Johnny comes marching home to financial battles

Some military reservists are coming back from Iraq to find another battle on their hands.

Although federal laws mandate that active-duty military personnel get special consideration when it comes to their jobs and financial obligations, some employers and creditors don't know, understand or comply with the regulations. As a result, airmen, marines, soldiers and sailors could find their return to civilian life complicated by lost jobs or unexpectedly high bills.

Air Force reservist Master Sgt. Oscar Rodriguez of Modesto, Calif., found out how dire the domestic consequences of military service can be. Fortunately, he also discovered that the armed force's justice system wields a big stick when it comes to taking care of its own.

When Rodriguez was called to active duty shortly after the Sept. 11 attacks, he left behind his thriving construction business ($1.5 million in revenue earned the previous year) and its 16 employees.

Rodriguez knew the Soldiers and Sailors Civil Relief Act offered some protection. He took advantage of the SSCRA provision that reduces to 6 percent the interest a creditor can charge active-duty personnel. Still, Rodriguez spent his life savings, nearly $80,000, to keep his business afloat and pay personal debts. After nine months of active duty, he ran out of money.

He attempted to negotiate with his creditors, seeking a reprieve under federal guidelines. The law allows the forbearance of debt until a service person finishes his or her commitment and for a period afterward that equals the length of active duty served.

But many of Rodriguez's creditors didn't understand the law and refused. A number of them sent their repo men to claim his construction equipment. When that happened, the people running the business in Rodriguez's absence shut down the company.

Making a federal case out of it
That's when Rodriguez turned to Col. John Odom, a military attorney and member of the Air Force Reserve. Odom, who himself is on active duty, took up the cause and expects shortly to have the contractor back in business, his unfairly collected debts removed and his creditors fined.

Odom says most cases aren't this extreme, but the law is the law.

"Whether creditors unfairly collected $100 or thousands of dollars," says Odom, "I don't hesitate to go after them."

Odom is uniquely qualified to understand this case and fight for Rodriguez's rights because two years ago he won a precedent-setting summary judgment on behalf of another serviceman, Stewart Cathey of Monroe, La., who was in similar straits.

Cathey and his wife owned a chain of convenience stores. Cathey also was a lieutenant colonel in the Army reserve. When he was sent to Bosnia in 1996, he sought to have his debt on the stores reduced from near 12 percent to the federally mandated 6-percent rate. When he returned, he discovered that his bank hadn't complied. He tried to correct the error, but his banker told him that because his debt was business-related, it didn't count, and according to the court papers, he should "forget about all this garbage concerning the SSCRA."

The bank not only seized and sold Cathey's convenience stores, they also foreclosed on his home, which he had put up as collateral. Cathey turned to Odom, who helped the reservist fight the bank. The Justice and Defense Departments each submitted Friend of the Court briefs in support of Cathey. But even with that clout, it was May 2002 before the court decided in Cathey's favor, ruling that federal law protects servicemen who have business obligations as well as those who have personal debts.

Odom also spearheaded subsequent agreements on penalty issues in the Cathey case. Those arrangements limit what Odom can say about the case, but he admits that the settlement was large enough to make everybody on Cathey's side of the table very happy.

Call in the big guns
The lesson returning servicemen should take from the Rodriguez and Cathey cases: If your creditors don't follow the rules, get legal assistance to make them comply.

First, ask your local judge advocate general attorney to write a letter explaining how your rights as a serviceman were violated.

If that doesn't remedy the situation, consider (thanks to the Cathey case) filing suit in federal court to get the relief to which you are entitled. While judge advocates can't take these cases, there are volunteer attorneys all over the country who will. The ombudsmen service of the National Committee for Employer Support of the Guard and Reserve will find you a lawyer. (When Odom litigated Cathey's complaint, he was in private practice and a volunteer for the reserve organization.)