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#99216 - 07/21/03 10:12 PM SSCRA-Was Active Duty, Retired, Activated w/Guard
JulesB Offline
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JulesB
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A Designated Tree City in OK, ...
We have a customer who is asking for relief under the SSCRA. According to his loan application, he was active duty as an Army recruiter when the loan was made in July 2000. He retired in November 2000, became a police officer, but stayed in the National Guard for the weekend duty pay. He is now asking for relief, because the Guard has activated him periodically over the past one and a half years and will continue to indefinitely.

Since he was Active Duty when the loan was made, does the SSCRA apply, and if so, is it because he later joined the National Guard?
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#99217 - 07/21/03 10:29 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Guard
Don_Narup Offline

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Las Vegas Nevada
The debt was not incurred PRIOR to entering military service which IMO would not qualify them for relief. Unfortunately, I think there could be some judicial descrition if it gets that far. Looks to me like you have to file with the court to seek an exemption as it says the BURDEN IS ON THE CREDITOR The law states as follows:

"Obligations incurred by a military member prior to entry into military service shall during such service bear interest at a rate not exceeding six percent annually, unless a court (usually a state court where the military member permanently resides) determines that the military members’ ability to pay did not change in any significant manner due to activation. The burden is on the creditor seeking rate modification of the statutory six percent rate to bring the matter to the court’s attention. However, if it can be shown that your making about the same pay you received as a civilian when the debt was incurred, you can expect to pay the higher rate."

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#99218 - 07/21/03 10:43 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
Richard Insley Online
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Richard Insley
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Toano, VA
How much money are we talking about?
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#99219 - 07/22/03 09:24 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
JulesB Offline
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JulesB
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A Designated Tree City in OK, ...
We haven't taken the time to figure out the amount yet, because it is a few days here, a week off, a couple of weeks there, time off, etc. It will need to be calculated for each day on a simple interest rate over the past year and a half. Hence, my dilema. Do we even need to mess with the calculation, since he was Active Duty military when he originally got the loan?

In addition, as Don states in his response, this guy is now making more money since being reactivated than he was as a civilian, according to his loan application for another loan made to him in 3/2003.
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#99220 - 07/22/03 09:58 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
Richard Insley Online
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Richard Insley
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Toano, VA
During Desert Storm my bank ate a number of small balance loans because it was more costly to perform the necessary servicing changes than to forgive the debt. Additionally, there's the HUGE reputational risk of having your customers griping to the media because they believe the bank should be more patriotic. Being right doesn't matter if it wins you the Milburn Drysdale award. Sure there can be abuses, but it all boils down to the cost of your alternatives.
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#99221 - 07/22/03 10:13 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
JulesB Offline
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JulesB
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A Designated Tree City in OK, ...
The balance on the loan is still over 8M. We have dropped the interest rate from 9.5% to 6% as of last Thursday, but then found out about the other stuff I have talked about in the posts above. Just want to make sure we need to do the calculations on past interest differences, before we credit his loan balance.
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#99222 - 07/22/03 10:23 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
Richard Insley Online
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Richard Insley
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Toano, VA
You could probably win the argument if you thought it was worth the effort. I'd take a rough guess of how much interest you're being asked to rebate and compare that with the value of a few more hours of your time.
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#99223 - 07/24/03 04:27 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
JulesB Offline
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JulesB
Joined: Feb 2002
Posts: 324
A Designated Tree City in OK, ...
Richard,
Thanks for all of your input. I went ahead and figured out how to calculate the difference on an excel spreadsheet. The amount of interest totalled approximately the same amount as one of his normal monthly payments. We have reduced his principal balance by that amount and reduced the rate going forward.

I appreciate your input on this one (you too Don). It took me less than an hour to do the calculations, so it wasn't so bad after all - and now we have a spreadsheet set up to do future requests for a rate reduction under the SSCRA.
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#99224 - 07/25/03 08:01 PM Re: SSCRA-Was Active Duty, Retired, Activated w/Gu
Gotwood Offline
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Joined: May 2001
Posts: 715
Seems like an inordinate amount of time spent on someone who everyone agrees isn't entitled to relief under the act. Everyone talks about reputational risk. While I agree that needs to be considered, I wouldn't make that the overriding basis for my decision to grant them relief. We have military members who request relief under the same or similar circumstances. We politely send them a letter stating the requirements of the SSCRA do not mandate this request.

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