Guideline F: Financial Considerations

Security clearance data continues to tell the story that financial concerns are the most common reason for people to be denied a security clearance or have their existing clearance revoked. With rising inflation, housing market and interest rate fluctuations, and bad decision-making, it is not unusual to see people fall into financial hardship. Financial issues arise in nearly everyone’s life at some point, but the way those problems are handled can make or break a security clearance adjudication. Security clearance applicants and holders must be especially careful to avoid common pitfalls that could endanger their clearance.

The inability to meet financial obligations and the reasons why an individual ends up in debt are concerning to the federal government because financial problems have historically been a very easy way for someone to fall victim to coercion or blackmail.

Concerns Under Guideline F

Unpaid Debts or Inability to Meet Financial Obligations

Delinquent balances or accounts in collections can result in a denial or revocation.
High interest rates on credit cards, vehicles, and other items can quickly result in large amounts of unpaid debt.

Unpaid taxes

One of the most common items in an LOI or SOR is a year or several years of unpaid state or federal taxes. Not only is the failure to file and pay a criminal offense, but the late payment fees and interest can also quickly create a large tax bill that cannot easily be paid.

Deceptive or illegal financial practices

Theft, embezzlement, and altering financial documents either to commit fraud or conceal financial problems are all concerns not only under Guideline F but will likely invoke concerns under guidelines for criminal behavior and personal conduct.

Gambling

Large gambling transactions, even those not related to delinquent accounts, can raise concerns, especially with the legalization of online gambling for both casino games and sports.
Hiding gambling from family or causing family conflict raises concerns due to the ease with which you can rack up a large gambling debt and the high interest rates attached to some gambling debts.

Unexplained Affluence

If your lifestyle or bank accounts reveal a sudden increase in material wealth that is not easily explained, such as by inheritance or court settlement, this can cause concern for undue influence from malign actors. Famously, Aldrich Ames, a noted CIA turncoat, was able to retain his security clearance despite living a lavish lifestyle, including driving a Jaguar and having a very expensive house, despite his meager salary at the agency, where security officials ignored signs of his financial distress and sudden affluence that did not fit with his household income.

Contact us for help

Aenean leo ligula, porttitor eu, consequat vitae, eletteifend ac, enim. Aliquam lorem ante, dapibus in, viverra quis, feugiat a, tellus. Phasellus viverra nulla ut metus varius laoreet.

Mitigating Financial Concerns

Mitigating financial concerns starts with honestly confronting the nature and scope of the problem. Whether it is large debt, compulsive behavior, or past dishonesty, mitigating financial concerns can be straightforward, but not always easy to accomplish.
Being honest with family who may not have been aware of the scope of a financial issue is a difficult conversation to have, but being open about it reduces the potential for coercion from outside sources and can lead to creative solutions for digging out of a financial hole.
Making a good faith effort to resolve the problems with a clear plan of affirmative steps to reduce and eventually pay off the debts is the heart of solving a Guideline F problem.

Debt consolidation or credit counseling

Many groups offer to consolidate your debts, negotiate total amounts down, or assist in bankruptcy filings to resolve financial problems.
Overdue creditors will also often accept a small total amount with a payment of a lump sum and a promise of a quick payment period.

Payment plans

If you have one or several delinquent debts and cannot pay them off entirely, getting on a formal payment plan to demonstrate financial responsibility can be an effective way to address the concern.

Demonstrate Unusual Circumstances

Often, people get into debt due to unforeseen circumstances such as a medical emergency, job loss, divorce, death of a family member, or identity theft. Demonstrating that the circumstances that led to the financial concern are unlikely to recur, are resolved, and that you acted responsibly to address the circumstances is often effective in mitigating the concern.
Demonstrating how they once lost their financial stability and why those circumstances will not recur is a major part of resolving Guideline F financial considerations cases.

File Taxes

The government, state, or federal government will always accept your money. While there may be additional money owed due to interest and late fees, late filing taxes will always look better than leaving them unpaid.

Do the Math

Showing your fixed expenses, sources of income, and places you’ve identified to cut spending can help clarify your financial situation for an adjudicator.
Often, a financial worksheet will be provided in a letter of interrogatory (LOI) to do this very same process, so showing the same work before a demand for information is issued can prevent problems from occurring.

Check Your Credit

Basic financial hygiene involves checking your credit scores at least annually. The major bureaus’ credit reports are available weekly. A clearance applicant or holder should check prior to any report, reinvestigation, or interview, let alone when problems arise.
Inaccurate marks on your credit report can harm your rating and your security clearance. Often, fraudulent accounts are opened without the holder’s knowledge. Starting the process to remove fraudulent or inaccurate information from your credit report early can prevent a problem from becoming more serious.

Hiring an Experienced Security Clearance Attorney Can Help

Guideline F cases are document-heavy and often require a lot of action on your part to address delinquent financial issues. Having an experienced attorney who is familiar with Guideline F, can read a credit report, and knows how to navigate the IRS system to get required documents can help ease your stress and mitigate the government’s concerns. Contact us today for a free, confidential consultation to get a handle on any potential or existing Guideline F financial concerns. Brian@LSAttorneys.com 847-775-7701.