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Around The Fleet

SCRA Reconsidered

How SCRA Really Works

Last week, All Hands featured an article titled "Show Me the Money; SCRA is Saving Sailors Thousands of Dollars.

And that's true; the Servicemembers Civil Relief Act (SCRA) does save Sailors thousands of dollars in interest they would otherwise have to pay on pre-military service consumer debt for which the contractual interest rate exceeds six percent. However, the article erroneously suggested that Sailors are entitled by law to use their reenlistment contracts to obtain lower interest rates for debts incurred during service.

We apologize for the erroneous information. It was our intention to inform Sailors about a program from which we believed Sailors could benefit.

Despite our good intentions and belief that our information was accurate, the editorial liberties we took caused the information to potentially lead to abuses of SCRA protections. We encourage Sailors to properly claim the legal right to benefits under the SCRA for pre-service consumer debt for which the interest rate exceeds 6%. Additionally, we encourage Sailors to maintain their integrity by ensuring that when a debt is not a pre-service debt, such as debt incurred while on active duty but prior to re-enlistment, that the Sailor does not misrepresent that debt as an SCRA-protected debt.

That said, we are fortunate that several financial institutions may reduce interest rates more liberally than is required by the SCRA. Every Sailor has the right to ask a creditor to consider the Sailor's unique personal economic circumstances that may cause the Sailor to have difficulty meeting his or her personal financial obligations. However, Sailors should *not* be encouraged to claim a legal right to SCRA interest rate protection for debt incurred during a previous enlistment.

Our team, along with our legal public affairs reviewer, failed to connect all the dots before going live with the information, and for that we apologize.

Our hope is that Sailors will look closely at the SCRA and use it the way it is intended to be used, remembering that it:

Applies to an obligation or liability bearing interest at a rate in excess of six percent per year that is incurred by a service member, or the service member and the service member's spouse jointly, before the service member enters military service shall not bear interest at a rate in excess of six percent during:

(A) 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) the period of military service, in the case of any other obligation or liability.
Businesses may forgive more than six percent (e.g. reduce interest to four percent as a courtesy) but no law requires this action. Six percent may be extended to cover the entire period of military service (no break in service reenlistment) as a courtesy by the creditor.
Additionally, Sailors are encouraged to consult with a free military legal assistance attorney.

A list of offices can be found HERE