Military servicemembers and their families make huge sacrifices for the good of our entire country. Servicemen and servicewoman put their normal lives on hold and place their lives on the line to protect our country’s way of life. We have been at war for the past decade and many members of our military have sacrificed life and limb, all the while receiving very modest financial rewards.
Sadly, many military families find themselves under financial strain, unable to stay on top of the normal monthly bills.
Along with the stress that normally comes with financial struggles, members of the military face additional strain. For a member of the military, a financial problem can affect their status with the military, including the loss of a required security clearance and the possibility of an administrative discharge.
These serious consequences mean that military servicemembers need to be extra careful and work to solve financial problems before they get out of hand. One solution that is available for military families with financial problems is military debt consolidation.
Military servicemembers also should be aware that under The Servicemembers Civil Relief Act (SCRA), a federal law, special protections exist for those on active duty or who recently completed active duty, regarding their financial obligations. According to a circular issued by the Veterans Administration in January, 2011, "The SCRA (50 U.S.C. Appendix §§ 501-596) provides numerous protections to active duty military members and reservists, or members of the National Guard called to active duty, and, in limited situations, dependents of military members. The SCRA is intended to ease the economic and legal burdens on military personnel during their active service by postponing, suspending, or mitigating various types of obligations, including mortgage loans. The SCRA provides relief during and after active service under certain circumstances, including:
The Arizona US Attorney summarized the provisions of the SCRA, making clear that “because there are so many finer details to this law, certain exceptions to any situation may exist. Therefore, it is advisable that servicemembers seek more information about their SCRA benefits and obligations by obtaining legal advice and assistance.”
The Arizona US Attorney states that “SCRA is intended to lower the monthly financial obligations of a servicemember who enters active duty, by minimizing the effect of his/her reduced income. SCRA applies to credit card debts, car loans, mortgages, personal loans, and other similar obligations and liabilities incurred by the servicemember (or jointly with his/her spouse).” The following rules apply:
“To take advantage of the reduced interest rate on obligations incurred before going on active duty, servicemembers must:
Military debt consolidation requires a bit more homework than standard debt consolidation, due to both the special protections available to servicemembers and the potential risks to servicemembers’ military status.
Make sure to understand how the different military debt consolidation options can affect you, before you decide how to resolve your debt problems.
Watch out for predatory lenders. Beware of debt resolution firms that claim to tailor their programs for servicemembers. Be skeptical about firms that use the US flag, the bald eagle, or other patriotic symbols in their advertising. There are legitimate organizations and businesses that use patriotic symbols, such as the Navy-Marine Corps Relief Society. But, there are also bad players that use these symbols in order to give you a false sense of security and lure you into a bad deal.
Never hesitate to get an outside opinion, before you sign any paperwork to hire a firm to work on your behalf, especially one that works to help you get out of debt.