Security Clearance Attorney Sean M. Bigley represents clients worldwide in security clearance denials and revocations. He is a former investigator for the U.S. Office of Personnel Management. For more information, please visit www.bigleylaw.com.
You may have noticed that I often write on issues related to Guideline “F” – the security clearance adjudicative criteria which aptly cover financial considerations. There is good reason for this: financial problems have consistently been, and remain today, the top reason for security clearance denials.
In most Guideline “F” cases, the security clearance applicant is directly responsible for accruing the debt at issue. There isn’t much ambiguity on the issue of liability when, for example, the debt is a vehicle loan or a credit card (exception: identity theft).
But what happens when debt on the applicant’s credit report is solely a result of co-signing a loan for a friend or family member who turned out to be irresponsible? Will that debt become an obstacle to obtaining a security clearance?
In a word, “yes.”
Liable Under the Law
Under the law, co-signing for a loan of any kind makes the co-signer fully liable if and when the borrower defaults. A lender in such a case would be perfectly entitled to sue the co-signer on the full amount owed, which happens sometimes in situations where the borrower is insolvent or dodging the creditor. Even if the creditor chooses not to sue, the co-signer still gets stuck with the default on his or her credit report. That can be the kiss of death for obtaining future credit – or a security clearance.
For a fascinating example, take a look at ISCR Case No. 14-05690. I recently represented the applicant in this case, who co-signed on student loans for his daughter who later failed to make the payments. Despite repeated warnings by the applicant to his daughter, the daughter chose to spend frivolously instead of pay back the loans. The applicant – in his desire to teach his daughter a lesson about financial responsibility – allowed the loans to become delinquent. It took the daughter some time, but she ultimately stepped up to the plate and took care of her responsibilities.
No doubt this country could use more parents who, like this applicant, held a firm line. Yet the irony of the situation is that the applicant’s good parenting almost cost him his job.
In the end, we were able to save this applicant’s security clearance and his career, but not without some time and expense. That’s worth remembering before you ever agree to co-sign on a loan.
This article is intended as general information only and should not be construed as legal advice. Consult an attorney regarding your specific situation.