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                           DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
) 
 [NAME REDACTED] )       ISCR Case No. 17-01838 
  ) 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Robert Blazewick, Esq., Department Counsel 
For Applicant: Pro Se 
 
 
 
 
______________ 
 
Decision 
______________ 
 
 
MALONE, Matthew E., Administrative Judge:  
 
 Applicant mitigated the security concerns raised by his financial problems. His 
request for a security clearance is granted. 
 
Statement of the Case 
  
 On March 22, 2016, Applicant submitted an Electronic Questionnaire for 
Investigations Processing (e-QIP) to renew his 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 
determine that it is clearly consistent with the interests of national security for Applicant 
to have a security clearance.1 
                                                 
1 Required by Executive Order 10865, as amended, and by DOD Directive 5220.6 (Directive), as amended. 
 
 
 
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 On June 17, 2017, DOD issued a Statement of Reasons (SOR) alleging facts that 
raise security concerns under the adjudicative guideline for financial considerations 
(Guideline F). Applicant timely responded to the SOR (Answer) and requested a hearing.  
 
 I received the case on January 10, 2018, and convened the requested hearing on 
March 8, 2018. The parties appeared as scheduled. Department Counsel proffered 
Government Exhibits (GX) 1 – 6. Applicant testified and proffered Applicant Exhibit (AX) 
A. All exhibits were admitted without objection. I received a transcript of the hearing (Tr.) 
on March 15, 2018.  
 
Findings of Fact 
 
 Under Guideline F, the Government alleged that Applicant filed Chapter 13 
bankruptcy petitions in May 2016 and December 2016, each of which was voluntarily 
dismissed (SOR 1.a and 1.b); and that in February 2017, Applicant filed a third Chapter 
13 petition that was open and active as of the date of the SOR (SOR 1.c). The SOR also 
alleged that Applicant owed $111,803 for 14 delinquent or past-due debts (SOR 1.d – 
1.q). In response, Applicant admitted each of these allegations. The allegations under this 
guideline are further supported by GX 1 – 6. In addition to the facts thus established, I 
make the following findings of fact.   
 
 Applicant is 59 years old. He and his wife have been married since April 1987. 
They have two adult children, and have lived in the same house since June 2004. 
Applicant served in the Army, first as an enlisted member, from 1978 until 1985. After 
attaining the rank of staff sergeant, Applicant became a warrant officer and served without 
interruption from 1985 until retiring in 2000. Applicant held security clearances while in 
the Army and received his first industrial clearance in 2006. His current application is for 
an upgrade from secret to top secret access. (GX 1) 
 
 Until late 2014, Applicant and his wife together earned almost $200,000. His wife 
then became disabled and unable to work. Her income dropped to about $24,000 
annually from disability payments. In an effort to reduce expenses, Applicant voluntarily 
returned a new truck he had bought so that he could save the monthly payments. 
Eventually, however, they began to struggle meeting their financial obligations. Applicant 
could no longer pay his student loans as required, and they could not resolve the 
deficiency after remainder from the voluntary repossession of his truck. Additionally, in 
2016 he made an error in his tax return for 2015 (which he timely filed), and was assessed 
the $3,011 tax debt listed at SOR 1.d. This debt is being resolved through the Chapter 13 
bankruptcy petition described below. (Answer; Tr. 21 – 22, 32 – 33, 36 – 38, 45) 
 
 In May 2016, Applicant and his wife retained a bankruptcy attorney to file a Chapter 
13 bankruptcy so they could save their house and make some repayment of the debts 
they owed. The resulting wage earners repayment plan required Applicant to pay $4,000 
monthly, which left Applicant insufficient money to meet his other obligations. Applicant 
 
 
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and his wife directed their attorney to withdraw the petition. They also indicated that before 
another petition was filed, the attorney should consult with Applicant. On December 28, 
2016, unbeknownst to Applicant, the attorney filed a second Chapter 13 petition. 
Applicant and his wife decided to find a different attorney to halt the second petition and 
work with them to file a petition that met their needs. (Answer; GX 4 – 5; Tr. 22 – 23) 
 
 In February 2017, their new attorney withdrew the second Chapter 13 and filed a 
new petition. That Chapter 13 action requires Applicant to pay about $1,500 monthly and 
should be complete in late 2020. Applicant and his wife are in good standing with this 
Chapter 13 plan, which was approved in June 2017. (Answer; GX 3; GX 6; AX A; Tr. 23 
– 26) 
 
 Applicant’s Chapter 13 includes the non-student loan debts at SOR 1.d and 1.k, 
as well as several other unsecured loans not addressed in the SOR. A federal credit union 
debt alleged at SOR 1.h was for a boat Applicant purchased several years ago. That debt 
was resolved outside the bankruptcy through a short sale of the boat. (Answer; GX 6; Tr. 
27, 34) 
 
 While in the Army, Applicant obtained two associate’s degrees between 1988 and 
1999. After leaving the Army in 2000, he went on to obtain a bachelor’s degree and a 
master’s degree. The debts addressed at SOR 1.e – 1.g, 1.i, 1.j, and 1.l – 1.q are for 
delinquent student loans he obtained to finance his tuition. Applicant was unable to 
consolidate his student loans and paid as much as $780 monthly until sometime in 2016. 
Applicant could not include his student loans in his bankruptcy petition; however, as a 
function of his Chapter 13 petition, those loans are in deferment without further accrual of 
interest until he completes his current Chapter 13 repayment plan. He intends to resume 
payments on his student loans at that time. (Answer; GX 1; GX 3; Tr. 27 – 29) 
 
 Applicant’s testimony and an examination of his income and expense declarations 
in his February 2017 Chapter 13 petition indicate his current finances are sound. In 
addition to the required Chapter 13 payments, he and his wife meet all of their expenses, 
living frugally and within their means. They have not incurred any new unpaid debts, and 
they have improved their retirement savings after initially having to take loans from their 
401k accounts to make ends meet after Applicant’s wife became unable to work. (Answer; 
GX 2; GX 3; GX 6; Tr. 38 – 43) 
 
Policies 
 
 Each security clearance decision must be a fair, impartial, and commonsense 
determination based on examination of all available relevant and material information,2 
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(d) of 
the guidelines. Commonly referred to as the “whole-person” concept, those factors are:  
                                                 
2 See Directive. 6.3. 
 
 
 
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  (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 
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 interest3 for an applicant to either receive or continue to 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.4 A person who has access 
to classified information enters into a 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.5 
 
Analysis 
 
Financial Considerations  
 
 The Government’s information about Applicant’s financial problems reasonably 
raises the security concern articulated at AG ¶ 18: 
 
Failure to live within one's means, satisfy debts, and meet financial 
obligations may indicate poor self-control, lack of judgment, or 
                                                 
3 See Department of the Navy v. Egan, 484 U.S. 518 (1988). 
 
4 See Egan, 484 U.S. at 528, 531. 
 
5 See Egan; AG ¶ 2(b). 
 
 
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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 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. 
 
 Applicant accrued numerous debts after his wife lost most of her income due to 
disability in late 2014 or early 2015. His inability to pay those debts led him and his wife 
to seek Chapter 13 bankruptcy protection in May 2016. After difficulties with their first 
bankruptcy attorney that resulted in the voluntary dismissal of two Chapter 13 petitions in 
December 2016 and February 2017, they are now making payments on their declared 
debts through a Chapter 13 wage earner plan approved in June 2017. Applicant’s 
circumstances do not permit his student loans to be discharged through bankruptcy. He 
was making payments on those debts until sometime in 2016, when he could no longer 
afford to do so and still meet his mortgage payments. The student loans are in deferment 
and Applicant avers he will resume payments after completing his Chapter 13 payments 
in late 2020. The foregoing requires application of the following AG ¶ 19 disqualifying 
conditions: 
 
(a) inability to satisfy debts; and 
 
(c) a history of not meeting financial obligations. 
 
I also have considered the following pertinent mitigating conditions under 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; and 
 
(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. 
 
 Applicant’s financial problems arose through unforeseen circumstances when his 
wife became disabled. Her income at the time was just more than half their total income. 
Applicant took what steps he could – voluntary repossession of a vehicle to save the 
monthly payment, as well as multiple loans from his retirement account – to reduce 
 
 
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expenses and meet the financial obligations he had at the time his wife stopped working. 
He continued to pay his student loans until around the time he filed his first Chapter 13 
petition.  
 
 Applicant resorted to bankruptcy protection only when it became apparent he could 
not pay his debts without losing his home. Bankruptcy, although not a preferred method 
of resolving unpaid debts, is a reasonable means of satisfying one’s debts under the right 
circumstances. In this case, Applicant’s decision to file for bankruptcy protection was a 
reasonable step under the circumstances. The failure of his first two petitions was due to 
unforeseen difficulties in communicating with their first attorney. It does not make sense 
that he would agree to the terms of the first wage earner plan that required him to pay 
most of his take home pay for several years. Further, Applicant credibly asserted that he 
and his wife insisted that their first lawyer consult with them about the possibility of filing 
another petition and that he not do so without their permission. At the end of December 
2016, Applicant later learned that a second petition was filed without his knowledge and 
without the expected consultation with his lawyer. His third wage earner plan has been in 
place since June 2017 and Applicant is in good standing with his payments. As to 
Applicant’s student loans, they are in deferment as a result of his bankruptcy. The fact 
that Applicant’s finances are currently sound supports confidence that he will resume his 
student loan payments when he completes his Chapter 13 repayment. All of the foregoing 
supports AG ¶¶ 20(a) and 20(b). 
 
 Financial problems present a two-fold inquiry. First, does the presence of unpaid 
debt or other unresolved financial burdens present a likelihood that Appellant would resort 
to illegal acts or other conduct that might compromise national interests? Here, that 
appears highly unlikely. Applicant has a long record of service and employment while 
holding a security clearance without any indication that he has ever not complied with 
what is required to safeguard classified information. Further, he has avoided incurring 
more debt while acting prudently and quickly to resolve his existing delinquencies. 
Second, did Applicant’s financial problems arise from irresponsible decisions, poor 
judgment, or other factors that indicate he is unreliable or untrustworthy? Applicant’s 
financial problems stem directly from the unforeseen circumstance of his wife’s disability 
and loss of income. He is in the midst of resolving his debts in a way that allows he and 
his wife to meet all of their regular obligations, and that will position them to renew their 
payments on Applicant’s student loans after completion of their bankruptcy petition.  
 
On balance, I conclude Appellant’s actions in response to his financial problems 
were prompt and responsible under the circumstances. Available information is sufficient 
to mitigate the security concerns under this guideline. I also have evaluated this record in 
the context of the whole-person factors listed in AG ¶ 2(d). Applicant has tried to resolve 
his debts responsibly and as expediently as his circumstances permitted. I also have 
considered his long history of previously uneventful access to classified information in the 
military and after retirement. A fair and commonsense assessment of the record evidence 
as a whole shows that the security concerns raised by the Government’s information are 
mitigated.  
 
 
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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:  FOR APPLICANT 
 
 Subparagraphs 1.a - 1.q:  For Applicant 
 
Conclusion 
 
 In light of all of the foregoing, it is clearly consistent with the interests of national 
security for Applicant to have access to classified information. Applicant’s request for a 
security clearance is granted. 
 
 
 
                                        
MATTHEW E. MALONE 
Administrative Judge