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Finances or debt problems have increasingly become the number one reason active duty military members are denied security clearances. Prior civilian debts, past due credit card accounts and high debt to income ratios can all be harmful to one’s military career. It can be extremely difficult to negotiate debt repayment plans with third party collectors and even harder to know where to begin. Meanwhile, your main focus needs to be on the military, not in dealing with harassing debt collectors or burdened with bad debt.
The nature of military service makes it difficult for service members to fulfill their financial obligations and to assert their legal rights. Fortunately, Congress and the state legislatures recognized the need for such protective legislation. The first such legislation dealing with military debt was passed during the Civil War, when Congress passed a moratorium on civil actions brought against soldiers and sailors. During World War I, Congress passed the Soldiers' and Sailors' Civil Relief Act of 1918 This statute did not stop all actions against service members, but it directed trial courts to be as fair as possible when a service member's rights were involved.
The well-known Soldiers' and Sailors' Civil Relief Act (SSCRA) of 1940 was essentially an updated version of the 1918 statute with amendments. The first of these amendments was enacted in 1942. Congress wanted to override court decisions that had led to restrictive interpretations of the Act. Another amendment occurred in 1991 as a result of Desert Shield/Storm.
Reservists and National Guard Members (when in active federal service) are also protected under the SSCRA. SSCRA starts on the first day of active duty, when the soldier ships out to basic training. Some protections under the act extended for a limited time beyond active duty discharge or release but were tied to the discharge/release date. Additionally, some of the Act’s protections can also be applied to the members’ dependents.
This changed in 1995. After passage of the Hatch Act Reform Amendments, however, which went into effect January 1995, creditors have a much easier way to force soldiers to pay their military debts.
All a creditor must do now to collect debts from soldiers is to obtain a court judgment that complies with the requirements of the Soldiers' and Sailors' Civil Relief Act, attach a certified copy of the final judgment to an application form (DD Form 2653), and send the paperwork to the Defense Finance and Accounting Service (DFAS) processing center in Cleveland, Ohio. The soldier will be notified and then the DFAS will begin garnishing the soldier's pay 90 days later unless the soldier objects.
There are only a few valid objections:
The court judgment must have been certified within 90 days;
If the judgment must explicitly state that the court has jurisdiction over the soldier and that the creditor complied with the Soldiers' and Sailors' Civil Relief Act;
The soldier proves that the debt has already been paid or discharged in bankruptcy.
Creditors quickly acted after the passage of the law and, by July 1995, the DFAS was averaging 1000 applications per month for such allotments. Clearly, it is more important than ever that soldiers resolve financial disputes before moving to a new duty station. If the dispute can not be settled before PCS, the soldier needs to monitor the dispute until it is resolved. If a lawsuit is subsequently filed, it is imperative that the soldier quickly respond, to ensure the court hears both sides of the story before rendering judgment.
In November 2002, Congress passed the Veterans Benefits Act of 2002, which provides SSCRA protection to National Guard members called to state active duty under Title 32, if the duty is the result of a federal emergency, the request for active duty is made by the President or Secretary of Defense, and if the member is activated for longer than 30 days. One recent example of would be the National Guard members activated at the request of the President, to provide security for airports after the 9/11 tragedy.
Even with the 1995 changes, soldiers and service members have protections. If a service member’s military obligation affects his or her ability to pay on credit cards, loans, or mortgages, the service member can have his or her interest rate capped at 6% for the duration of their active service, according to provisions of the SSCRA.
In order to qualify, a debt must have been incurred prior to the service member coming on active duty, the service member must be on active duty at the time of the request, and most importantly, the service member’s military career must materially affect their ability to pay the debt.
To cap the rate at 6%, the soldier or service member should contact the creditor in question and request the rate by capped at 6% per the SSCRA. The soldier should attach documentation showing he or she is on active duty. The creditor can always go through the courts to seek relief if it believes the request if fraudulent or if the soldier defaults on payments.
The Debt Reduction Group has helped many soldiers to deal with their debt problems. We can negotiate lump settlements with your creditors to reduce your military debt, credit cards, and other secured loans by 40-60%. Getting out of debt can allow you to concentrate on the more important tasks at hand – your job in the military. Click here for a free consultation. We are experienced in dealing with people overseas and through email so you can be confident in our ability to help you.
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