Debt Relief Advice for Service Members


Americans’ personal debt reached $2.6 trillion earlier in 2009, and the men and women of the nation’s armed forces have felt this probably more than most Americans realize. However, a nearly 70-year-old law is helping to ease the debt burden for those called to serve their country in the armed forces.

Financial protections for service members exist in the form of the Service Members’ Civil Relief Act (SCRA). Under this law, formerly called the Soldiers and Sailors Civil Relief Act back in1940 and renamed in 2003, lenders must cap at 6 percent the interest rates on loans military service members incurred prior to becoming active.

The 6 percent interest cap applies to any charges including credit card debt, service charges and renewal charges. The act specifies that in order to receive the interest rate reduction, a service member must request it in writing and include a copy of his or her military orders. Additional protections include:

  • Reduced interest rates on mortgage payments.
  • Protection from eviction if your rent is $1,200 or less.
  • Delay of all civil court actions, such as bankruptcy, foreclosure or divorce proceedings.

The promise also states that service members who claim any of the law’s protections would not feel adverse effects on their credit reports or be refused future credit because of it.

Some credit card companies even go beyond what the law requires and offer additional benefits to service members. However, many other simply ignore its requirements. What these companies fail to realize is that there are criminal penalties in many sections of the SCRA for violations of the act. Additionally, many sections preserve service members’ basic right to bring lawsuits to protect additional legal rights independent of the SCRA.

Numbers show that U.S. military men and women can use the help, even though there is some dispute regarding the extent of their debt difficulties. A 2006 Associated Press review of records from the Navy, Marines and Air Force revealed a staggering increase in the number of soldiers who had their clearances to be deployed around the world revoked as a result of personal debt. The AP found that among the branches that provided information, the number of clearances revoked because of debt climbed from 284 in 2002 to 2,654 in 2005 — a 935 percent spike.

If you are a service member who is experiencing financial difficulties, we suggest you contact the SCRA office nearest you and file the forms to protect you from those creditors who are not following the law.