Members of the military fighting overseas also face another battle at home -- the daily grind of staying on top of personal finances.
The government offers several benefits that protect military service members from financial hardships that may befall them or their families. They include:
Servicemembers Civil Relief ActIn 2003, President George W. Bush signed the Servicemembers Civil Relief Act, or SCRA. It clarifies and expands on several provisions made to the 1940 Soldiers and Sailors Civil Relief Act, and is intended to ease the economic and legal burdens on military personnel called to active duty status.
Provisions of the act include:
- Extends the right for service members on active duty who are moving to terminate real property leases.
- Allows termination or cancellation of automobile leases.
- Prevents tax bracket increases that result from adding a service members' military income to a nonmilitary spouse's earned income.
- Limits the amount of interest that may be collected on the debts of active-duty members of the military to 6 percent per year. The cap applies to all debts incurred in the period prior to service and includes things such as car loans, credit card debt and mortgages.
This last provision is not automatic and must be requested by the service member. For example, a service member with a mortgage must request the temporary interest rate reduction and submit several documents, including a written request to his or her mortgage lender, a notice indicating he or she has been called to active duty, and a copy of military orders.
"The amount above the 6 percent cap is completely forgiven during the period the cap is in place," says U.S. Army Col. Shawn Shumake, an Army lawyer and director of the Office of Legal Policy for the Undersecretary of Defense for Personnel and Readiness.
Traditionally, the cap has only applied during periods of active duty. In 2008, the SCRA was amended to extend the cap for preservice mortgage-type obligations to one year after leaving active duty.
However, Shumake adds, "once the period of the cap ends, then the original interest rate may once again be charged."
Military Lending ActIn 2007, the Department of Defense initiated new predatory lending regulation that limits the fees and interest lenders can charge for payday loans, vehicle title loans and tax refund anticipation loans.
The regulation limits the annual percentage rate of these loans to 36 percent and requires all fees (with a few exceptions) be included in the cap.
Joint Federal Travel RegulationsThe Joint Federal Travel Regulations -- which dictate rules for monetary allowances associated with military travel and transfers -- have a specific provision that helps service members whose landlords face foreclosure.
"The Joint Federal Travel Regulations establishes that local moves can be paid for by the military if a service member is forced to move because the service member's landlord has been foreclosed on," Shumake says.