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                        DEPARTMENT OF DEFENSE 
         DEFENSE OFFICE OF HEARINGS AND APPEALS 
           
             
 
 
In the matter of: ) 
 ) 
  )  ISCR Case No. 17-04395 
 ) 
Applicant for Security Clearance ) 
 
 
Appearances 
 
For Government: Brittany Muetzel, Esq., Department Counsel 
For Applicant: Pro se  
 
 
 
______________ 
 
Decision 
______________ 
 
 
MURPHY, Braden M., Administrative Judge: 
 
Applicant’s mortgage remains significantly past due and in foreclosure. Applicant 
has not made a mortgage payment in about two years despite steady employment and 
the means to pay other significant expenses, such as the monthly payment on an 
expensive luxury auto. She and her husband recently filed for Chapter 13 bankruptcy, 
but the filing was not completed and is pending dismissal. Applicant has not acted 
responsibly in attempting to improve her finances. She did not mitigate the financial 
considerations security concerns. Eligibility for access to classified information is 
denied.  
 
Statement of the Case 
 
On January 24, 2018, the Department of Defense (DOD) issued Applicant a 
Statement of Reasons (SOR) detailing security concerns under Guideline F, financial 
considerations. The action was taken under Executive Order (Exec. Ord.) 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 National Security 
Adjudicative Guidelines (AG), implemented by the DOD on June 8, 2017.  
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Applicant answered the SOR on March 27, 2018 and requested a hearing. The 
case was assigned to me on June 27, 2018. On July 27, 2018, a notice of hearing was 
issued scheduling the hearing for August 23, 2018. The hearing convened as 
scheduled.  
 
At the hearing, Department Counsel offered Government Exhibits (GE) 1 and 2, 
which were admitted without objection. Applicant and her husband testified. The three 
documents Applicant provided with her Answer to the SOR were marked as Applicant’s 
Exhibits (AE) A, B, and C, and admitted without objection. I held the record open until 
September 7, 2018, to provide Applicant the opportunity to submit additional 
documents. She timely submitted documents that were marked as AE D and AE E, and 
admitted without objection.1 DOHA received the transcript (Tr.) on August 30, 2018. The 
record closed on September 7, 2018.  
  
Findings of Fact 
 
 Applicant admitted all three debts in the SOR (¶¶ 1.a-1.c). Her admissions are 
incorporated into the findings of fact. After a thorough and careful review of the 
pleadings and the record evidence submitted, I make the following findings of fact. 
 
 Applicant is 53 years old. She and her husband have been married since 1987. 
They have two grown children. She has a bachelor’s degree. She served honorably in 
the United States Navy for 20 years. She retired in 2005 as a petty officer first class (E-
6). She was then largely unemployed for about 18 months. Since February 2007, she 
has worked in the defense industry. She was briefly unemployed in early 2009 after a 
layoff, and in mid-2012 after being terminated. She has worked for her current employer 
and clearance sponsor since December 2015. She has held a security clearance since 
2009. (GE 1; Tr. 9, 22-25, 58-59) 
 
 Applicant submitted a security clearance application (SCA) in December 2015. 
She disclosed various delinquent debts, including some she said had been satisfied. 
(GE 1) The three debts alleged in the SOR were a mortgage in foreclosure that was 
$19,609 past due, with a total balance due of $282,416 (SOR ¶ 1.a); a $348 past-due 
debt to a phone company (SOR ¶ 1.b); and a $150 past-due medical debt (SOR ¶ 1.c). 
(GE 2) Applicant provided proof with her Answer that the two small debts had been 
paid. (AE B; AE C) 
 
With her Answer, Applicant also provided a document from her mortgage 
company reflecting that her application to modify her mortgage had been approved as 
of January 9, 2018. Starting on March 1, 2018, she was to make a monthly payment of 
$1,665, with an annual interest rate of 4.125%. She and her husband signed the 
agreement on January 6, 2018. (AE A; Tr. 40) 
 
                                                          
1 AE D is a scheduling order for Applicant’s bankruptcy case. AE E is a group exhibit, consisting of eight 
letters from character references.  
  
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 Applicant has an annual salary of $70,000. She also receives $1,400 a month in 
retirement pay. Her husband works for an outdoor equipment company. He earns 
$43,000 a year. (Tr. 25, 59-60) 
 
In July 2016, Applicant purchased a $45,000 used luxury automobile. She has a 
monthly car payment of $836. Her husband drives a sport utility vehicle. He has a 
monthly car payment of $681. He purchased his car earlier this year, after his prior auto 
was wrecked in an accident during a rainstorm. Applicant and her husband have other 
monthly expenses, including a student loan payment, utilities and phones, as well as 
homeowner association fees. (Tr. 51-55, 70-71)  
 
Applicant and her husband began experienced financial problems after he was 
out of work for a time following knee surgery, in 2013. Applicant also took a lower 
paying job. They also began having personal problems, and in February 2016, they 
separated for a period of time. Her husband testified that they had several separations. 
He also accepted some responsibility for their financial problems. (Tr. 27-36, 60-63) 
 
The mortgage debt in the SOR concerns their marital home. Applicant bought the 
home in February 2009. She later added her husband onto the deed, but she alone is 
on the mortgage. She testified that she had to prioritize paying some bills over others. 
She chose to keep making the car payment because she needed a car to get to work. 
She fell behind on the mortgage. (Tr. 33-36) 
 
The credit report in the record, from October 2017 (GE 2), shows that Applicant 
had not made a mortgage payment for 12 months, since October 2016. Applicant 
testified that she has not made a mortgage payment since then, almost two years ago. 
At the time of the hearing, she did not have an approved mortgage repayment plan with 
her lender. She said they wanted to sell the home, but had consulted a lawyer, and 
were advised to let the home go to foreclosure. At the time of the hearing, Appellant and 
her husband remained in the home. (Tr. 41-45)  
 
Applicant said she is using the money that should be going to the mortgage to 
pay other monthly bills, including car payments. She also had funeral expenses after 
her mother passed away in December 2017. (Tr. 41-42) 
 
Applicant testified that she made repeated attempts to modify the mortgage. She 
testified that she attempted to comply with the agreement by making the first payment, 
of $1,600. The lender kept requesting more information without approving it. AE A is a 
loan modification agreement Applicant signed in early January 2018. When asked what 
happened next, Applicant testified that the lender sent it back to her because of 
problems with her signature, or because it was not notarized. (Tr. 25-27, 35-36, 38) The 
exact nature of the issue is not clear, because the documentation Applicant received 
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from the lender is not in the record. It is unclear if Applicant’s initial modified payment of 
$1,600 was accepted by the lender.  
 
In early April 2018, Applicant was notified that the bank was beginning 
foreclosure proceedings. At some point thereafter, in about June 2018, Applicant and 
her husband filed bankruptcy. It was dismissed for lack of a payment plan. They later 
refiled bankruptcy under Chapter 13. Applicant testified that they then heard from the 
lender that “now they want to work with us. . . . And they recommend that it’s best that 
you just sell the house.” (Tr. 25-32, 39, 85-86) 
 
Applicant was unable to provide details about what debts are listed in the 
bankruptcy, or how much she and her husband claimed in liabilities. She testified that 
she and her husband do not keep a budget. She testified that she has not been through 
financial counseling. (Tr. 47, 50) 
 
Applicant’s husband testified that he and his wife filed Chapter 13 bankruptcy 
jointly. They initially filed in April 2018, but the case was dismissed, either for lack of a 
payment plan, or because the paperwork was incomplete. Their first filing was without 
legal counsel. He said they then sought legal counsel and refiled bankruptcy in August 
2018. He testified that they took some credit counseling as required. At the time of this 
hearing, their payment plan had not yet been approved. He said that their mortgage and 
all of their outstanding debts are listed in the bankruptcy petition. He said they declared 
about $400,000 in liabilities. (Tr. 64-73) 
 
 After the hearing, Applicant submitted a scheduling order from the bankruptcy 
court, dated August 22, 2018. Both Applicant and her husband are listed jointly as 
debtors. The order states that they filed bankruptcy pro se. The court set a hearing for 
September 18, 2018, for the debtors to show cause why their bankruptcy case should 
not be dismissed for: 1) failure to time file a Chapter 13 payment plan; and 2) failure to 
timely file “lists, schedules, and statements.” The court also noted that the $310 of the 
filing fee remained unpaid. A monthly payment plan ($115 in September 2018, $100 in 
October 2018, and $95 in November 2018) was ordered. (AE D)  
 
 Personal and professional character references attested to Applicant’s good 
moral character and work ethic. She is professional, polite, and respectful of privacy. 
She is law-abiding, honest, trustworthy, reliable, and has good, “level-headed” 
judgment. (AE E) 
 
 
 
 
 
 
 
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Policies 
 
 It is well established that no one has a right to a security clearance.2 As the 
Supreme Court noted in Department of the Navy v. Egan, “the clearly consistent 
standard indicates that security determinations should err, if they must, on the side of 
denials.”3 
 
 The AGs are not inflexible rules of law. Instead, recognizing the complexities of 
human behavior, administrative judges apply the guidelines in conjunction with the 
factors listed in the adjudicative process. The administrative judge’s overarching 
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 national security 
eligibility will be resolved in favor of the national security.” Under ¶ E3.1.14, the 
Government must present evidence to establish controverted facts alleged in the SOR. 
Under ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other 
evidence to rebut, explain, extenuate, or mitigate facts admitted by the 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 the applicant may deliberately or inadvertently fail to safeguard 
classified information. Such decisions entail a certain degree of legally permissible 
extrapolation of potential, rather than actual, risk of compromise of classified 
information. 
 
Analysis 
 
Guideline F, Financial Considerations 
 
The security concern for financial considerations is set out 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 
                                                          
2 Department of Navy v. Egan, 484 U.S. 518, 528 (1988) (“it should be obvious that no one has a ‘right’ to 
a security clearance”).  
 
3 484 U.S. at 531.  
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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. . . . 
 
The guideline notes several conditions that could raise security concerns under 
AG ¶ 19. The following are potentially applicable in this case:   
 
(a) inability to satisfy debts;  
 
(b) unwillingness to satisfy debts, regardless of the ability to do so; 
 
 (c) a history of not meeting financial obligations; and  
 
(e) consistent spending beyond one’s means or frivolous or irresponsible 
spending, which may be indicated by excessive indebtedness, significant 
negative cash flow, a history of late payments or of non-payment, or other 
negative financial indicators.  
 
Applicant incurred significant delinquent debt in recent years. Her mortgage 
remains significantly past due, and she has not made a mortgage payment since 
October 2016, despite remaining gainfully employed and living in the home. AG ¶¶ 
19(a) and 19(c) apply. Applicant purchased a luxury car with a large monthly car 
payment that she could not afford. She chose to prioritize that expense over paying her 
mortgage, rather than to try to live within her means. AG ¶¶ 19(b) and 19(e) also apply.  
 
  Conditions that could mitigate financial considerations security concerns are 
provided under AG ¶ 20. The following are potentially applicable:  
 
(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, clear victimization by predatory lending practices, or identity 
theft), and the individual acted responsibly under the circumstances; 
 
(c) the individual has received, or is receiving financial counseling for the 
problem from a legitimate and credible source, and there are clear 
indications that the problem is being resolved or is under control; and  
 
(d) the individual initiated and is adhering to a good-faith effort to repay 
overdue creditors or otherwise resolve debts.  
 
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 SOR debts ¶¶ 1.b and 1.c, debts totaling about $500, are paid and resolved. 
Applicant’s mortgage delinquency, SOR ¶ 1.a, is large and ongoing. She has not made 
a mortgage payment in about two years, and remains several thousand dollars behind. 
She and her husband recently filed Chapter 13 bankruptcy, but they did not pay the full 
filing fee, and they did not perfect the filing by including schedules or a payment plan. 
She did not establish that her financial problems are unlikely to recur and do not cast 
doubt on her current reliability, trustworthiness, or good judgment. AG ¶ 20(a) does not 
apply. 
 
 AG ¶ 20(b) has some application. Applicant has had some brief periods of 
unemployment. Her husband missed significant work after surgery. They also separated 
on more than one occasion. These conditions were largely beyond Applicant’s control, 
and they impacted her finances. The first prong of AG ¶ 20(b) applies.  
 
 For full effect, however, Applicant must also show that she acted responsibly 
under the circumstances. Applicant did not provide sufficient evidence to establish that. 
Applicant fell behind on her mortgage, at least in part, because she prioritized other 
expenses. As she testified, she needed a car to get to work. That logic is not 
unreasonable. However, the mitigating effect of this action is significantly minimized by 
the fact that in mid-2016, she bought a $45,000 luxury car, with an $836 monthly 
payment. In mid-2017, her husband bought an SUV, with a $681 monthly payment. The 
combined monthly car payments total over $1,500. This is almost as much as their 
modified mortgage payment of $1,600. Put simply, Applicant and her husband 
purchased cars that were fancier than they need, and more expensive than they can 
afford. They have prioritized those payments over their mortgage, and have made no 
attempts to limit expenses by getting less expensive cars. Applicant and her husband 
have filed Chapter 13 bankruptcy, but have not even paid the full filing fee of $310. 
Applicant has not acted reasonably under the circumstances. AG ¶ 20(b) does not fully 
apply.  
 
 AG ¶¶ 20(c) and 20(d) are also not established. While Applicant attempted to 
modify her mortgage, she also has not made a mortgage payment in about two years. 
She has filed for bankruptcy but did not establish that she has participated in credit 
counseling during the bankruptcy process or otherwise. She and her husband do not 
have a budget. At the close of the record, their bankruptcy petition is on the verge of 
being dismissed because their filing was incomplete. AG ¶¶ 20(c) and 20(d) do not 
apply.  
 
Whole-Person Concept 
 
 Under the whole-person concept, the administrative judge must evaluate an 
applicant’s eligibility for a security clearance by considering the totality of the applicant’s 
conduct and all relevant circumstances. The administrative judge should consider the 
nine adjudicative process factors listed at AG ¶ 2(c):  
 
 
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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. 
 
 Under AG ¶ 2(c), the ultimate determination of whether to grant eligibility for a 
security clearance must be an overall commonsense judgment based upon careful 
consideration of the guidelines and the whole-person concept.  
 
I considered the potentially disqualifying and mitigating conditions in light of all 
the facts and circumstances surrounding this case. I have incorporated my comments 
under Guideline F in my whole-person analysis. Overall, the record evidence leaves me 
with questions and doubts as to Applicant’s eligibility for a security clearance. Applicant 
did not mitigate the financial considerations security concerns.  
 
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:    Against Applicant 
   Subparagraphs 1.b-1c:  For Applicant 
     
Conclusion 
 
 In light of all of the circumstances presented, it is not clearly consistent with the 
interests of national security to grant Applicant eligibility for a security clearance. 
Eligibility for access to classified information is denied. 
 
 
________________________ 
Braden M. Murphy 
Administrative Judge