Bill Limits Military Loan Interest Rate

>According to a report on Thompson.com, HR 100 dictates that a holder of the service member’s debt – or one incurred jointly by the service member and a spouse before going into the military – can’t charge more than 6% during the military service period. Anything over 6% is forgiven under the bill. In addition, a change in interest rates must not cause an acceleration of principal repayments.

>The bill includes loans taken by military personnel from an employer-sponsored retirement plan.

>To benefit from the 6% cap, the service member must provide the lender written notice and a copy of the call-up or extension orders not later than 180 days after his or her termination or release from service. A court may grant a creditor relief from the 6% cap if, in the opinion of the court, the service member’s ability to pay more than 6% interest is not materially affected by reason of the military service, according to the Thompson report.

Intended to restate, clarify and revise the Soldiers’ and Sailors’ Civil Relief Act of 1940 containing the 6% cap, HR 100 was referred to the Senate Committee on Veterans’ Affairs, where a companion bill (S 792) is pending.