Show Me the Money
SCRA is saving Sailors thousands of dollars
12 February 2014
"OMG!!!" wrote Petty Officer 2nd Class Meaghan Biery on Facebook. "Just got notification from [my credit card & auto loan company] that all but 6 percent of the interest from all accounts is being credited back to my account. "My car is now paid off a year early! Sa-WEET!!" added Biery. "So that alone saved me $404 a month. I could hug you for reminding us of this valuable benefit."
The person she wanted to hug was Chief Petty Officer Athena Allen; and the valuable benefit, The Servicemembers Civil Relief Act (SCRA).
The SCRA provides a wide range of protections for individuals entering the military, Reservists called to active duty or deployed service members. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed.
Although the program can help with mortgage payments, taxes and the termination of leases, the biggest benefit most have found with this program is its ability to lower the interest rates of credit cards and loans to 6 percent. But there is a catch.
This law only covers debt incurred prior to military service. Or does it?
"I had heard about the ability to use the Servicemembers Civil Relief Act when you join the military, to help reduce interest rates on debt incurred before you entered the service," said Allen. "But until recently, I didn't know that you could actually use your reenlistment contract to bring your accounts down to 6 percent interest if they were established before reenlisting or deploying."
Allen, still a little doubtful, decided to wait.
"I had heard that people were sending in their reenlistment paperwork and getting amazing interest refunds, but for some reason, I still hesitated," said Allen.
One person told her that his [clothing store] credit card debt went from $3,500 to $1,800 after submitting the paperwork. Another Sailor said credited back so much interest that it actually paid the card's balance off, and sent a $400 check to one Sailor even though the account was paid in full and closed.
So Allen decided, "What the heck?" She'd give it a try to see what happens. She faxed her current reenlistment contract along with a memo to her credit union's SCRA department, and then she waited. Ten days later while checking her balance she saw an interest charge credit adjustment in the amount of $3,065.99.
She immediately took to Facebook posting about her experience and encouraging people to fax their info into their credit card companies. She was met with the same hesitation she had once encountered.
One Sailor posted, "I called my bank and they told me I wasn't eligible."
Another Sailor posted, "I was told this only applies to Reservists who are called back to active duty."
Allen was adamant in her response.
"When you turn in a chit and your supervisor denies it, the chit does not die there," wrote Allen. "You have to let the chit go all the way up to the CO. Only he can deny it. Submit a 1306 and let them tell you no in writing."
And then the success stories started pouring in.
Chief Petty Officer Shante Morris wrote, "I turned in the proof of enlistment to two creditors. They both paid my balance off, and I received a total of $2,300 from them. Yeah, you read that right. They paid me. And my credit card company lowered my APR to 4 percent."
Petty Officer 2nd Class Tiffany McMillin wrote, "Adjusted an auto loan (third car) from 24 percent to 4 percent! Saved us $330 a month!"
Seaman Aleia Jablonski wrote, "Got my car loan dropped from 12 percent down to 6 percent and was able to pay it off a year early."
Petty Officer 2nd Class Meghan Morris wrote, "I just submitted my paperwork to my credit union and credit card company, and received more than $4,500 from the institutions, and now I am just that closer to having a good down payment to buy a home in San Diego!"
Chief Petty Officer Lakeshia Diaz wrote, "This worked for one of my accounts so far. My [credit card company] paid off my account, and I now have an $893 credit on my account!"
Master Chief Petty Officer Marilyn Kennard wrote, "My bank credited me approximately $10K on credit cards and loans. Thanks for sharing this information with us! My Sailors will benefit from this!"
The crazy part is how simple it was.
1. Go to the financial institution's website or call them and ask for the SCRA fax number.
2. Enter your account information and your contact information on the letter
(sample located here).
3. Obtain a copy of your reenlistment contract or deployment orders to include as enclosures with the letter and ask for the reduction, understanding in some instances the reduction is a courtesy and not required by law under the SCRA.
4. Fax the letter to the financial institution.
5. Wait for a response.
Not everyone will have success, said Allen. It seems to really depend on the company and the circumstances, and how they interpret the SCRA, but ultimately it has proven worth it to try.
"It's going to take you a few minutes to gather the information, but the potential benefit far outweighs the five minutes it will take to fax the letter," said Allen. "I do not need the money, but I'm not thinking about me. I'm thinking about Sailors who have families and bills and debt, and are not taking advantage of a program that is meant to help them, especially when it is their money."
Representatives from Navy Legal explained how the SCRA works:
An obligation or liability bearing interest at a rate in excess of 6 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 6 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 6 percent e.g. reduce interest to 4 percent as a courtesy but no law requires. Six percent may be extended to cover the entire period of military service (no break in service reenlistment) as a courtesy by the creditor.
For more legal guidance click
HERE.
**Editor's Note: Comment below and let us know how the program helped you.