Interest capped at 6% on debts from before service
50 U.S.C. § 3937(a)(1)
In plain words
If you (or you and your spouse together) owed a debt before you entered military service, the interest rate is capped at 6% per year while you serve. For a mortgage, the cap lasts during service and for 1 year after. Interest above 6% is forgiven, not just delayed. You must send the creditor written notice and a copy of your orders.
Who is protected
Servicemembers, and spouses on joint debts, for debts incurred before entering military service.
When it applies
- Only if you (or your spouse) are in military service.
- The debt must have been incurred before entering military service.
What you can do
Send your interest-cap request with orders
Write to each creditor asking for the SCRA 6% rate and attach your military orders (or a letter from your commanding officer).
Deadline: No later than 180 days after your service ends. The cap reaches back to the start of service.
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Honest limits
- Does not apply to loans taken out during service.
- A creditor can ask a court to deny the cap if military service did not materially affect your ability to pay.
- Free help: your installation's legal assistance (JAG) office can review SCRA issues with you.
- This is general legal information, not legal advice, and it does not promise any result. A HUD-approved housing counselor or a lawyer can look at your facts.
The law
- Federal lawSCRA — 6 percent interest cap
50 U.S.C. § 3937(a)(1)
Exact part: (a)(1)
What it says: Pre-service debts may not bear more than 6 percent interest during service, and for mortgages, for one year after.
Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title50-section3937&num=0&edition=prelim - Federal lawSCRA — excess interest forgiven
50 U.S.C. § 3937(a)(2)
Exact part: (a)(2)
What it says: Interest above 6 percent that would have been charged is forgiven.
Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title50-section3937&num=0&edition=prelim - Federal lawSCRA — notice and orders
50 U.S.C. § 3937(b)(1)
Exact part: (b)(1)
What it says: The servicemember must give the creditor written notice and a copy of orders no later than 180 days after service ends.
Read the official texthttps://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title50-section3937&num=0&edition=prelim
Court cases
- Homeowner wonSame topicRenfroe v. Nationstar Mortgage, LLC
Renfroe v. Nationstar Mortg., LLC, 822 F.3d 1241 (11th Cir. 2016)
a servicer that answers a borrower's written request without a reasonable investigation may be liable under RESPA when the borrower alleges resulting damages
- Homeowner wonSame topicJesinoski v. Countrywide Home Loans, Inc.
Jesinoski v. Countrywide Home Loans, Inc., 574 U.S. 259 (2015)
a borrower exercises the Truth in Lending right to rescind by notifying the lender in writing within three years, without needing to sue within that period
- Homeowner wonSame topicMarais v. Chase Home Finance LLC
Marais v. Chase Home Fin. LLC, 736 F.3d 711 (6th Cir. 2013)
a borrower who alleges actual damages, such as added interest, caused by a servicer's deficient response to a qualified written request states a RESPA claim
- Homeowner wonSame topicJerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A.
Jerman v. Carlisle, McNellie, Rini, Kramer & Ulrich, L.P.A., 559 U.S. 573 (2010)
the FDCPA's bona fide error defense does not excuse a debt collector's incorrect interpretation of what the Act requires
- Homeowner wonSame topicKaltenbach v. Richards
Kaltenbach v. Richards, 464 F.3d 524 (5th Cir. 2006)
a person who meets the FDCPA's general definition of debt collector is subject to the whole Act even while enforcing a security interest
- Homeowner wonSame topicHeintz v. Jenkins
Heintz v. Jenkins, 514 U.S. 291 (1995)
the FDCPA applies to lawyers who regularly collect consumer debts, even through litigation
Related rights
No foreclosure without a court order during service and for 1 year after
50 U.S.C. § 3953(a)
If you took out your mortgage before you entered military service, a foreclosure sale during your service — or within 1 year after it ends — is not valid unless a court approves it first (or you signed a valid waiver). A court can also pause the case or adjust the loan if military service affected your ability to pay.
Read this rightPause a court case while on military duty
50 U.S.C. § 3932(b)(1)
If you are in military service and get sued, the court must pause the case for at least 90 days if you ask and show that your duty keeps you from appearing. Before a court can enter a default judgment against you, the other side must file a sworn statement saying whether you are in the military, and the court may appoint a lawyer for you.
Read this rightMake the company that reported the error investigate it
15 U.S.C. § 1681s-2(b)(1)
The company that reported the information — such as your servicer — must investigate when a credit bureau passes along your dispute, and fix what is wrong with every bureau. In many cases you can also dispute directly with that company, which must then investigate and report back to you.
Read this rightAfter a discharge, creditors cannot collect the wiped-out debt from you
11 U.S.C. § 524(a)(2)
A bankruptcy discharge wipes out your personal liability for most debts in the case. After that, the law forbids creditors from suing, calling or otherwise trying to collect a discharged debt from you personally. A court can hold a creditor in contempt if there was no fair doubt that its conduct was barred.
Read this rightNo discrimination in housing or home loans (Fair Housing Act)
42 U.S.C. § 3604(a)–(b)
It is illegal to discriminate in selling, renting, or financing a home because of race, color, religion, sex, disability, familial status (having children), or national origin. This covers mortgage lenders and servicers too — for example, in who gets offered a loan modification and on what terms. You can file a complaint with HUD within 1 year or go to court within 2 years.
Read this rightA collection or charge-off must carry its real delinquency date
15 U.S.C. § 1681s-2(a)(5)(A)
A company that reports an account placed for collection or charged off must tell the credit bureau the month and year the delinquency began, within 90 days. That date sets when the item must come off your report, and it does not change when the debt is sold.
Read this right