Recently, the Security Clearance Attorneys at Luchansky Law successfully reinstated the Secret clearance of a Department of Defense contractor. The prosecuting attorneys for the Defense Office of Hearings and Appeals (“DOHA”) submitted their File of Relevant Material (“FORM”) asserting that our client’s application for security clearance should be rejected because he had demonstrated:  (a) an inability or unwillingness to satisfy debts; and  (b) a history of not meeting financial obligations.    Our attorneys prepared a persuasive written response arguing the following: Department of Defense Directive, Guideline F, addresses financial considerations in the review of an applicant’s security clearance application: An individual who is financially overextended is at risk of having to engage in illegal acts to generate funds. Unexplained affluence is often linked to proceeds from financially profitable criminal acts.  There was no indication that any of the concerns espoused in Guideline F were applicable to our client.  Indeed, when our client was interviewed by an authorized investigator for the Department of Defense, the investigator stated: The subject does not have a history of indebtedness caused by frivolous or irresponsible spending or the absence of any evidence of willingness or intent to pay debts.  The subject is currently attempting to meet his financial obligations and has completed the bankruptcy procedures and settlement. There is nothing in the subject’s background or activities, including his delinquent financial accounts, that could be used against him for the purpose of coercion or blackmail. Despite the investigator reaching the above conclusions, DOHA failed to provide these findings any deference.  Rather, DOHA proceeded to file its opposition to our client’s security application, submitting that the investigator’s conclusions were inaccurate and “that it was not clearly consistent with the national interest to continue Applicant’s security clearance.”  Further, in so doing, DOHA elected to consciously ignore the express mitigating factors set forth in the Directive, stating it “did not have the burden of disproving the applicability of mitigating conditions.” Our attorneys argued that the bulk of our client’s debt was derived from student loans.  It was not incurred as a result of the concerns outlined in Guideline F, such as “frivolous or irresponsible spending” and it certainly did not represent “unexplained affluence.” Moreover, Guideline F establishes mitigating factors to be applied in considering an applicant’s financial conditions: E2.A6.1.3.3. The conditions that resulted in the behavior were largely beyond the person’s control (e.g., loss of employment, a business downturn, unexpected medical emergency, or a death, divorce or separation); E2.A6.1.3.4. The person has received or is receiving counseling for the problem and there are clear indications that the problem is being resolved or is under control; E2.A6.1.3.6. The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts. Section E2.A6.1.3.3 was directly applicable to our client, as the conditions that caused his tumultuous financial condition were largely beyond his control.  Indeed, the examples provided within the directive were the exact situations endured by our client: loss of employment and unexpected medical emergency.  After incurring substantial student loan debt, our client’s subsequent medical condition and succeeding loss of employment were the very incidents which led to our client’s inability to repay his creditors.  Accordingly, his situation fit squarely within the mitigating factors. Our client also satisfied sections E2.A6.1.3.4 and E2.A6.1.3.6, because he handled the matter in a responsible fashion and with the good-faith intent to repay his existing creditors.  When the debt became unmanageable, our client responsibly sought legal relief byway of filing for bankruptcy.   Guideline F does not in any way consider the filing of bankruptcy by an applicant as a factor which should be given any consideration in evaluating his or her security application.  To the contrary, bankruptcy and associated credit counseling are considered positive efforts on an individual’s behalf when they are exercised in order to gain control of one’s financial situation.  This is exactly what occurred with our client and, as such, these mitigating factors were directly applicable. In adjudicating a case seeking denial of a security clearance application on the basis of financial concern, the decision maker must carefully evaluate the cause of the debt and the response of the debtor.  In this case, the cause of the debt was largely student loans and medical bills, not frivolous spending.  The response of our client was to seek bankruptcy protection, and to then establish a reasonable and responsible repayment plan.  As concluded by the investigator, our client’s conduct did not raise any concerns regarding his candidacy for maintaining a security clearance.  Our client’s security clearance was successfully reinstated. Contact the experienced Security Clearance attorneys at Luchansky Law today.  We’ll get you back to work.