Everyone seems to be in debt today, and military personnel are no exception. Debt is common in the world because regardless of how people earn a paycheck, it’s often impossible to live a basic life without going into debt at some point.
A home and a car are two of your most basic necessities, especially when you’re raising a family. Unless you’ve got a big stash of cash, you can’t buy a house without taking on a mortgage, and it’s not easy to buy a quality car without a loan.
Uncontrollable debt isn’t just for “other people”
Most people don’t think they’ll ever reach a point in their lives where they can’t pay their bills, but it can happen when you least expect it. Your secure job might fall out from underneath you, medical expenses could pile up, and an unexpected emergency could wipe out your life savings in a flash. Sometimes a foreclosure is right around the corner, and if you’re overwhelmed by debt you might find yourself considering bankruptcy.
Paying off debt can be more challenging for military personnel
Families who can easily pay off their debts usually have two reliable incomes. If you’re in the military and married, you know that having two incomes doesn’t work for you the way it does for everyone else.
Due to frequent relocation, military spouses often have a hard time finding full time employment. When you’re in debt, not having two reliable sources of income can make it more difficult to pay the bills.
If you’re in the military, in debt, and looking for relief so you don’t have to file bankruptcy, here are some tips to help:
- Consider debt consolidation
Debt consolidation can be a huge relief when you’re overwhelmed by owing multiple debts. A consolidation company will negotiate your debts down on your behalf, and instead of making individual payments to each of your creditors, you’ll make one monthly payment to your consolidation company. This payment will include a service fee that’s usually based on a percentage of the amount of the negotiated debt.
Be cautious, though. Just because you’re military, and debt consolidation programs market to you specifically, doesn’t mean you’re automatically getting a better interest rate on consolidation services.
Don’t be afraid to ask questions, and ask specifically how being in the military is going to benefit you.Debt consolidation is always a better choice than bankruptcy, but you should shop around for the best deal before choosing a company.
- Learn about the Service members Civil Relief Act
One of the reasons people file for bankruptcy is due to foreclosure or eviction from their home. However, the SCRA is a Federal law that provides special protections for military personnel who are on active duty or who recently completed active duty.
The SCRA is designed to ease the economic burdens during active service and postpone, suspend, and mitigate the terms of certain financial obligations like loans and mortgages. This law also has other protections for credit card debt, pending trials, taxes, and lease terminations. The SCRA provides the following protections for all active duty service members, Reservists, and members of the National Guard (while on active duty):
- If you’re on active duty, under this law you are protected from being evicted for nonpayment of rent that’s equal to, or less than $3,451.20/month.
- If you get a permanent station change or are deployed to a new location for 90 days or more, you have a right to terminate your housing lease.
- Any credit card debt incurred prior to joining the service is limited to a 6% interest rate.
- If you relocate for 90 days or more and your current cellphone carrier is inactive in that location, you can terminate your contract without penalty.
- If you’re on a call to duty for 180 days or more, you can terminate a vehicle lease even if you signed it before entering the military.
If you’re on active duty and facing eviction due to nonpayment of rent, you need to know that you’re protected. While most people might think they’re doomed for bankruptcy, you don’t have to worry about that.
Don’t expect your landlord to know about, or follow the SCRA. Just because you get an eviction notice doesn’t mean it’s legal.Knowing your rights means you don’t have to worry that bankruptcy is in your future if you receive an eviction notice that contradicts this Federal law.