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Debt

(Note: The below article is from the Aug 97 edition of Navy "All Hands" Magazine. While it is written with Navy personnel in mind, for the most part, the information is applicable for members of all of the services.


Just like anyone else, a military member is expected to pay just debts and to pay them on time. Nonpayment of a debt can lead to serious consequences for one's military career, even up to receiving an administrative discharge.

Failure to pay just debts is an offense under the Uniform Code of Military Justice. However, the failure must be judged to be characterized by deceit, evasion, false promises or other circumstances indicating deliberate nonpayment or indifferent attitude toward one's just debts.

The Armed Forces do not have legal authority to make you pay private debts, nor can they act as a collection agency by taking part of your pay to settle a debt except in two situations. First, part of your wages can be garnished or involuntarily allotted for court-ordered alimony and child support payment. Second, if the creditor gets a court order that says you owe the debt, the creditor can get an involuntary allotment of your pay to collect on the judgment.

DOD is required by law to provide to your creditors certain information about you that may aid in locating you for purposes of collecting the debt. For example, information that must be made available to anyone who requests it includes your name, rank, date of rank, salary, present and past duty assignments, future assignments (that are final), military phone number and address.

If you find you can't meet payments, get help right away. If you think the creditor used deceptive or fraudulent tactics, go to your legal assistance attorney right away. The legal assistance attorney normally can't represent you in court, but he or she can tell you what your legal rights are and may be able to suggest a workable plan for saving your credit standing and your military career. If there was fraud or deceit, the legal assistance attorney can also help you to file a complaint with the Federal Trade Commission or similar state/local consumer affairs agencies.

If you think the debt is lawful but you're overextended, take advantage of personal financial management and budgeting assistance available through your family service center and your command financial specialists. The Navy-Marine Corps Relief Society also provides budgeting assistance and financial counseling, and may be able to grant you an interest-free loan.

There are several other avenues open to you that could ease your financial problems:
  • You may be able to arrange for your creditors to extend the contract time, thus reducing the size of the payments until you are back on your feet financially. You may be charged more interest or finance charges in the long run, but your debt will become manageable. Also, your creditors will have proof of your good faith and intention to pay your just debts.
  • Set up an appointment with a loan counselor at your credit union or bank. The counselor can aid you in setting up a credit arrangement. If your creditors agree, you could arrange an allotment of an agreed sum each pay period. This allotment would be paid into the credit union where a credit union officer would pay each of your creditors an amount proportionate to the total you owe each of them.
  • Another form of relief is to negotiate a consolidation loan. Again, this may cost you more in the long run, but at least it will lower your monthly payments to a more reasonable amount.

  • Some people seek to solve their debt problems with a second mortgage on their homes. Since the lender on the second mortgage has less claim on the home than the holder of the first mortgage, the interest rate on the second mortgage will be higher.

  • Another possibility, in a severe debt situation, is the wage-earner bankruptcy plan. A debtor can take up to three years to pay off debts under this plan. Consult your legal assistance attorney before making this move.

  • As a last resort, you can file a regular bankruptcy petition; members of the Armed Forces have the same bankruptcy rights as other individuals. This action could be detrimental. Consult your legal assistance attorney before taking this very serious and final step.
If, for one reason or another, you do fall behind in your payments, you are still protected against certain harassment procedures sometimes used by debt collectors.

Under the Fair Debt Collection Practices Act, debt collectors are defined as those collecting debts other than debts owed to them personally and are not permitted to contact (without your consent), third parties (including your commanding officer) other than to ask about your identity and whereabouts. Some states go even further and prohibit anyone from contacting your employer without consent, even if they're trying to collect money that's owed directly to them.

The debt collector cannot tell a third party that you owe any debt or call any third party more than once except to correct or supplement information.

In attempting to contact you, debt collectors normally must make their calls between 8 a.m. and 9 p.m. If you have an attorney, the debt collector must contact your attorney.

If you notify the debt collector in writing that you refuse to pay or that you wish not to be contacted again, the debt collector is forbidden by law to contact you, except to inform you that no further efforts will be made to collect, or to inform you of any formal legal actions that are being brought against you.

Harassing or threatening conduct, use of obscene or profane language and repeated telephone calls intended to annoy you are forbidden. Misrepresentation of the debt collectors business or of any of the remedies that might be involved is also forbidden. Post cards, which can be read by other people, cannot be used by debt collectors to communicate with third parties.

Within five days of initial contact, debt collectors must send you a written notice telling the amount of the debt, name of the creditor to whom it is owed and a request that the debtor (you) acknowledge the debt.

If you don't feel that you owe the debt, you should immediately tell the debt collector, in writing, that you dispute the debt. You may be able to dispute the amount even if the promis-sory note you signed is sold to somebody else. If your new car is defective, you may be able to dispute the debt, even if the dealer you purchased the car from sold your note to a bank.

If you feel you are being harassed in any way, contact your legal assistance attorney. An attorney can advise you of your right to bring legal action against the collector.
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