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Home >> Military Issues
Timing and Coverage of SCRA Protection
When a soldier is deploying, their creditors: mortgage lender, credit card, auto loans etc., have to lower the interest rate to 6% as per the soldier sailor act. Does it go into effect with the pre-mobilization orders (the 90 day orders before deployment), or do they have to wait for the activation orders (the day they are activated)? Does this also apply to the soldier's spouse's credit card companies, or does the soldier have to be on the spouse's account?
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The requirement that the interest rate on debt incurred prior to military service be reduced to no more than 6% applies during the period of active duty only, except for mortgage debt, to which it applies during the period of active duty and for one year thereafter. The reduced rate requirement applies to obligations of the service member or of the service member and to joint obligations of the service member and his/her spouse. It does not apply to individual obligations of a service member's spouse.
The applicable section of the Servicemembers Civil Relief Act (that's the name of the law that replaced the Soldiers and Sailors Civil Relief Act) is 50 App. U.S. Code 527(a):
"An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent --
(A) during the period of military service and one year thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage; or
(B) during the period of military service, in the case of any other obligation or liability."
Published on BankingQuestions.com 1/09/09
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