In the latest ABA Journal, someone asked a question about late fees and the SCRA regarding the 6% interest rate cap. The individual who responded to the question noted "the term 'fees' was not defined, but it is reasonable to conclude the term 'fees' was not intended to include late fees."
I always thought the opposite was true. Granted, it's 10 years old at this point, but from the first quarter 2013 Consumer Compliance Outlook:
Per the information provided during the webinar, I understand that fees cannot be in excess of 6 percent for service members. Is it correct that if a service member invokes his or her rights, you cannot charge more than 6 percent for any fees (including late fees and fees for nonsufficient funds), but you can charge up to 6 percent?
Under section 3937 of the SCRA, the maximum rate of interest on debts incurred prior to military service is 6 percent. Additionally, section 3937(a)(2) of the SCRA provides that interest on debt covered by the SCRA that exceeds the 6 percent cap must be forgiven. The SCRA defines the term interest to include “service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability.” A creditor may seek relief from a court in order to impose additional fees and charges based on a finding that the service member’s ability to meet the obligation at a rate greater than 6 percent was not materially affected by military service. Accordingly, for obligations covered under the SCRA, creditors should include in the interest calculation any fee or charges incurred with respect to the covered debt, including late payment fees and other fees incurred after origination.
Has something changed or have I missed something regarding the interpretation of late fees in relation to the SCRA?
With the lights out, it's less dangerous.