What is "active duty" for someone who is in the army full time. I understand when someone in the national guard is call up for duty and applying the SCRA requirements for the 6% loan cap. For a career military person does it apply when they are sent overseas?

Per 10 USC 101(d)(1):

The term "active duty" means full-time duty in the active military service of the United States. Such term includes full-time training duty, annual training duty, and attendance, while in the active military service, at a school designated as a service school by law or by the Secretary of the military department concerned. Such term does not include full-time National Guard duty.

So are you saying that a person who enlist in the US Army is on active duty and debts such as a mortgage incured prior to their enlisting would qualify for the 6% cap?

Does the 6% rate cap only apply to consumer type debt? What if the loan was a small business loan?

I get a big mortgage, a big commercial loan and lots of credit card debt. I join the Army. My orders will provide a "start date" which is in effect when I'll head out for basic training. On that date, all my rates are required to drop to 6% when I have requested protections and provided you a copy of my orders.

Thanks Guys!

Better ead up on the relief act my friends. Enlisting in the Army does not qualify you for the interest rate decrease. You have to be called to duty through no act of your own.

You do not have to be called to active duty to qualify for SCRA. You can enlist as well.

Called to active duty from a reserve status, enlisted, drafted, it is all serving and all are protected. The only differences are the "when" of when protections begin. Generally when you are "called up" protections start then. If you join on a delayed program, protections start when you report.

So let me throw in another twist, if I may. My son joined the USMC Reserves and reported to basic training at MCRD - San Diego in October, 2004. He's completed his training and is now simply a "weekend warrior", reporting once a month to his duty station. He recently took out a loan to purchase a truck. It was my understanding that, unless and until he is called to duty, such as deployed to Iraq or wherever, SCRA benefits will not apply. In his case, he has enlisted, then incurred the debt. Only his order to report for active duty would "trigger" eligibility, right? Or will he never be eligible now, since he essentially entered the military before getting the loan? Please help me out; I'm getting more confused by the minute!

You are correct. If called to active duty he would we eligible for the section 207 - interest rate limitation.

Section 207(c) A court may grant a creditor relief from the limitations of this section if, in the opinion of the court, the ability of the servicemember to pay interest upon the obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of the servicemember's military service.
We have a customer who was called to active duty but who's business remained up and running and didn't skip a beat. In fact, business improved because in this small town word got around that this business person/servicemember was called up and more customers started to patronize the business as a result.
I don't know if I'd want the negative publicity if I didn't lower the rate to 6% for someone in this situation. Especially in the small town.

I failed to mention, the loan to the servicemember was on the business.

This recent article may help you out.

There are different types of duty which afford the SCRA protections. The weekend duty isn't it. The intent here is to balance someone who goes from a higher paying civilian job to a lower paying military duty. Rather than have the servicemember worry about getting bills paid and keeping a roof over their family's head, the SCRA protects them. Serving on the weekends, this is not necessary.