LANGLEY AIR FORCE BASE, Virginia –
If someone told you they could reduce your interest rate on a car loan you had before joining the Air Force to six percent, you might think it’s a scam.
But, you’d be wrong.
The Servicemembers Civil Relief Act, a 2003 update to the 1940 Soldiers and Sailors Relief Act, outlines financial protections granted to military members.
“It’s a federal law that guards active-duty rights,” said Karen Hornbostel, Family Support Center community readiness consultant.
Some of the protections include the “Six Percent Rule,” where pre-service consumer debt and mortgage interest rates are reduced to six percent.
“The service has to have materially affected your income,” Ms. Hornbostel said. “You send a letter, which we can provide, to the lender. They can even get back interest from the date they entered active duty. The lender is required by law to knock it down to six percent unless they want to take it to court.”
Under the SCRA, service members can also delay court and administrative proceedings if they’re temporary duty assignments.
“If you’re unable to appear in court due to military responsibilities, you can request a delay in writing,” Ms. Hornbostel said. “You have to provide a date when you will be available and include a letter from your commander.”
One of the updates to the old Soldiers and Sailors Relief Act includes a car lease termination similar to the one that allows military members to terminate apartment leases.
“It used to be we’d tell people not to lease cars because if they went overseas, they’d still be responsible for making the payments,” Ms. Hornbostel explained. “Now, the termination-of-leases section includes cars.”
To terminate a lease, a military member must provide proof they are going to be TDY more than 90 days. The benefit gives the service member the option of putting their belongings in storage and saving a hefty rent payment while they are deployed.
Other protections include default judgement protection and protection against eviction for nonpayment of rent.
If a default judgement is made against an Airman while they are in the military or within 60 days after they leave the service, the SCRA allows that person to reopen the judgment and set it aside.
While the SCRA doesn’t excuse an Airman from paying the rent, it does make it more difficult for an Airman or their family from being evicted. A landlord must have a court order to evict a military family, and the court must find that the service member’s failure to pay is not affected by their time in the military.
Another protection is one from state taxes. In the past, states that were unable to tax service members living in their state would increase the taxes on the spouse, Ms. Hornbostel said. The new act clarifies the law and prevents that.
If an Airman had a life insurance policy before entering the military, the SCRA provides for that policy’s reinstatement after the service member is released from the military. The policy must have been in effect before the Airman’s enlistment and does not apply to a servicemember entitled to employer-offered insurance.
The only problem with the SCRA is getting the word out about it, Ms. Hornbostel said.
“We try to get the word out at FTAC and newcomers briefings,” she said. “We give them copies of the letters they need. We try to make it as easy for them as possible. We think as more and more people benefit from it, the more the word will get out.”
The SCRA will be briefed at the upcoming Joint Forces Financial Education Fair April 12 at the Officers’ Club.