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Servicemembers' Civil Relief Act

  
  
  

 

The 1940 (amended 2004) Servicemembers' Civil Relief Act (SCRA) helps members manage their personal civil affairs, so they can devote attention to their duties. In addition, the SCRA recognizes the sacrifices members make to answer their country's call to serve, although it may include difficult financial obligations.

The SCRA helps Soldiers in many ways, however, for the sake of this article; I will focus on a scant section of the SCRA that limits interest charged to members at 6%. The SCRA allows this lower interest rate only on debt incurred before a servicemember enters the service. Therefore, credit debt incurred after entry is not covered.

However, over the years, countless service members have gotten their credit debt reduced as low as 0%, even though they acquired that debt after entry.


How to use the SCRA after entry: The easiest way to lower your interest rate is to talk to your creditor through their customer service department. Some companies will be more than glad to assist you with your request, even if you do not qualify through the SCRA. 

Example: The Company may have a motto of, "Keep customers happy. Give them what they want, and make them loyal customers." Otherwise, get lucky, and find a helpful service rep who is willing to work with you.   

Remember, even at lower rates, creditors still make millions of dollars. While companies may play along with you invoking the SCRA, the results may vary.  

Example A: One customer service rep said her company had no special interest rates for the military; however, if their credit rating was in good standing, the company would lower its fixed rate and even drop to 6% if the member went to war.


Example B: Another service rep seemed well versed with the SCRA, at least on the behalf of the customer. When asked about military discounts, she replied, "Have them send us a copy of their orders, and we'll lower their interest rate to 6% under the SCRA." Furthermore, the fixed rate would continue until members left the service. In addition, when asked about debt accumulated after enlistment, she replied, "That applies to all balances." 

Therefore, in both examples, the offers were more generous than the legal restrictions of the SCRA.    

What if creditors do not agree to lower rates: Do not give up! Call another customer service rep. Usually, there are several service reps within a company; therefore, you might find one that will work with you. However, if you are not making any headway, then ask for the manager. The manager may agree with your request to lower the interest rate. In addition, you will further your chances of a rate reduction, if you are courteous and not demanding over the phone, especially, since creditors are not obligated to lower debt that you accrued after enlisting. 


What else can I do to lower interest rates with my creditors? When re-enlisting, send a letter (see below) to your creditor that invokes the SCRA, including re-enlistment paperwork. As a public relations gesture, your creditor may lower your interest rate on debt accrued from your past enlistment, but expect to be billed at current rate of interest for any future transactions. 

Sample letter: First, call your creditor to let them know that you will pay 6% while in the service, and cite the SCRA as your authority. However, if this does not work, send creditor this letter, and attach a copy of your proof of enlistment with it: 

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A sample letter is included in the PDF of this article that is
available for download. Click the button at the end of the article.

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To learn more about the SCRA, visit:  

 

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