Debt Assistance through the Servicemember Civil Relief Act

FINRA Investor Education Foundation’s military survey in financial capacity reports that 41% of military members have credit card debt over $5,000, 27% of military members have over $10,000 in credit card debt, and that a third of military families have difficulties making ends meet every month. In 2013, the Army Times reported 41% of military members had student loan debt compared to their civilian peers at 34%. With many military families facing debt, Military Spouse Advocacy Network (MSAN) finds it crucial to share information regarding the Servicemember Civil Relief Act (SCRA).

The SCRA protects military members on active duty orders and often times extends specials rights to their dependents. Debts incurred prior to the military member’s entrance into active duty may qualify for the interest rate cap at 6%. Military.com explains that no interest can legally accrue over 6% for the qualifying debts established prior to active duty status, which includes Reservists and National Guard members upon activation. The SCRA protection ends upon discharge from active status.

When joining the military or upon activation, a letter including a copy of military orders must be sent to creditors for qualifying debts. Credit card, car loan, mortgages, and some student loan debt qualify for this special interest rate reduction. Dependents can benefit if they jointly share the debts with the servicemember. Upon receipt of letter, the interest rate would become retroactively applied to the date of entry into active duty status. It is very important to understand that re-enlistment does not meet the qualification for protection under the SCRA, as reported by Marine Corps Times.

For further information regarding the 6% interest cap or other protections under the Servicemember Civil Relief Act, contact your installation’s JAG or Legal office to schedule an appointment with an attorney.

By Meghan Northcutt, AFC ® Candidate


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