Your military service may have an impact on your ability to receive SCRA benefits. Even if you are not on active duty, but a member of the Reserves, the Guard, or a retired veteran with an honorable discharge, you may be eligible for certain protections under the Act.

Get in touch with your lender or servicer as soon as you decide to join the military or receive orders to begin training. Until you return from service, insist on holding any delinquents accountable. To prove that you are a member of the armed forces, show them your military ID card.

As a result of your deployment, the information on how to reach your lenders may have changed. You can download a copy of your Leave and Earnings report from the Department of Defense’s Personal Financial Management website.

Interest accrued while serving in the military is subject to a 60-day grace period in addition to the 30-day grace period already provided by your lenders. In addition, military personnel is entitled to a 12-month payment deferral under federal law.

As soon as possible after your release, notify your lender of your Honorable Discharge (DD214). Be sure to let them know if you receive orders for additional training or deployment as a precaution. It’s critical to remember the following: Deferrals based on anticipated future deployment or training are not required by state or federal law for lenders to grant them. Any upcoming deployments or training may be requested as documentation by your lender.

With a copy of your deployment orders, you’ll be fine as long as you can show your lender that you’ve been deployed, which the Department of Justice is aware of.

The fact that you are protected by the SCRA does not give you the right to stop making loan payments. It doesn’t matter how much you owe; you still have to repay it. There is no guarantee your interest rate won’t rise because you’re in the military. Lenders will maintain their standard rates as long as you make regular payments in accordance with the terms of your promissory note (i.e. the minimum payment).

A good way to verify your eligibility for SCRA benefits is to give your lender a copy of your official military orders or an approved DoD form defining your status as activated, deployed, or on temporary service away from home.

As soon as you are activated or put on temporary duty, you should keep in contact with your lenders and send them copies of the orders that designate you as such. Tell them how long your activation will last so that they can put it in writing as proof that it complies with the law. In order to keep your military deferment, don’t stop making loan payments just because you’re under the SCRA protections.

Can I still get a loan if my service time doesn’t match the length of the loan period?

Everything is meaningless. If you are on active duty for more than one term of your loan, the SCRA protects all of your loans. This federal law does not require you to select which loans or how much debt you want to be covered. The military service dates on your orders protect it from non-payment so it will not be accelerated, late, or subject to penalties if it is covered by SCRA. Know your rights under the Servicemembers Civil Relief Act (SCRA)

In what ways does the SCRA safeguard members of the armed forces currently on active duty?

The SCRA protects all active-duty military personnel. As soon as you are ordered to active duty, you are given a set stipend. No matter how much money you owe, you’ll always have this income as long as you’re in the military. Interest rates cannot be changed by the Federal Reserve in response to military service or the terms of a loan, credit card, mortgage, or any other type of debt that a borrower has taken out before joining the military. Only if you are currently serving in support of a contingency operation on active duty after October 1, 2003, can you protect an obligation that you had to fulfill prior to military service. SCRA protections do not apply to new debts, so you must keep them separate from your existing debts.

What should you know about the SCRA?

To qualify for a six percent interest rate on pre-military loans, you must have served before October 1, 2003. This figure does not include interest charges that have already been paid. The percentage cap rises to 10% if you’re also in a conflict zone. Up to one-third of your outstanding principal may be forgiven if you live in a war zone.

While serving your country, you can reduce your debt by up to 6% or 4% thanks to the SCRA. You’ll have to get in touch with your creditor if they don’t agree to let you. Unlike student loans, there is no way to reduce your debt automatically. Another case of debt relief involved a man who was able to get his cell phone bill reduced from $80 to $20 per month after proving that he could not afford to pay it at the original rate. Debt collectors are unable to mark your accounts as past due, impose penalties, or cancel reward programs.

1. You are either in the military or the spouse of a service member who has served or has died while on active duty.
   • Interest rates on military loans are capped at 6% when the Servicemembers Civil Relief Act (SCRA) is in effect.
   • When the SCRA is in effect, there is a 4% cap on interest rates on debts (26 USC 162(d)(2)). There are a few things to keep in mind if you signed up for military service with the understanding that your active duty would be covered even if it was extended after you were informed of the extension. Each period must be at least 90 days long in order to be covered.
   • Interest rates can’t be cut to less than 6% under the terms of 26 USC 162(d)(1).
   • Based on time served (90 days to less than a year) or the type of duty performed (where more specific regulations apply), debt coverage is determined. Even if interest rates are lower, they cannot be lower than 4% in these situations.
   • As long as you’re serving in the military, you can take tax-free withdrawals from your Individual Retirement Account (IRA).
   • Members of the active reserves and National Guard can be considered “active duty” if they are absent from duty for less than one day.
   • Interest rates cannot be raised above the average rate of consumption, according to 26 CFR 1.518-6(b) (2). The Federal Reserve discount rate or 8 percent, whichever is greater, is lower than 1/8 percent.
2. There are some debts that aren’t included in your credit report that you can use to raise your credit score. Examples of exempt obligations include student loans and child support, as well as debts discharged in bankruptcy after October 7, 2005 (11 USC 523), and debts for death or personal damage caused by an automobile accident (26 USC 6501).