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                DEPARTMENT OF DEFENSE 
     DEFENSE OFFICE OF HEARINGS AND APPEALS 
 
 
 
 
In the matter of:  ) 
 ) 
  REDACTED  )   ISCR Case No. 17-00694 
   ) 
Applicant for Security Clearance  ) 
 
 
Appearances 
 
For Government: Carroll J., Connelley, Esq., Department Counsel 
For Applicant: Pro se 
 
 
______________ 
 
Decision 
______________ 
 
 
MATCHINSKI, Elizabeth M., Administrative Judge: 
 
Applicant defaulted on her student loans, two credit cards, and a medical debt 
because of insufficient income. She has rehabilitated her private student loans and has 
repaid two of the three consumer delinquencies on her credit record. Her federal student 
loans were repaid by interception of her income tax refund. She has yet to make any 
payments on a credit-card debt that was incurred by her mother on their joint account, but 
Applicant has no new past-due debt. Clearance is granted. 
 
Statement of the Case 
 
 On April 17, 2017, 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 Guideline E, personal conduct, 
and explaining why it was unable to find it clearly consistent with the national interest to 
grant or continue eligibility for access to classified information. 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); 
 
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and the Adjudicative Guidelines for Determining Eligibility for Access to Classified 
Information (AG) effective within the DOD on September 1, 2006. 
 
On May 1, 2017, Applicant answered the SOR allegations and requested a hearing 
before an administrative judge from the Defense Office of Hearings and Appeals (DOHA). 
On June 1, 2017, 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. The hearing was scheduled for August 3, 2017.  
 
While this case was pending a hearing, Security Executive Agent Directive 4 was 
issued establishing National Security Adjudicative Guidelines (AG) applicable to all covered 
individuals who require initial or continued eligibility for access to classified information or 
eligibility to hold a sensitive position. The AG supersede the adjudicative guidelines 
implemented in September 2006 and are effective for any adjudication made on or after 
June 8, 2017.1 Applicant was informed with the Notice of Hearing that the new AG would 
be considered in her case. 
 
On July 17, 2017, I rescheduled Applicant’s hearing for August 2, 2017. I convened 
the hearing as rescheduled. Department Counsel withdrew the Guideline E allegation. 
Three Government exhibits (GEs 1, 3-4) and seven Applicant exhibits (AEs A-G) were 
admitted in evidence without objection. A report of subject interview, which was offered as 
GE 2, was excluded under ¶ E3.1.20 of the Directive. Applicant and a witness testified, as 
reflected in a transcript (Tr.) received on August 8, 2017. 
 
I held the record open for one month after the hearing for Applicant to submit 
additional exhibits. No documents were received by the deadline, and I closed the record 
on September 2, 2017. 
 
Findings of Fact 
 
 The SOR alleges under Guideline F that Applicant owed student loans in collection 
for $4,393 (SOR ¶ 1.a); $2,464 (SOR ¶ 1.c); $1,115 (SOR ¶ 1.f); and $702 (SOR ¶ 1.g); a 
charged-off credit card debt of $2,778 (SOR ¶ 1.b); and two collection debts of $463 (SOR 
¶ 1.d) and $191 (SOR ¶ 1.e). Applicant denied the student loan delinquencies in that the 
account in SOR ¶ 1.a was current, the debt in SOR ¶ 1.c was the same debt as that in 
SOR ¶ 1.a, and her tax refund of $1,938 had been applied to resolve the federal student 
loans in SOR ¶¶ 1.f and 1.g. Applicant denied the credit collection debt in SOR ¶ 1.d and 
the medical collection debt in SOR ¶ 1.e on the basis that they had been paid. She 
admitted the retail credit debt in SOR ¶ 1.b, but indicated that she was only a co-signer on 
her mother’s account. After considering the pleadings, exhibits, and transcript, I make the 
following findings of fact. 
 
Applicant is a 27-year-old high school graduate with some college credits in a 
medical assistant’s program. She is one semester short of earning her associate’s degree. 
                                                 
1 Application of the AGs that were in effect as of the issuance of the SOR would not change my decision in this 
case. 
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She has worked in assembly for a defense contractor since late February 2016. Applicant 
has never married, but she has a four-year-old daughter. (GE 1; Tr. 43.) Her daughter’s 
father took over daycare for their daughter in approximately July 2017. Applicant and her 
daughter’s father had been alternating paying his sister’s mother-in-law $80 a week to care 
for their daughter for the past year. (Tr. 66-68.) 
 
Applicant was a full-time commuter college student from September 2008 to April 
2011. She paid for her schooling in part with private and federal student loans. In 
September 2011, she transferred to a community college near her home. In October 2011, 
Applicant began working full time as a sales associate for a department store. She was 
unemployed from February 2012 to October 2012, when she began working at a call 
center. In March 2013, she stopped working because she was pregnant. Following the birth 
of her daughter in May 2013, Applicant was a stay-at-home mom until August 2015, and 
she and her daughter lived with her parents. In August 2015, Applicant regained 
employment as a phone representative at a call center. Applicant began her current 
employment in February 2016. (GE1; Tr. 41-42.) 
 
On February 10, 2016, Applicant completed and certified to the accuracy of a 
Questionnaire for National Security Positions (SF 86). She responded negatively to all of 
the financial record inquiries. (GE 1.) A check of Applicant’s credit on February 20, 2016, 
showed several collection accounts on her credit record. A joint credit card opened in May 
2009 was in collection for $2,778 with no activity since March 2012 (SOR ¶ 1.b). A $463 
credit card debt from April 2014 had been placed for collection in August 2015 (SOR ¶ 
1.d). A $440 wireless telephone debt from August 2013 was in collection (not alleged in 
SOR). A $191 medical debt from July 2012 had been in collection since November 2012 
(SOR ¶ 1.e). Applicant had opened federal student loans of $1,750 and $1,000 in 
November 2010. She made no payments after October 2014, and, as of January 2016, she 
owed collection balances of $1,115 (SOR ¶ 1.f) and $702 (SOR ¶ 1.g). Two private student 
loans obtained for $3,500 (SOR ¶ 1.a) and $1,806 (SOR ¶ 1.c) in November 2008 had 
been placed for collection in December 2015. Applicant or her parents had paid off 
additional educational loans of $5,595 obtained in November 2008 and $989 obtained in 
May 2010.2 (GE 3; Tr. 60.) 
 
 As of December 2016, the $440 wireless telephone debt on Applicant’s credit record 
was listed as paid for less than its full balance. She had one federal student loan on her 
credit record, which was reportedly past due for $1,170 (SOR ¶ 1.f). The private student 
loans in SOR ¶¶ 1.a and 1.c were listed as past due for $4,393 and $2,464. No progress 
was reported on the delinquent accounts in SOR ¶¶ 1.b, 1.d, and 1.e. (GE 4.) 
 
Applicant had rehabilitated her student loans in SOR ¶¶ 1.a and 1.c by late January 
2017 by paying $5 a month for nine or ten months. (AE A; Tr. 31-32, 44.) On January 26, 
2017, she was advised that the student loans would be placed into a standard repayment 
plan requiring equal monthly payments of at least $50 for the life of the loans not to exceed 
                                                 
2 Applicant testified that her parents handled her student loan payments about half the time, but also that her 
parents may also have allowed her student loans to become delinquent without telling her because they did 
not want to cause her stress. (Tr. 60.) 
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10 years. (AE A.) As of June 2017, Applicant owed $6,417 in consolidated student loan 
debt (SOR ¶¶ 1.a and 1.c). Her loan was rated as current with her first monthly payment of 
$72 due on July 22, 2017. Applicant provided a confirmation number as evidence that she 
made that payment. (AEs E, G; Tr. 33-34.) Applicant maintains that the federal student 
loans in SOR ¶¶ 1.f and 1.g were paid when $1,938 of her federal income tax refund was 
withheld. (Tr. 37, 46-49.) There was no outstanding balance for the federal student loans 
listed on her credit report as of August 2017. (AE G.) 
 
Applicant took responsibility for paying her own debts. (Tr. 61.) In April 2017, 
Applicant arranged to settle the $463 credit card collection debt for $363. She paid the 
settlement the same month. (AE D; Tr. 34-35, 50.) The $191 medical debt from November 
2012 (SOR ¶ 1.e), which was for emergency services, was still on her credit record, 
although she provided a MoneyGram receipt of her payment for the debt. (AEs F-G; Tr. 
34.) Applicant provided documentation showing she had paid two additional medical debts 
of $191 (not alleged). (AEs B-C; Tr. 35.) 
 
As of August 2017, Applicant has made no progress toward addressing the $2,778 
retail credit delinquency. (AE G.) Applicant had added her name to her mother’s account so 
that Applicant could use her mother’s card. Applicant was unaware that her mother had 
fallen behind on the account. Applicant has made no payments because she learned that 
the account has been charged off. She believes no payments can be made because the 
account has been closed. She has been unsuccessful in locating the entity that currently 
holds the debt, although she indicated that she would again attempt to track down the debt. 
(Tr. 37, 52-53, 71.) No additional evidence was provided after the hearing regarding this 
debt. 
 
Applicant’s take-home pay is approximately $890 every two weeks. Applicant and 
her daughter still live with Applicant’s parents. Applicant does not pay rent, but she gives 
her parents $250 for household bills. Applicant gives her father an additional $100 for her 
share of the phone bill and $150 for her car insurance. (Tr. 55-56.) As of early August 
2017, Applicant had about $800 in checking account deposits and $50 in savings deposits. 
(Tr. 57.) Applicant pays for groceries and clothing for her daughter. (Tr. 58.) Applicant does 
not have any open credit card accounts. She uses her debit card to avoid any new financial 
problems. (Tr. 59.) There is no evidence that her daughter’s father pays a set amount for 
child support. When Applicant asks her daughter’s father for something, he supplies it. (Tr. 
68.) 
 
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 
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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(a), 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 national security 
eligibility will be resolved in favor of the 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). 
 
Analysis 
 
Guideline F, Financial Considerations 
 
 The security concerns about financial considerations are articulated in AG ¶ 18: 
 
Failure 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 or 
sensitive information. Financial distress can also be caused or exacerbated 
by, and thus can be a possible indicator of, other issues of personnel security 
concern such as excessive gambling, mental health conditions, substance 
misuse, or alcohol abuse or dependence. An individual who is financially 
overextended is at greater risk of having to engage in illegal or otherwise 
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questionable acts to generate funds. Affluence that cannot be explained by 
known sources of income is also a security concern insofar as it may result 
from criminal activity, including espionage. 
 
 When Applicant answered the SOR allegations, she admitted only the debt in SOR 
¶ 1.b, and she indicated she was only a co-signer on that account. The burden is on the 
Government of proving matters that are controverted. See Directive ¶ E3.1.14. The Appeal 
Board has held that adverse information from a credit report is normally sufficient to meet 
the substantial evidence standard to establish a debt. See, e.g., ISCR Case No. 14-03612 
(App. Bd. Aug. 25, 2015). Applicant had defaulted on private and federal student loans 
(SOR ¶¶ 1.a, 1.c, 1.f, and 1.g). Credit card debts for which Applicant was jointly liable 
(SOR ¶ 1.b) or individually liable (SOR ¶ 1.d) were placed for collection as was a medical 
debt (SOR ¶ 1.e). Even assuming as she testified that her parents were handling some of 
her debt payments for her, Applicant was responsible for ensuring that payments were 
made on time, and she did not do so. Two disqualifying conditions under AG ¶ 19 apply in 
this case: AG ¶ 19(a), “inability to satisfy debts,” and 19(c), “a history of not meeting 
financial obligations.” 
 
 Applicant has the burden of mitigating the security concerns raised by the delinquent 
debts. The following conditions under AG ¶ 20 may apply: 
 
(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, a death, divorce or separation, clear 
victimization by predatory lending practices, or identity theft), and the 
individual acted responsibly under the circumstances; 
 
(c) the person has received or is receiving counseling for the problem from a 
legitimate and credible source, such as a non-profit credit counseling service, 
and there are clear indications that the problem is being resolved or is under 
control; 
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts; and 
 
(e) the individual has a reasonable basis to dispute the legitimacy of the 
past-due debt which is the cause of the problem and provides documented 
proof to substantiate the basis of the dispute or provides evidence of actions 
to resolve the issue. 
 
 Available credit information substantiates the debts. Applicant or her parents 
stopped paying on her student loans in 2014. Her private student loans were in default 
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status until January 2017. Her federal student loans were satisfied by interception of a 
portion of her federal income tax refund. Applicant did not pay the debts in SOR ¶¶ 1.d and 
1.e until April 2017. Her failure to address her past-due debts before 2016 precludes me 
from concluding that her financial problems occurred so long ago to qualify for mitigation 
under AG ¶ 20(a). 
 
 AG ¶ 20(b) has some applicability in that Applicant’s financial problems were caused 
by unemployment and underemployment. The salient issue is whether Applicant acted 
responsibly once she had stable employment. Applicant started the process of 
rehabilitating her student loans early in 2016. She made arrangements to settle the credit 
card debt in SOR ¶ 1.d in April 2017. She indicated that the medical collection debt (SOR ¶ 
1.e) had been paid. Applicant has yet to make any payments on the $2,778 credit card 
delinquency (SOR ¶ 1.b). Whether she was a joint owner or co-signer on the account, she 
is legally liable for the balance on the account. 
 
 AG ¶ 20(c) and AG ¶ 20(d) have some applicability because of her rehabilitation of 
her private student loans, her settlement of the $463 credit card delinquency, and her 
recent payment of the medical collection debt. Satisfaction of her federal student loans by 
the government taking her income tax refund is not a good-faith effort to repay the loans 
under AG ¶ 20(d). However, AG ¶ 20(c) is applicable in that her federal student loans have 
been resolved. 
 
 Applicant made some inquiries of the credit lender about the $2,778 charged-off 
debt (SOR ¶ 1.b). Those inquiries are not enough to establish either AG ¶ 20(c) or AG ¶ 
20(d) without some documentation that the debt is no longer owed. Additionally, AG ¶ 
20(e) is not satisfied without some documentation to prove that she had no legal liability on 
the account. 
 
 Appeal Board precedent requires that “a person acts in a way that shows 
reasonableness, prudence, honesty, and adherence to duty or obligation.” The security 
clearance adjudication is not aimed at collecting an applicant’s personal debts. Rather, it 
involves an evaluation of an applicant’s judgment, reliability, and trustworthiness in light of 
the security guidelines in the Directive. See ISCR Case No. 09-02160 (App. Bd. Jun. 21, 
2010). In evaluating Guideline F cases, the Appeal Board has established that an applicant 
is not required to pay off every debt in the SOR: 
 
The Board has previously noted that the concept of a meaningful track 
record necessarily includes evidence of actual debt reduction through 
payment of debts. However, an applicant is not require, as a matter of law, to 
establish that he has paid off each and every debt listed in the SOR. 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. The Judge can reasonably consider the entirety of an applicant’s 
financial situation and evaluating the extent to which that applicant’s plan for 
the reduction of his outstanding indebtedness is credible and realistic. There 
is no requirement that the plan provide for payments on all outstanding debts 
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simultaneously. Rather, a reasonable plan (and concomitant conduct) may 
provide for the payments of such debts one at a time. 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.  
 
See ISCR Case No. 07-06482 at 2-3 (App. Bd. May 21, 2008) (internal citations and 
quotation marks omitted). Applicant is not required to pay off all of her SOR debts if she is 
handling her finances in a manner that shows sound judgment. She paid two medical debts 
that were not alleged in the SOR. Applicant indicated at her hearing that she would again 
attempt to determine whether the $2,778 debt is currently in collections so that she could 
establish a repayment plan. A promise to pay a delinquent debt in the future, no matter 
how sincerely made, is not a substitute for having paid the debt. See e.g., ISCR Case No. 
14-04565 (App. Bd. Sep. 18, 2015). However, in her favor, Applicant is not taking on any 
new debt. She appears to have her spending in control. Her latest credit report shows no 
delinquent debt apart from the $2,778, which is not likely to be a source of financial 
pressure for her. Applicant has demonstrated a willingness to resolve her verified debts by 
rehabilitating her private student loans and satisfying the debts in SOR ¶¶ 1.d and 1.e. She 
has a stable income from which she can make debt payments. Her financial situation no 
longer presents an unacceptable security risk. 
 
Whole-Person Concept 
 
In assessing the whole person, 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(d).3 The analysis under Guideline F is incorporated in my whole-
person analysis. Some of the factors in AG ¶ 2(d) were addressed under that guideline, but 
some warrant additional comment. 
 
A record of delinquent debt raises some concerns about financial judgment. 
Applicant showed some irresponsibility by allowing her parents to handle some student 
loan payments for her without checking to ensure that they were making the payments. 
Two of her delinquent debts were paid after the SOR was issued, but she is credited with 
taking steps in 2016 to rehabilitate her private student loans. 
 
While there is a strong presumption against the grant or renewal of a security 
clearance when there are issues of some security concern,4 the relatively small amount of 
                                                 
3 The factors under AG ¶ 2(d) 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. 
  
4 See Dorfmont v. Brown, 913 F. 2d 1399, 1401 (9th Cir. 1990). 
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debt yet to be addressed is not likely to be a source of undue pressure or coercion, 
especially given that the debt has been charged off by the creditor. After considering the 
whole-person concept, I conclude that it is clearly consistent with the national interest to 
grant Applicant 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 
 
Subparagraphs 1.a-1.g:  For Applicant 
 
Paragraph 2, Guideline E:  WITHDRAWN 
 
Conclusion 
 
In light of all of the circumstances, it is clearly consistent with the national interest to 
grant Applicant eligibility for a security clearance. Eligibility for access to classified 
information is granted. 
 
 
_____________________ 
Elizabeth M. Matchinski 
Administrative Judge