Trans World Assurance Blog

Security Clearance Debt Concerns & Solutions (Part 3) by Jeff Burch

Posted on Mon, Dec 26, 2011

Previous Article - Part 2

Part 3. Solutions and assistance that can mitigate financial concerns:

Conscientious participation in credit counseling or a debt consolidation program can significantly mitigate financial concerns. Consistent, systematic, documented good faith efforts to repay or otherwise resolve debts without formal counseling will have the same effect. If it is obvious that the subject is only taking such actions to get or retain a security clearance, it will do little to convince Central Adjudication Facilities (CAF) that the problem is unlikely to recur once the clearance is granted. Therefore, efforts to resolve financial problems should begin as soon as possible. Obviously, the earlier corrective action is taken, the more likely the problem can be fully mitigated.

For further assistance, contact a reputable nonprofit 501(c)(3) Credit Counseling Agency (CCA) that has extensive experience assisting soldiers in protecting or saving their security clearance. In most cases, they can negotiate a debt repayment plan with your collectors and put these accounts on a Debt Management Plan (DMP) to be paid off as quickly as your budget allows. A CCA can provide you with a detailed report that lists all your consolidated accounts, contact information, payment amounts, and projected pay off dates. This minimizes financial risk associated with your career and aids in the acceptance of your security clearance.


Security Clearance Debt Concerns & Solutions was written by Jeff Burch. Be sure to check out the other articles on the Trans World Assurance blog written by Jeff Burch.

Tags: military, Money Book, Jeff Burch, establish credit, Security Clearance, debt

Security Clearance Debt Concerns & Solutions (Part 2) By Jeff Burch

Posted on Sat, Dec 24, 2011

Previous Article - Part 1

Part 2. What "patterns" adjudicators look for in a Personal Security Investigation (PSI):

Adjudicators follow the "whole-person" concept and look for "patterns" of irresponsibility in a PSI. A bankruptcy or foreclosure can be considered a non-issue if the financial crisis stemmed largely from circumstances beyond the subject's control and is unlikely to recur or the subject acted in a reasonable and responsible manner.

Example: If a subject has never had financial problems in the past, but got into trouble with a lender because his/her home is currently worth less than the mortgage loan due to a market downturn, and then (gulp) received PCS orders, this would tend to be considered a mitigating condition. However, if a subject going through foreclosure has a prior history of not meeting financial obligations documented in previous investigations, this suggests a pattern of financial irresponsibility that cannot be easily brushed aside. Likewise, a soldier who obtained a loan by overstating income or committed other types of loan fraud may find it difficult to convince the adjudicators that he/she was just an innocent victim of circumstances beyond their control.

 Adjudicators understand that financial problems often arise due to situations beyond the investigation subject's control, such as serious illness/disability, divorce, loss of income, crime, business downturn, and natural disasters. Again, if a person acts reasonably and responsibly under the circumstances (including bankruptcy, when necessary) to resolve their debts, the financial issue can be mitigated. The debts do not have to be fully resolved at the time of adjudication, but there should be "verifiable uninterrupted efforts" toward this goal. Response to debt is evaluated by the things people do (or don't do) about delinquent debt. How people deal with delinquent debt is often a decisive consideration, because it is viewed by adjudicators as an indication of their trustworthiness and reliability. Those who disregard their financial obligations may also disregard their responsibility to safeguard classified information. The following is a list of common indicators of irresponsibility and unethical behavior:

• Changing address without notifying creditors
• Failure to take reasonable measures to pay or reduce debts
• Knowingly issuing bad checks
• Increased credit card use immediately before filing for bankruptcy

 

Security Clearance Debt Concerns & Solutions by Jeff Burch will continue tomorrow on the Trans World Assurance Blog with Part 3 - Solutions and assistance that can mitigate financial concerns.

Tags: military, Money Book, Jeff Burch, establish credit, Security Clearance, debt

Security Clearance Debt Concerns & Solutions (Part 1) By Jeff Burch

Posted on Fri, Dec 23, 2011

Previous Article - Introduction

Part 1. Concerns and issues that can occur if you're not proactive with your security clearance:

A. Financial concerns: 

Failure or inability 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 information. An individual who is financially overextended is at risk of engaging in illegal acts to generate funds. Compulsive gambling is a concern as it may lead to financial crimes including espionage. Affluence that cannot be explained by known sources of income is also a security concern. It may indicate proceeds from financially profitable criminal acts.
 
B. Conditions that raise security concerns and may lead to disqualification:

• Inability or unwillingness to satisfy debts
• Indebtedness caused by frivolous or irresponsible spending and the absence of any evidence of
willingness or intent to pay the debt or establish a realistic plan to pay the debt  
• A history of not meeting financial obligations
• Deceptive or illegal financial practices such as embezzlement, employee theft, check fraud, income tax evasion, expense account fraud, filing deceptive loan statements, and other intentional financial breaches of trust
• Consistent spending beyond one’s means, which may be indicated by excessive indebtedness, significant negative cash flow, high debt-to-income ratio, and/or other financial analysis
• Financial problems that are linked to drug abuse, alcoholism, gambling problems, or other issues of security concern
• Failure to file annual Federal, state, or local income tax returns as required or the fraudulent filing of the same
• Unexplained affluence, as shown by a lifestyle or standard of living, increase in net worth, or money transfers that cannot be explained by subject's known legal sources of income
• Compulsive or addictive gambling as indicated by an unsuccessful attempt to stop gambling, concealment of losses, borrowing money to fund gambling or pay gambling debts, family conflict or other problems caused by gambling

C. Conditions that could mitigate security concerns:

• 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
• 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), and the individual acted responsibly under the circumstances
• The person has received or is receiving counseling for the problem and/or there are clear indications that the problem is being resolved or is under control
• The individual initiated a good-faith effort to repay overdue creditors or otherwise resolve debts
• 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 taken to resolve the issue
• The affluence resulted from a legal source of income

 

Security Clearance Debt Concerns & Solutions by Jeff Burch will continue tomorrow on the Trans World Assurance Blog with Part 2 - What "patterns" adjudicators look for in a Personal Security Investigation (PSI).

Tags: military, Money Book, Jeff Burch, establish credit, Security Clearance, debt

Security Clearance Debt Concerns & Solutions (Intro) by Jeff Burch

Posted on Thu, Dec 22, 2011

INTRODUCTION

A security clearance is a status granted to individuals allowing them access to classified information, i.e., state secrets, or to restricted areas after completion of a thorough background check. Additionally, a security clearance can be a lucrative commodity to retain after service separation for future employment opportunities.

To apply for Military Security Clearance one must fill out and complete Standard Form 86 (www.opm. gov/Forms/pdf_fill/SF86_July2008.pdf).

Included in the SF 86 questionnaire is Section 26 that concerns your financial records within the last 7 years, and asks for full disclosure of all financial obligations, including those in which you are a cosigner or guarantor. Questions asked pertain to bankruptcy, repossessions, liens, unpaid judgments, wages garnished, 90/180 days current or past due/delinquent accounts, etc. Dire consequences may come about if discrepancies arise.

Example: A soldier marks "no" to all Section 26 questions, assuming he had paid all his bills on time, never been late, etc. But 3 years prior when splitting a townhouse rental with 3 other people, the cable was in his name. When he moved out, he told the roommates to return the cable box. They never did and the cable company marked him down for an unpaid return 3 years ago. Fast forward 5 years and the US Government pulls his credit and sees the discrepancy. The soldier has lied (unknowingly) on his SF 86 and they discharge him from service.

 

Security Clearance Debt Concerns & Solutions by Jeff Burch will continue tomorrow on the Trans World Assurance Blog with Part 1 - Concerns and issues that can occur if you're not proactive with your security clearance.

Tags: military, Money Book, Jeff Burch, establish credit, Security Clearance, debt, credit history