Fort Bliss Monitor

SCRA eases financial burdens for servicemembers after active duty

Linda Zaneski
Special to the Monitor

There are many issues to consider when returning home from active military service – the most important of which may be a family’s financial health. Take comfort, families have up to 180 days after departure from active duty to apply for interest rate protections under the Servicemem-ber’s Civil Relief Act.

Under the provisions of the act, formerly known as the Soldiers’ and Sailors’ Relief Act of 1940, servicemembers can cap the interest rate at six percent for all debt obligations entered into prior to entering active military service. This can include credit cards, mortgages and even some student loans. Keep in mind that the interest rate reductions are temporary.

The SCRA also mandates that no interest above six percent can accrue for credit obligations while a servicemember is on active duty, and the excess interest cannot become due once the servicemember leaves active duty. The interest above six percent is permanently forgiven.

To qualify for protection under SCRA provisions:

• A servicemember must be able to demonstrate that his or her military income is less than the pre-military income and that the ability to pay financial obligations has been negatively affected.

• A servicemember must notify his or her mortgage lender and other creditors in writing of “intent to invoke the 6 percent rate cap.”

• The loans and installment debts for which a servicemember seeks six percent caps on must have been originated prior to the beginning of active duty, and the servicemember must have qualified for them with non-military income.

• A servicemember must provide proof of placement on active-duty status.

The act applies to all persons on active duty in Armed Forces of the United States. Reservists and persons in the National Guard also are eligible when called to active duty by the federal government.

The intent of the SCRA is to help servicemembers focus on the military job at hand by helping to reduce or eliminate home-front financial worries. SCRA protection begins on the date of entering active duty and usually ends between 30 and 90 days after the last date of active duty.

Dependents also may be entitled to SCRA protections. The act does not define “dependent” per se, yet the most commonly accepted definitions are your spouse, child and/or parent. Special steps must be taken for a dependent to claim protection under the act.

For information, speak with a financial services advisor, accountant or installation legal office as soon as possible.



www.bliss.army.mil	Published for the Fort Bliss/El Paso, Texas Community	November 10 , 2004

<map name="boxmap-b4"> <area shape="rect" coords="0, 589, 120, 600" href="http://rcm.amazon.com/e/cm/privacy-policy.html?o=1" > <area coords="0,0,10000,10000" href="http://www.amazon.com/exec/obidos/redirect?tag=&creative=92501&camp=8117&link_code=dl1&path=subst/misc/amazon-cobrand-cc/v3/marketing-from-associates-step1.html/ref%3Db1_assoc_29" > </map>	SCRA eases financial burdens for servicemembers after active duty Linda Zaneski Special to the Monitor There are many issues to consider when returning home from active military service – the most important of which may be a family’s financial health. Take comfort, families have up to 180 days after departure from active duty to apply for interest rate protections under the Servicemem-ber’s Civil Relief Act. Under the provisions of the act, formerly known as the Soldiers’ and Sailors’ Relief Act of 1940, servicemembers can cap the interest rate at six percent for all debt obligations entered into prior to entering active military service. This can include credit cards, mortgages and even some student loans. Keep in mind that the interest rate reductions are temporary. The SCRA also mandates that no interest above six percent can accrue for credit obligations while a servicemember is on active duty, and the excess interest cannot become due once the servicemember leaves active duty. The interest above six percent is permanently forgiven. To qualify for protection under SCRA provisions: • A servicemember must be able to demonstrate that his or her military income is less than the pre-military income and that the ability to pay financial obligations has been negatively affected. • A servicemember must notify his or her mortgage lender and other creditors in writing of “intent to invoke the 6 percent rate cap.” • The loans and installment debts for which a servicemember seeks six percent caps on must have been originated prior to the beginning of active duty, and the servicemember must have qualified for them with non-military income. • A servicemember must provide proof of placement on active-duty status. The act applies to all persons on active duty in Armed Forces of the United States. Reservists and persons in the National Guard also are eligible when called to active duty by the federal government. The intent of the SCRA is to help servicemembers focus on the military job at hand by helping to reduce or eliminate home-front financial worries. SCRA protection begins on the date of entering active duty and usually ends between 30 and 90 days after the last date of active duty. Dependents also may be entitled to SCRA protections. The act does not define “dependent” per se, yet the most commonly accepted definitions are your spouse, child and/or parent. Special steps must be taken for a dependent to claim protection under the act. For information, speak with a financial services advisor, accountant or installation legal office as soon as possible.