Are you eligible for an interest rate reduction? By Lt.j.g. Ryan Charles Special Contributor Service members paying interest rates in excess of 6 percent per year may be entitled to relief under fed- eral law. Section 527 of the Service Member's Civil Relief Act (SCRA) provides that "an obli- gation 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 inter- est at a rate in excess of 6 percent per year during the period of military service." This means that if you incurred a debt in the form of a mortgage, car loan, credit card balance, or just about any other finan- cial liability, prior to entering military ser- vice, you may be entitled to reduce your interest payments to 6% during the entire period of active duty service. Please note that the reduction does not apply to feder- ally guaranteed student loans. A service member intending to invoke the 6 percent interest rate cap must com- ply with the SCRA's notification proce- dures. The service member must provide the creditor with written notice and a copy of the military orders calling the service member to military service. Generally, the written notice should be a letter to the creditor setting forth: (1) the basis of the service member's qualification for the 6 percent interest cap, (that the debt giving rise to the interest payment was incurred before the service member went on active duty); and (2) a request that the creditor reduce the service member's interest rate to 6 percent pursuant to the SCRA. The military orders must show that the service member was called to military service after the debt or obligation was incurred. A court may grant a creditor relief from the interest rate reduction if the creditor can show that the service member's ability to pay interest in excess of 6 percent is not materially affected by reason of the service member's military service. However, the burden is on the creditor to prove that this is the case. Still, it is a good idea for the service member to include a statement in the written notice to the creditor that his or her ability to pay interest in excess of 6 percent has been "materially affected" by reason of entry into military service. The SCRA imposes a timeline within which requests for interest rate reductions must be submitted. The service member has 180 days after termination or release from military service to submit written notice to the creditor. This means that the interest rate reduction applies retro- actively where a service member has been paying interest in excess of 6 percent after being called to military service. The credi- tor should account for any interest pay- ment in excess of 6 percent made by a ser- vice member since the date of active duty. However, it is preferable to provide written notice as soon as possible after being called to active duty in order to avoid disputes with creditors and complications in calcu- lating over interest payments. Also, it is the service member's obligation to inform a creditor if military service is subsequently terminated. Otherwise, the former service member is liable for any interest forgiven by the creditor after being released from military service. The SCRA mandates that interest in excess of 6 percent is "forgiven," and can- not simply be deferred until the period of military service ends. Also, the SCRA broadly defines "interest" to include ser- vice charges, renewal charges, fees, or any other charges, except bona fide insurance. This protects service members from credi- tors trying to cleverly disguise the forgiven interest as "legitimate" charges and fees. Moreover, the SCRA forbids creditors from taking adverse action against a service member's credit report for requesting an interest rate reduction pursuant to the SCRA. Remember, the interest rate reduc- tion does not apply to debt incurred by a spouse alone. As a second practice point, some creditors are willing to lower inter- est rates below 6 percent for pre-military debt. Therefore, service members should contact each individual creditor to find out its policy before sending written notice and locking in the 6 percent cap. As a final word of caution, debts incurred by a service member after entering military service are not subject to the 6 percent interest cap. If you believe you might qualify for an interest rate reduction, contact a legal assistance attorney at: NAS Jacksonville (904) 542-2565 ext. 3006; NS Mayport (904) 270-5445 ext. 3017. This article is not intended to substitute for the personal advice of a licensed attorney. no]cOMPAC acer Caxaer (a LG t*L dhlscafpi AUDIOFOX PanasOnic. A, =..-' SONY@ Buy from the Pros! Sony Portable Navigation $15 Per Payday* SONY. Sony Bravia 46" LCD 1080p HDTV $77 Per Payday* Kenwood 7" Flip-Out In-Dash DVD System $35 Per Payday* Flat-Panel TV Mounting System $18 Per Payday* 50" Plasma HDTV While they Last $57 Per Payday* HP Dual 2.0 GHz Notebook PC $63 Per Payday* 17" Toshiba Laptop $100 Savings CUSTOM~ ~ ~IsIZE YUR RIDEI9 IV IRhino Linings THE SPRAYED-ON LINER $50 OFF RHINO BEDLINER #1 Consumer Ranked Bedliner National Lifetime Warranty 10% OFF DETAILING MOTHERS Polishes*Waxes*Cleaners $25 OFF WINDOW TINT SunTek WINDOW FILMS Carbon Tint (Cell Phone and GPS Safe) Lifetime Warranty Pes res rayuay o3 rer rayuay- WE SHIP ANYWHERE Furniture Electronics Appliances Jewelry Computers Car Audio & Video Rims & Tires II w ^ ,," i Cavalier Chocolate Recliner Englewood 7 pc. Dining Group $18 Per Payday* $35 Per Payday* 0% FINANCING 6 MONTHS INT-KaST FREE FOR MILITARY & CIVILIANS* 1ir iL" "/ Posturepedic Mattresses = FREEDOM 7Te A/merican drzeam 4tarts/ 6e e *Freedom offers 6 months 0.0% interest with credit approval. If the account is kept current and the entire balance is paid in full within 180 days of receipt of merchandise purchased, all finance charges will be rebated to customer. Per payday or twice monthly payments in this ad are based on 24 months with zero down payment at 19.96% APR on approved credit, taxes not included. To calculate the total cost of financing simply multiply the payment amounts by 48. Freedom's other credit plans begin at 14.96% APR o.a.c. Regardless of your credit, Freedom has a plan for everyone!!! 1=8=8041 WWW.HOPFEEDO.CO ow