By: Roy L. Kaufmann
Section 527 of the Servicemembers Civil Relief Act ("SCRA") generally requires that interest rates on obligations that pre-date active duty be rolled back to 6% upon request of the servicemember and adequate demonstration that the servicemember is eligible for this and other protections. Other protections deal with foreclosure proceedings, insurance, and default judgments in court. The logic behind this benefit is that, after a servicemember is called to duty, his income may be reduced and the reduction in interest rate is to soften the financial impact upon the servicemember and his family. A lender has a right to ask the court to determine that, notwithstanding the new military service, the servicemember has not been disadvantaged to the point where he merits the reduction to 6%. Such might be the case if the servicemember is particularly wealthy, has other sources of income, or is at a particularly high grade level.