Bankruptcy for Military families is different
I found the following article that I thought you would find interesting and informative. It concerns our military families, bankruptcy and the Service Members' Civil Relief Act (SCRA).
Bankruptcy And Members Of The Military
Many people who find themselves in financial trouble consider applying for bankruptcy as a way to resolve their debts. This situation happens to people serving in the military as well. This is why Congress passed the Service Members' Civil Relief Act (SCRA). It was passed December 19, 2003, signed by President Bush, and it basically completely rewrote the Soldiers and Sailors Civil Relief Act of 1940. Its main purpose was to help to allay the legal and economic encumbrance on military corpsmen who were in active duty status in "Operation Iraqi Freedom."
The first part of the act provided different definitions so there could be no confusion. A service member is a member of the uniformed services — Army, Air Force, Navy, Marine Corps, or Coast Guard on active duty, or an active commissioned officer of the Public Health Service or National Oceanic and Atmospheric Administration. A dependent of a service member is the service member's spouse, child, or anyone for whom they provide more than one-half of support for 180 days before an application for relief.
The SCRA does three important things in the protection of military members, including reservists and members of the National Guard. First, it can prevent the filing of a default judgment by a creditor — nobody is allowed to close a soldier's account or sue them for unpaid debts without giving the military person a chance to resolve it. The SCRA also requires that service members be notified of all activity against their account. Finally, the SCRA can wipe out judgments or garnishments against service members, meaning a business or agency that has sued a soldier cannot take the award out of the soldier's paycheck.
Under the SCRA, home foreclosures can be halted and new payment schedules arranged under court order. Soldiers and their families cannot be evicted from apartments or rental properties. Insurance companies cannot cancel policies for non-payment of premiums. Military members cannot be charged over six percent interest and may request a lowering of that rate. A lease can be broken once a service member goes on active duty, provided the request is completed in writing with a copy of the orders.
If military service causes a service member to struggle with payments on financial obligations like loans, mortgages, or credit cards, the interest rate can be capped at 6% for the duration of their service obligation — but only for debts incurred before coming on active duty.
The provisions of the SCRA protect service members and their families from being harassed by creditors. These provisions also protect those connected with military families, such as relatives who help support a family living on a military salary.
The goal of the SCRA is to discourage service members from filing for bankruptcy while serving in the military. Invoking SCRA protection can provide more options for financial recovery than bankruptcy, and more hope for future financial health.
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