Does the SCRA Allow You to Miss Loan Payments?

I was recently contacted by a new military spouse who wanted to know if the Servicemember’s Civil Relief Act allowed his wife to miss a payment on her credit card and avoid paying the associated fees and service charges. Here is the question: Q: Hey Ryan, my wife got a credit card about 2 months…
Advertising Disclosure.

Advertiser Disclosure: Opinions, reviews, analyses & recommendations are the author’s alone. This article may contain links from our advertisers. For more information, please see our Advertising Policy.

default image

I was recently contacted by a new military spouse who wanted to know if the Servicemember’s Civil Relief Act allowed his wife to miss a payment on her credit card and avoid paying the associated fees and service charges. Here is the question:

Servicemembers Civil Relief Act

Q: Hey Ryan, my wife got a credit card about 2 months before she left for basic training. She is active duty Army. She was employed before even entering the Army, but left her job about two weeks before leaving for basic.  She didn’t receive pay for 45 days after leaving for basic. In that time her credit card payments were due. Well, with all other expenses she/we didn’t have the funds to make the payment so they charged her a late payments and have reported the missed payment on her credit report, even though they knew of the situation b/c I had called them to keep them up to date. We have her shipment papers showing she was gone and the bank that we have the credit card through can see where we set her direct deposit up, and when the first payment was deposited. Isn’t there something that protects her from this effecting her and her credit and the charges?

A: Thanks for contacting me.The Servicemember’s Civil Relief Act offers a wide range of protections for military members, including some that pertain to loans and interest rates. However, I don’t know if you will be able to get any late fees or interest charges waived in this situation. The SCRA doesn’t eliminate the requirement to make on-time payments for loans entered into before the service. What it does do is allow you to lower your interest rate to 6% for pre-service debt and obligations.

What this means, and what you should do. The SCRA allows you to request that your interest rate be lowered to 6% for all debts incurred before your wife entered the military. This would apply to her credit card, and any other loans she has. Note, this will only apply to loans with her name, this won’t apply to loans that you have only in your name. The lender is required to lower the interest rate to 6%.

This decreased interest rate will only apply to old charges, and will not apply to anything that was put onto the card after she joined the military. But it may help you pay off the credit card balance more quickly. You can contact your base legal department with assistance if your credit card issuer does not readily lower the interest rate. Even though it is the law, some companies push back, either out of ignorance of the law, or because they prefer to use other methods before complying. Don’t let them push you around – this is a law they must comply with!

What about the missed payment? Your best bet would be to contact the lender and ask them to waive the fee and interest charges one time as an act of good faith. Many lenders will do this one time if you otherwise have a good record. You can also offer to set up automatic payments for at least the minimum payment each month, that way he credit card issuer won’t ever have to worry about getting a late payment in the future.

Protect your credit score. You should also request they remove the late payment from your credit report if they are willing to do so. This will help keep your credit score in good standing, as missed payments will hurt your score. Keep in mind that while a missed payment will hurt your score, it won’t necessarily prevent you from opening further lines of credit. Here are tips for improving your credit score, which you may find helpful in this situation. Finally, you should periodically monitor your credit score to see how it is changing. This is good information to have if you are applying for a new credit card or loan. Here is how you can get a free score.

Consider finding a new bank or lender. Finally, you may consider joining a military-friendly bank. These financial institutions offer a wide variety of financial products and services, very competitive rates, and excellent customer service. More importantly, they know what it means to serve, and they are often more lenient with missing a credit card payment one time, or having financial difficulties due to a deployment, temporary duty assignment, or relocation. I recommend looking at your options and seeing if any of those banks meet your needs. Here are some recommended military banks.

I hope you find these tips helpful.

By the way, welcome to the military community! The military truly is a different way of life, and I’m sure there have been some challenges getting acclimated to being a military spouse. I can speak from experience. I was prior active duty Air Force, but I was also a civilian spouse for about a year after I got out of the military. There was a lot I didn’t know, even with my military experience! Thankfully, there are many websites now dedicated to military spouses. Here are a few I recommend looking at for valuable information and for a sense of community:

  • MaleMilSpouse.com (formerly Macho Spouse) – a community dedicated to male military spouses.
  • MilitarySpouse.com – Tons of great information on PCSing, deployments, career tips, and more.
  • SpouseBuzz.com – A Military.com-owned site with lots of great info on military life, family, new laws/policy, and more.

Remember, you can always reach out to the military and military spouse communities for help, large or small. Best of luck to you and your wife in your military journey!

Get Instant Access
FREE Weekly Updates! Enter your information to join our mailing list.

About Ryan Guina

Ryan Guina is the founder and editor of The Military Wallet. He is a writer, small business owner, and entrepreneur. He served over 6 years on active duty in the USAF and is a current member of the IL Air National Guard.

Ryan started The Military Wallet in 2007 after separating from active duty military service and has been writing about financial, small business, and military benefits topics since then. He also writes about personal finance and investing at Cash Money Life.

Ryan uses Personal Capital to track and manage his finances. Personal Capital is a free software program that allows him to track his net worth, balance his investment portfolio, track his income and expenses, and much more. You can open a free Personal Capital account here.

Featured In: Ryan's writing has been featured in the following publications: Forbes, Military.com, US News & World Report, Yahoo Finance, Reserve & National Guard Magazine (print and online editions), Military Influencer Magazine, Cash Money Life, The Military Guide, USAA, Go Banking Rates, and many other publications.

Reader Interactions

Comments

    Leave A Comment:

    Comments:

    About the comments on this site:

    These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.

    • Ryan Guina says

      Hello Jessica, I am not aware of any legal provisions that would allow you to stop making mortgage payments. You can check with your lender to see if they have any programs or provisions for service members who deploy. Some military-friendly lenders may work with members on a case by case basis.

      For now, though, my recommendation is to continue paying your mortgage as required by your contract. 

      Best wishes on your deployment.

  1. Linette says

    I have a question- If I have to cancel a trip because i was put on extended orders am I covered Under SCRA or can the airline just take my $?

    • Ryan Guina says

      Hello Linette, I recommend speaking with the airline company about this. You can also try contacting your credit card company. But I’m not sure what recourse, if any, may be available. This is one reason why purchasing travel insurance can be a worthwhile option for active duty military members and their families.

      I wish you the best.

The Military Wallet is a property of Three Creeks Media. Neither The Military Wallet nor Three Creeks Media are associated with or endorsed by the U.S. Departments of Defense or Veterans Affairs. The content on The Military Wallet is produced by Three Creeks Media, its partners, affiliates and contractors, any opinions or statements on The Military Wallet should not be attributed to the Dept. of Veterans Affairs, the Dept. of Defense or any governmental entity. If you have questions about Veteran programs offered through or by the Dept. of Veterans Affairs, please visit their website at va.gov. The content offered on The Military Wallet is for general informational purposes only and may not be relevant to any consumer’s specific situation, this content should not be construed as legal or financial advice. If you have questions of a specific nature consider consulting a financial professional, accountant or attorney to discuss. References to third-party products, rates and offers may change without notice.

Advertising Notice: The Military Wallet and Three Creeks Media, its parent and affiliate companies, may receive compensation through advertising placements on The Military Wallet; For any rankings or lists on this site, The Military Wallet may receive compensation from the companies being ranked and this compensation may affect how, where and in what order products and companies appear in the rankings and lists. If a ranking or list has a company noted to be a “partner” the indicated company is a corporate affiliate of The Military Wallet. No tables, rankings or lists are fully comprehensive and do not include all companies or available products.

Editorial Disclosure: Editorial content on The Military Wallet may include opinions. Any opinions are those of the author alone, and not those of an advertiser to the site nor of  The Military Wallet.