript, I make the following findings of 
fact. 
 
 Applicant is a 40-year-old high school graduate, who started working for his present 
employer in March 2003 as a painter. He had served honorably in the National Guard from 
approximately September 1994 to October 2000. He has held a DOD secret clearance for 
his defense contractor duties since March 2004. (GE 1; Tr. 24-25.)  
 
 Applicant and his spouse married in July 2002. They have two sons, now ages 7 
and 11. (GE 1.) In May 2004, he moved the family to another state for a three-year road 
job with his current employer. It did not work out as expected in that he was laid off in 
November 2006 because of a lack of work. They moved back to their previous locale. In 
January 2007, Applicant was recalled to work by the defense contractor. (GEs 1, 6; Tr. 24-
26.) 
 
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 After years of renting, Applicant and his spouse bought a home in September 2010.1 
(GE 1.) They obtained a mortgage loan of $219,000 solely on his income as she was 
unemployed. (GE 4; Tr. 24, 28.) In June 2011, Applicant transferred to a new job with his 
employer to avoid being laid off. He took a pay cut from $27 to $19 an hour, but he kept his 
health insurance for his family. (GEs 1, 2, 6; Tr. 20-29.) His spouse was unemployed until 
2013, when she began working for a landscaping company. (Tr. 20-21, 30.) It took two 
years for Applicant to regain his previous wage. (Tr. 20, 27.) 
 
 On December 18, 2013, Applicant completed and certified to the accuracy of a 
Questionnaire for National Security Positions (SF 86) to renew his security clearance 
eligibility. In response to financial record inquiries concerning delinquency involving routine 
accounts, Applicant listed only one debt: a credit charge of $5,000 in collection for dental 
services that he indicated he never received (SOR ¶ 1.b). (GE 1.) At his hearing, he 
elaborated that the dental provider ran a check of his credit and prequalified him for $5,000 
in planned dental work that he chose not to have done. He claimed to not have known that 
he had been charged for the services until the DOD advised him that the debt was on his 
credit report. (Tr. 31-32.) 
 
 As of January 15, 2014, Applicant and his spouse’s joint mortgage loan was 
$46,085 past due on a $246,146 balance with no payments since June 2011. (GE 4.) 
Applicant reportedly owed a $218 medical collection debt from June 2012. The dental debt 
from 2011 (SOR ¶ 1.b) was still on his credit record with a $4,863 balance as of November 
2013. (GEs 2, 4.) Other evidence shows that the account was charged off for $5,858 (GE 
2); that the creditor had cancelled debt of $4,006 on September 25, 2013 (AE B); and that 
Applicant and his spouse had reported the amount cancelled as income on their 2013 
federal income tax return.2 (AE D.) Applicant never disputed the charge with the creditor. 
(Tr. 54-55.) 
 
 On February 5, 2014, Applicant was interviewed by an authorized investigator for 
the Office of Personnel Management (OPM). He explained that he was behind on his 
mortgage loan due to repercussions from having been laid off from November 2006 to 
January 2007, although the evidence shows that he and his spouse did not buy their home 
until 2010. He was unable to provide any specific information about the mortgage loan 
because his spouse handles the bills. Concerning the dental debt previously disclosed, 
Applicant explained that he consulted a dentist in September 2011, and that he was 
charged $5,000 for dental services that he chose not to have done. He could not provide 
the current status of the debt, again because his spouse handles their finances, but he did 
not believe the debt had been resolved. Applicant indicated that he was able to pay his 
                                                 
1 Applicant was still living in the marital residence as of his hearing, but he and his spouse were in the process 
of a marital separation, and he indicated that he would be moving soon, likely into his parents’ home. (Tr. 41, 
45.) He expected that he would not be required to pay rent. (Tr. 45.) On August 2, 2016, he confirmed that he 
had a new address, which is the same address listed for his parents on his security clearance application.  
  
2 The debt was still on Applicant’s credit report as of March 2016 (GE 2), but the information was from 2013. 
The Government stipulated at the hearing that the debt in SOR ¶ 1.b was the same account that was 
cancelled by the creditor in 2013. (Tr. 19.)  
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current bills in part because he was working third shift and his spouse was working two 
jobs. (GE 6.) 
 
 On July 31, 2014, Applicant and his spouse filed a joint bankruptcy petition under 
Chapter 13 to save their home from foreclosure. (GE 5; Tr. 22-23.) They had completed 
the credit counseling required for filing. On August 3, 2014, they filed a Chapter 13 wage-
earner’s plan. They made five payments of $1,147 between September 3, 2014, and 
January 16, 2015. On January 29, 2015, they filed an amended plan, which was confirmed 
on February 3, 2015, to address their delinquent mortgage. (GE 5.) Applicant testified that 
their mortgage arrearage is the only debt included in the bankruptcy. (Tr. 22, 40.) Neither 
their bankruptcy petition nor their original or amended plans were made available for 
review. However, court docket and accounting information for the bankruptcy show that 
under the amended plan, Applicant and his spouse are required to pay $216 per week for 
60 months through payroll deduction from Applicant’s pay. (GE 5; AE C; Tr. 43.) The 
bankruptcy trustee’s record of accounting shows that, as of June 28, 2016, they had paid 
$21,103 of the $61,136 to be paid into the bankruptcy by January 18, 2020.3 Applicant 
missed four weeks of payments after he broke his leg in a dirt bike accident in early July 
2015 and was out of work on short-term disability. He and his spouse paid $865 on August 
10, 2015, to bring their payments current. (AE A; Tr. 36-37.) While on short-term disability 
through October 2015, Applicant was paid 40% of his salary. (Tr. 37.) His spouse was fully 
employed during that time. (Tr. 38.) 
 
 In approximately May 2016, Applicant and his spouse removed him from the 
mortgage.4 He and his spouse were in the process of a marital separation, although neither 
he nor his spouse had hired a divorce attorney. They had a separation agreement under 
which he agreed to pay child support at $150 a week, to keep their sons on his health 
insurance, and to cover half of the cost of his sons’ activities.  Applicant’s spouse intends 
to keep the house and take responsibility for the costs associated with the home, including 
the monthly mortgage payments. (Tr. 41-43, 56.) However, the bankruptcy payments would 
continue to be deducted from Applicant’s pay. (Tr. 41-43.) As of his hearing in July 2016, 
Applicant had yet to inform the bankruptcy court about his and his spouse’s impending 
marital separation. (Tr. 50.) 
 
 As of July 2016, Applicant’s hourly wage was $31 (AE C), after a recent increase of 
$2 an hour because he had become nuclear qualified. (Tr. 38.) His take-home pay was 
$531 per week. (AE C.) He did not have any credit cards. He had opened a new bank 
account from which he plans to pay his child support by check. He had $800 in that 
account as of his hearing. (Tr. 44-47.) He had $46,000 in a 401(k) account through his 
employer. He is repaying two loans from his 401(k). (AE C.) He obtained a $5,000 loan to 
                                                 
3 There is no evidence that Applicant or his spouse owed substantial credit card debt. (GE 2; Tr. 40.) 
 
4 The mortgage loan delinquency was not on Applicant’s Equifax credit reports of February 2015 (GE 3) and 
March 2016 (GE 2), well before he claims that he was removed from the loan. However, only Trans Union was 
reporting the mortgage on his credit as of January 2014 (GE 4), which could explain why it is not on the 
Equifax reports.  
 
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file for bankruptcy. He obtained his second loan for $2,000 to cover household expenses 
when he was on short-term disability in 2015. (Tr. 47-52.) 
 
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 
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 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 
 
 The security concerns about financial considerations are 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. 
 
 The evidence establishes that Applicant and his now estranged spouse filed for a 
Chapter 13 bankruptcy in July 2014 to save their home from foreclosure. As of January 
2014, their mortgage loan was $46,085 past due with no payments since June 2011. The 
SOR alleges the bankruptcy, which is a remedial action, rather than the mortgage default. 
However, Applicant would not have filed for bankruptcy but for his mortgage delinquency. 
 
 Concerning the credit charge in SOR ¶ 1.b, available credit reports show that a 
credit account was opened in March 2011. As of November 2013, the account was 
reportedly $457 past due on a balance of $4,863 after the account had been charged off 
for $5,858. The Appeal Board has indicated that adverse information from a credit report 
can normally meet the substantial evidence standard for the Government’s burden of 
alleging delinquent debt. See ISCR Case No. 14-03612 at 3 (App. Bd. Aug. 25, 2015). 
Applicant has repeatedly contended that he did not proceed with the planned dental 
services that gave rise to the debt, although he never disputed the debt with the creditor. 
The evidence shows that the creditor cancelled $4,006 of debt in September 2013, and 
Applicant and his spouse reported the $4,006 in cancelled debt on their income tax return 
for tax year 2013. Applicant discrepantly indicated in response to the SOR that he was 
“currently setting up a payment plan” with the creditor. While he may not have recalled that 
he reported the cancelled debt as income on his income tax return in 2013, he did not deny 
the debt’s legitimacy when he answered the SOR. The circumstances fall considerably 
short of disproving the legitimacy of the debt. Disqualifying conditions AG ¶ 19(a), “inability 
or unwillingness to satisfy debts,” and AG ¶ 19(c), “a history of not meeting financial 
obligations,” apply because of the mortgage delinquency that led to the bankruptcy filing 
and the credit charge that was neither paid nor disputed with the creditor. 
 
 Mitigating condition AG ¶ 20(a), “the behavior happened so long ago, was so 
infrequent, or occurred under such circumstances that it is unlikely to recur and does not 
cast doubt on the individual’s current reliability, trustworthiness, or good judgment,” is 
difficult to fully establish, despite the fact that the initial defaults occurred in 2011. He made 
no payments toward his mortgage loan in the three years preceding his bankruptcy filing. 
He took no steps to dispute or alternatively to pay the credit card debt in the two years 
preceding its cancellation by the creditor. His disregard of the financial obligations was a 
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course of conduct inconsistent with the sound judgment expected of persons holding 
security clearance eligibility. 
 
 Applicant has a case for partial mitigation under AG ¶ 20(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 
suffered an unexpected loss of income when he accepted a job transfer at lower pay to 
retain his employment with a defense contractor in approximately June 2011. His spouse 
was unemployed at that time. It took him two years to achieve his previous pay level. 
 
 Even if Applicant’s financial problems arose in whole or in part to circumstances 
outside of his control, I must still consider whether Applicant has since acted in a 
reasonable manner when dealing with those financial difficulties. See e.g., ISCR Case No. 
05-11366 at 4 n.9 (App. Bd. Jan 12, 2007). AG ¶ 20(b) requires that an applicant act 
responsibly to address his debts. Applicant and his spouse filed for a Chapter 13 
bankruptcy well before the SOR was issued to address their mortgage loan delinquency, 
although not before they were under threat of foreclosure. It is unclear whether they 
attempted other avenues, such as a loan modification, before they filed for bankruptcy. 
However, a Chapter 13 bankruptcy filing is a legal means to address debt. Applicant has 
shown that he acted reasonably by following through with the bankruptcy and making the 
payments required. Although he and his spouse missed a month of payments when his 
income was reduced on short-term disability in the summer of 2015, they brought their 
payments current on August 10, 2015. Applicant’s failure to take responsible action to 
either dispute or arrange for repayment of the credit card delinquency in SOR ¶ 1.b 
precludes full mitigation under AG ¶ 20(b), however. 
 
 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,” 
applies in that Applicant has been making consistent payments in bankruptcy to address 
his and his spouse’s mortgage loan arrearage. They completed the credit counseling 
required of a bankruptcy filing.  AG ¶ 20(c) also applies more generally in that Applicant 
has incurred no new delinquent debts. The only outstanding debt on his Equifax credit 
reports in recent years has been the credit card debt in SOR ¶ 1.b, and that debt was 
cancelled by the creditor in 2013 and reported as income by Applicant and his spouse on 
their joint tax return. 
 
 Concerning AG ¶ 20(d), “the individual initiated a good-faith effort to repay overdue 
creditors or otherwise resolve debts,” the Appeal Board has explained what constitutes a 
good-faith effort to repay creditors or otherwise resolve debts: 
 
In order to qualify for application of [the ‘’good-faith” mitigating condition], an 
applicant must present evidence showing either a good-faith effort to repay 
overdue creditors or some other good-faith action aimed at resolving the 
applicant’s debts. The Directive does not define the term ‘good-faith.’ 
However, the Board has indicated that the concept of good-faith ‘requires a 
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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 or she relied on a legally available option 
(such as bankruptcy) in order to claim the benefit of [the “good-faith” 
mitigating condition]. 
 
(internal citation and footnote omitted) ISCR Case No. 02-30304 at 3 (App. Bd. Apr. 20, 
2004) (quoting ISCR Case No. 99-9020 at 5-6 (App. Bd. Jun. 4, 2001)). Even so, in 
contrast to a Chapter 7 bankruptcy, a Chapter 13 bankruptcy requires a debtor to make 
some payments according to his or her income. The Appeal Board has held that, given 
sufficient evidence, a Chapter 13 bankruptcy can be part of a pattern of mitigation. See 
ISCR Case No. 12-06592 (App. Bd. Nov. 13, 2015), citing ISCR Case No. 07-06482 (App. 
Bd. May 21, 2008) (“There is no requirement that a plan provide for payment on all 
outstanding debts simultaneously. Rather, a reasonable plan (and concomitant conduct) 
may provide for the payment of such debts one at a time.”). 
 
 AG ¶ 20(d) also has no applicability to the credit card debt that was charged off and 
then cancelled. As for Applicant’s challenge to the legitimacy of the debt on the basis that 
he did not receive the services, he did not present any documentation that would satisfy 
AG ¶ 20(e), which provides: 
 
(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. 
 
Nevertheless, given the debt’s cancellation, he is not likely to be pursued for any balance 
that may remain on the account. 
 
 Concerning Applicant’s financial situation going forward, he had 43 months of 
payments remaining to complete his bankruptcy plan as of late June 2013. His pending 
child support obligation of $150 per week could strain his finances, but available credit 
reports do not show a history of significant delinquency other than the mortgage and the 
credit card in SOR ¶ 1.b. He has no outstanding consumer credit loans, such as a car loan. 
He testified that he was recently removed from the mortgage loan because his estranged 
spouse is going to keep the home in their divorce and take responsibility for the mortgage 
payments. He has little experience handling his personal financial matters because his 
spouse paid the household bills during their marriage. The $40,000 yet to be paid through 
the bankruptcy is a substantial amount, but the plan has been established for some time. 
The financial considerations concerns are adequately mitigated. 
 
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 
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process factors in AG ¶ 2(a).5 The analysis under Guideline F is incorporated in my whole-
person analysis. Some of the factors in AG ¶ 2(a) were addressed under that guideline, but 
some warrant additional comment. 
 
 A determination of any 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. Applicant is a longtime defense contractor employee, who 
transferred to a position that was not as well-paying to avoid being laid off in 2011. It 
appears that he and his spouse used the income that would have gone to their mortgage 
payments to instead cover their living expenses. Once Applicant’s income stabilized to its 
previous level, and with his spouse employed, they filed for a Chapter 13 bankruptcy to 
address their mortgage loan delinquency.  He presented a record of consistent payments 
since September 2014.  
 
 Applicant presented no evidence about his work performance, although his 
continued employment suggests it has been at an acceptable level. His hourly wage was 
recently increased by $2 because he became nuclear qualified, which shows some 
commitment to his job. He did not present a budget detailing his expenses in light of his 
impending divorce, but he has no history of financial extravagance. He is unlikely to 
jeopardize his employment for the income he needs for his own support and to pay his 
child support. For the reasons noted above, I find that it is clearly consistent with the 
national interest to continue Applicant’s security clearance eligibility. 
 
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 
                                                 
5 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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Conclusion 
 
In light of all of the circumstances presented by the record in this case, it is clearly 
consistent with the national interest to continue Applicant’s eligibility for a security 
clearance. Eligibility for access to classified information is granted. 
 
 
_____________________ 
Elizabeth M. Matchinski 
Administrative Judge