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7 financial moves returning reservists need to make

In addition to celebrating a return to home and family, reservists back from active duty have some tasks to complete to ensure their financial affairs are in order. The advice comes from the Reserve Officers Association and employment lawyer Henry Morris Jr., an attorney with Arent Fox in Washington, D.C.

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1. Check your credit
Recent amendments to the Soldiers and Sailors Civil Relief Act now prohibit both creditors and insurers from notifying credit agencies, denying credit or changing terms against service members who exercise their rights under the federal law. To make sure the SSCRA was followed, get credit reports from all three major credit reporting agencies and look for any adverse reports added during your time on active duty. If your credit was revoked because your income declined while you were called up, get your unit's judge advocate general to write a letter reminding the creditor that the action was illegal and asking for corrections.

2. Take a look at your insurance
Make sure your policies are in force. A reservist called to active duty is entitled to reinstatement of any health insurance that was in effect when he or she was called up, even if a health condition has changed.

If your employment situation has changed in a way that's not protected by the Uniformed Services Employment and Reemployment Rights Act, you still are eligible for COBRA, which allows you to continue to buy your old insurance at lower group rates. Talk to your former employer.

If your insurer canceled your homeowners or auto insurance because your circumstances changed (for instance, you had to leave your home vacant), remind your agent that this is illegal. You also might want to shop around. An insurer that gives you a hassle under these circumstances probably won't pay off quickly if you need to make a claim.

3. Undo any powers of attorney
Write a letter to anyone to whom you granted power of attorney, revoking it. Even if the person holding power of attorney is a family member, written notification eliminates misunderstandings, says Lt. Col. Dennis Veara, judge advocate general for the Michigan Air National Guard. It is particularly important to take care of this detail if you are estranged from a spouse to whom you gave power of attorney.

4. Talk to your creditors
The 6 percent interest rate available to reservists on active duty ends when your active duty ends. Your creditor will know that date because it's on the call-up orders that you submitted when you asked for the rate reduction. If your creditor doesn't notice right away, you're under no obligation to tell him. But if he notices later, the creditor can collect interest retroactively, unless you seek forbearance within 30 days because you can't pay. If that's the case, the creditor is obligated to give you a reprieve that is at least, but not longer than, the amount of time you were on active duty.

In any case, it's also a good time to renegotiate your debts. With interest rates at all-time lows and patriotism high, you might be in a position to get a better deal.

5. See your lawyer
Legal proceedings such as bankruptcy, eviction, foreclosure, divorce and civil suits that have been put on hold will be rescheduled based on the date of return on your orders. If you need more time, your lawyer will have to petition the court for a stay. Normally these are granted for a 60-day period.

6. Pay your taxes
Any income, property or other taxes that fell due during your period of active duty must be paid within six months of your return date to avoid penalties.

7. Review your situation
If you took a cut in pay during your period of active duty, you are undoubtedly facing some financial challenges. The best way to get back on your financial feet is to plan and budget. Bankrate.com offers numerous tips and strategies on how to manage your cash flow.

Jennie L. Phipps is a contributing editor based in Michigan.

-- Updated: May 12, 2004




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