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How Poor Financial Decisions Can Affect Your Ability to Obtain a Security Clearance


Financial problems can seriously affect your ability to obtain or retain a government security clearance. Under the guidelines used by the U.S. Department of Defense (DOD), an applicant’s “[f]ailure or inability to live within one’s means, satisfy debts, and meet financial obligations” may be cited as evidence they cannot be trusted with classified information. This is not to say that just because you have debts, you will automatically be denied a security clearance. But you will need to demonstrate that you are taking appropriate responsibility for your financial situation.

DOHA Judge Finds Bad Decision to Purchase Timeshare Not Fatal to Contractor’s Security Clearance Application

A recent decision from the DOD’s Defense Office of Hearings and Appeals (DOHA) illustrates the steps a security clearance applicant can take to mitigate potential concerns about their financial control. The applicant in this case is a 42-year old man who works as an information technology systems engineer for a DOD contractor and requires a security clearance.

During the application process, the applicant disclosed he had a number of outstanding debts, including more than $20,000 “related to a timeshare that he purchased in 2012,” and a $4,500 personal loan that he defaulted on after being laid off. With respect to the timeshare debt, the applicant told investigators that he and his wife were “enticed” to travel abroad in 2012 to attend a timeshare sales presentation where they “fell victims to the timeshare personnel pressure-sales tactics.” The applicant said he and his wife thought they had rescinded the timeshare contract, only to later find their account was in collection.

Although DOD officials initially denied the applicant’s security clearance based on his financial problems, a DOHA administrative law judge (ALJ) reversed. The ALJ said that taken as a whole, the applicant had taken appropriate steps to “mitigate” any concerns about his financial history. Although the ALJ noted the applicant’s efforts to address the timeshare transaction were “somewhat lacking,” he nevertheless said the applicant’s mistake appeared to be a one-time error that did not indicate larger trustworthiness problems.

Indeed, the ALJ noted that the applicant demonstrated “diligence and responsibility in the handling of his financial obligations.” The judge specifically credited the applicant’s decision to obtain financial counseling and follow a budget in light of his past debts. The ALJ also noted the applicant’s current salary was sufficient to pay for his family’s living expenses while still enabling him to repay his outstanding debts. Overall, the ALJ concluded there was no reason to believe the applicant’s past financial issues posed a risk to national security, and therefore he should be granted a security clearance.

Speak with a Maryland Security Clearance Attorney Today

Getting your finances in order should be among the first steps you take when you know you need to apply for a security clearance. While a one-time financial mistake is not fatal to your application, a history of failing to take your debts seriously will raise serious red flags with the DOD.

If you have additional questions or concerns about this process and need advice from an experienced Maryland security clearance adjudications and appeals lawyer, contact Henault & Sysko Chartered today at 410-768-9300 to schedule a consultation.


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