We have a customer that enlisted in the Marines in June of this year. He came to the bank and borrowed money to purchase a pickup in late August. He has now returned and says he recruiter told him he is entitled to 6% interest rate. It is my understanding that debts incurred after enlistment are not subject to relief. On the other hand, not to give someone in the military service relief makes the Bank out to be the bad person. Have I missed something?

Your understanding of the law is certainly correct. The point of the law is to protect the military person from burdensome obligations that arose prior to their entry into the military service. Debt contracted for by a person who is already in the military is not subject to Section 526 (the 6% rate provision). He knew what his financial situation was at the time he obtained the loan.

[This message has been edited by Mary Beth Guard (edited 10-20-2001).]

And, as Andy Z noted in an email to me, lenders have much greater collection rights against an individual in the military if the debt was incurred during military service, rather than before. See Section 517 of the SSCRA.

Lisa: Since the Gulf War, we have had numerous discussions w/new service members who (I believe) were misled by their recruiter in just the same manner.

I wonder if recruiters are enticing potential recruits by misrepresenting the benefits available under the SSCRA? The experience you had is so similar to what we've experienced, it cant be just a coincidence. I wonder if military recruiters have certain monthly/quarterly "number" that they have to meet and, in ordert to do so, they exaggerate the SSCRA benefits? More than 1 new recruit has bought a new car expecting to receive a reduced interest rate and been surprised.

P.S. Since 1990, in every instance in which we've informed the new recruit that s/he was misinformed, we've had only 1 instance in which the recruiter called to argue the point w/us. We've also never had the matter wind up in court.

I AM NOT ENGAGED IN PROVIDING LEGAL ADVICE AND THE VIEWS EXPRESSED DO NOT RELECT THOSE OF MY EMPLOYER

I believe you are probably right. The loan officer who handles this particular account is worried that if he does not work something out with the borrower, the borrower will simply quit making payments and that the bank will not be able to protect itself. I believe the loan officer is incorrect in this.