The Servicemembers Civil Relief Act provides protection for individuals (and their dependents) in the United States armed forces. This includes members of the U.S. Marines, Air Force, Army, Navy, and Coast Guard. Reservists and members of the National Guard (when in active federal service) are also protected under the act beginning on the first day of active duty, which means when the person ships out to basic training (basic training and job school are considered active duty for National Guard and Reserve personnel, as well as active duty personnel). The purpose of the Act is to prevent loss of residence, automobile, or similar personal property when the debtor is on active duty and living on a military pay scale.
If a servicemember’s military obligation has affected his/her ability to pay on financial obligations, such as credit cards, loans, mortgages, etc., the servicemember can request to have his/her interest rate capped at 6 percent for the duration of the servicemember’s military obligation, or in the case of a mortgage loan for one year after the end of the military obligation.
Qualifying debts are debts that were incurred prior to the servicemember coming on active duty. The servicemember must be on active duty at the time of the request, and the servicemember’s military career must have materially affected the servicemember’s ability to pay on the debt. This provision does not apply to federally guaranteed student loans.
The Bank will apply a maximum rate of 6 percent on loans made prior to the start of the individual’s active military service. This interest rate limitation will apply during the individual’s term of active service unless otherwise directed by a court. All interest in excess of 6 percent will be forgiven, not deferred.
In general, if a mortgage loan is originated before the period of the servicemember’s military service and for which the servicemember is still obligated, and is secured by a mortgage, trust deed, or other security in the nature of a mortgage, the Bank may have limited rights in foreclosure court. During the servicemember’s military service or within 9 months after their service has been completed the court may:
- Stay the proceedings for a period of time as justice and equity require, or
- Adjust the obligation to preserve the interests of all parties
For further assistance to servicemembers or their dependents, please call the toll-free military one source number (1-800-342-9647) and or go to the website of http://legalassistance.law.af.mil/content/locator.php.