Late Charges to service members

Posted By: yankee07

Late Charges to service members - 08/10/12 05:12 PM

Servicemembers Civil Relief Act (SCRA)

Section 203 - Fines and penalties under contracts



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(a) PROHIBITION OF PENALTIES- When an action for compliance with the terms of a contract is stayed pursuant to this Act, a penalty shall not accrue for failure to comply with the terms of the contract during the period of the stay.

Does this mean we can not charge late charges on loans when the service member notified us he is on active duty
Posted By: Dan Persfull

Re: Late Charges to service members - 08/13/12 07:04 PM

Late charges are included in the SCRA definition of "interest" therefore if you have the interest rate set at 6% the addition of any late charge will cause you to exceed the rate limitation which is a violation of the SCRA..
Posted By: yankee07

Re: Late Charges to service members - 08/14/12 03:03 PM

the loan was taken after the customer entered military service so it is my opinion that SCRA does not apply. Late charges therefore will also not apply..Correct????
Posted By: bankr grl

Re: Late Charges to service members - 09/05/12 02:17 PM

bump
Posted By: Dan Persfull

Re: Late Charges to service members - 09/05/12 03:39 PM

the loan was taken after the customer entered military service

This is pertinent information that should have been included in the original question. Leaving out pertinent information will cause incorrect or incomplete responses.

The rate limitation applies to pre active duty debt.

The section quoted above references relief and stays granted against civil actions.