Legal Insider: Navigating financial issues in security clearance adjudications

This is a sponsored column by attorneys John Berry and Kimberly Berry of Berry & Berry, PLLC, an employment and labor law firm located in Northern Virginia that specializes in federal employee, security clearance, retirement and private sector employee matters.

By Brendan C. Stautberg, Esq.,

Financial issues are a frequent reason security clearance applicants run into problems during the adjudication process. That may not be surprising: it makes sense that the government would care about your financial status — including your record of paying off debts, meeting other obligations, and living within your means — because of how those aspects of your life and conduct reflect your trustworthiness and reliability.

And it is not unusual for Americans to have various debts, whether current or resolved, and sometimes people fall behind on their payments for whatever reason. It happens; people can and do fall on hard times for reasons entirely outside their control. Likewise, sometimes people make bad financial decisions that it can take significant time and effort to recover from.

Luckily, financial issues are not necessarily the end of the road when it comes to obtaining a security clearance. Many people are granted clearances despite outstanding debts and other problems. However, to get to there, it is crucial to understand how to address financial concerns in a way that will satisfy clearance adjudicators.

Financial Issues in the Security Clearance Context

When you first apply for a security clearance, you are faced with a new level of scrutiny, including towards your finances. But the nuances of this scrutiny, although very important, can be difficult to understand at first. For example, again, it is hardly the case that you cannot be granted a security clearance if you have any outstanding debt. On the opposite end of the spectrum, though, you can also be denied a clearance even if you have completely resolved past financial issues if other concerns about your financial responsibility remain.

Therefore, it is important to understand what clearance adjudicators are looking for when they allege a finance-related security concern. This topic is also a great example of why it is important to be represented by an experienced attorney in order to maximize your chances of successfully appealing an unfavorable clearance decision.

Depending on the federal agency involved, whether the applicant is employed by a contractor, and what stage the process is in, security clearance adjudications may be processed within the Defense Office of Hearings and Appeals (DOHA), the Defense Counterintelligence and Security Agency (DCSA), or within a sponsoring agency’s own security office. Regardless of which agency or office is adjudicating your case, the clearance adjudicators use standards from a document called Security Executive Agent Directive 4 (SEAD 4), which is issued by the Director of National Intelligence. The financial component of SEAD 4’s National Security Adjudicative Guidelines is Guideline F: Financial Issues.

Understanding and Responding to a Guideline F Concern

While Guideline F itself provides further details on what types of conduct can give rise to a financially based security concern, the main takeaway from Guideline F is twofold: first, financial irresponsibility demonstrates a lack of good judgment, self-control, reliability, and similar traits deemed important to safeguarding classified information, in addition to irresponsibility potentially reflecting other problems such as substance abuse.

Second, financial overextension could lead someone to engage in illegal activity to make ends meet, and it could also open them up to blackmail. As a result, the Guideline F calculus assesses both your own responsibility and actions as well as whether your financial situation increases your risk of other problems.

However, a frequent pitfall in Guideline F cases is that the applicant will focus too much on their current financial situation and not on the other aspects of their financial history. It is easy to mistakenly assume that as long as you demonstrate to the adjudicators that you have paid off your debts or resolved whatever other issues there may be, you are in the clear. Unfortunately, that by itself is often not enough.

Security adjudicators are not just looking at your current financial picture, but also at two other aspects of whatever issues they may allege: first, how you got into the situation in question, and second, what you have done to deal with it. For example, if you have a charged-off debt in your credit report, then even if you have since paid the debt in full or otherwise resolved it, adjudicators will want to know details about why the debt was charged off in the first place, and they will also want to know why you didn’t make payments for whatever period of time may be the case.

Even if you did make payments or otherwise attempt to resolve the problem, adjudicators will want to see hard evidence of your payments or other efforts — they will not just take your word for it, and the burden is on you as the applicant to provide sufficient evidence. However, if you can provide good explanations about your good-faith efforts to address any financial issues to the best of your ability, as well as adequately explaining the circumstances that led to the problem in the first place, then your chance of sufficiently mitigating a Guideline F security concern is much greater.

Contact Us

Our firm handles many security clearance cases, including Guideline F matters, for federal and federal contractor employees. If you are a security clearance holder or applicant in need of representation, please contact our office at 703-668-0070 or through our contact page to schedule a consultation. Please also visit and like us on Facebook and Twitter.