MILITARY RELIEF ACT

A New Law Provides Relief For Military Personnel.

Borrowers -- whether for mortgage loans, credit card debt or auto loans -- who have
been called up for military duty have been given greater financial and legal protections.
On December 19, 2003, President Bush signed into law the "Servicemembers
Civil Relief Act" (SCRA).

Under this new law, "Servicemembers" are defined as persons on active duty
in the military, but also includes National Guard members who have been
called up for active duty for more than 30 days.

If yourself or a family member have been called into active duty, all of
your lenders should be immediately notified, and you must send them a copy
of the military orders. Once the lender has been put on notice, it must reduce
all interest payments down to six percent, and most importantly, must forgive all
pre-service debts which exceeded this six percent cap. It should be noted that this
protection applies only to debts incurred before the borrower went into active
military service; debts incurred while on active duty are not similarly protected.

Since the start of World War II, there was a law known as the Soldiers and
Sailors Civil Relief Act. That law also required lenders to automatically reduce
the interest rate obligations of persons in active military service down to six
percent. However, it was not clear that all interest above the six percent cap
was to be forgiven. SCRA clarifies this, with clear language in Section 207 of
the Act that "interest at a rate in excess of six percent per year ... is forgiven."
The old Soldiers and Sailors Relief Act was a very powerful tool designed to assist
servicemen and women whose income is less while on active duty than what it was
in civilian life. However, that law was enacted over 60 years ago, and times have
changed. Additionally, various Court cases have given different -- and often
conflicting -- interpretations of that old law. Accordingly, Congress decided to
update and clarify the rights of our service men and women.

The stated purpose of SCRA is:

To provide for, strengthen, and expedite the national defense through protection
extended by this Act to servicemembers of the United States to enable such
persons to devote their entire energy to the defense needs of the Nation; and to
provide for the temporary suspension of judicial and administrative proceedings
and transactions that may adversely affect the civil rights of servicemembers
during their military service.

It should be noted that the reduction in the interest rate must be accompanied
by a reduction of the monthly payment. The lender cannot require you to continue
to pay your same payment each month, and credit more toward principal.

In addition to mortgage and other debt payments, the new law provides other
important relief to the men and women in our Armed Services.

Leases: If a lease was entered into prior to the tenant's entry into the armed
services, the tenant has the right to terminate it, even before the term has
expired. Members of the military who receive orders for a permanent change of
station or to deploy with a military unit for a period of not less than 90 days
also have the right to terminate leases, even if the leases were entered into
while they were on active duty. The landlord must be given thirty days advance
notice of the termination, and rent must be paid up to the date the lease ends.
There is no longer a requirement that the lease contain a military termination clause.

Rent: Military personnel -- as their civilian counterparts -- must continue to
pay rent if the lease is not terminated. However, the Act does provide some
protection from eviction. Only a court can order the eviction of the tenant.
(Note: this is the law in many states anyway. A landlord generally cannot exercise
self-help by evicting a tenant without first obtaining Court approval.) If the
Judge determines that the military service has materially affected the ability
to pay, the Court must stay (stop) the eviction for a period of three months,
unless the Judge finds that "justice and equity require a longer or shorter
period of time." There are three basic requirements imposed by the law:

The landlord is attempting to evict a person who is in military service;

The leased premises are used for residential housing by the spouse, children or
other dependents of the military person, and

The agreed upon rent does not exceed $2465 per month. It should be noted that
the older law had a threshold of $1,200. The new law provides a formula for
increasing the ceiling based on an inflation index. Since this is a complex issue,
tenants who are on active military service must consult with the legal assistance
attorney assigned to their unit.

Insurance: The private life insurance policy cannot lapse, terminate or be
forfeited for nonpayment of premiums for a period while the insured is on
active duty, plus one year.

Garnishments and Attachments: On the request by the military person -- or the
Court on its own -- may stay or vacate any attachments or garnishments against the
debtor during the period of active duty plus up to 90 days after that duty ends.

Legal Representation: Under certain circumstances, when a lawsuit is brought and
the Court determines that the Defendant is on active military duty, the Court
cannot enter a judgment until after the Court appoints an attorney to represent
the interests of the servicemember. There is an interesting sentence in the new
law, to the effect that 'if an attorney appointed ... to represent a servicemember
cannot locate the servicemember, actions by the attorney in the case shall not
waive any defense of the servicemember or otherwise bind the servicemember." In
other words, Lenders beware: if your borrower is on active military duty, your
best option is to refrain from filing a lawsuit until his/her service has ended.
Thus, the new law extends -- and expands upon -- the protections which Congress
initially provided to the men and women who served during World War II. Our
servicemembers should devote their energies to their military tasks and not
have to worry about their creditors.