Soldiers' Interest Payments Capped by New Law

December 23, 2003 ( - A bill signed into law by President Bush caps at 6% the amount of interest employer retirement plans and other lenders can charge employees while they are on active military duty.

>HR 100, the Servicemembers Civil Relief Act, is intended to clarify and revise the Soldiers’ and Sailors’ Civil Relief Act of 1940. As did that law, it forgives the payment of interest higher than 6% a year for obligations or liabilities incurred by the servicemember, or jointly by the servicemember and his or her spouse, before the servicemember went into military service, according to Thompson Publishing.

>To qualify, the member of the military must furnish written notice and a copy of the call-up or extension orders to the creditor within 180 days after the soldier leaves active service.

>There is one opening in the law, according to Thompson. A court may grant a creditor relief from this limitation if, in its opinion, the servicemember’s ability to pay more than 6% interest annually is not materially affected by his or her military service.

The law also adds to the definition of “military service” active service by members of the National Guard of more than 30 consecutive days, the Thompson report said.