Military Debt Collection Law: Understand Your Rights

Nobody likes hearing from debt collectors. If you’re part of the military, military debt can pose risks to your status, promotions, and career. Military debt is just like any other type of debt. Primarily, it can affect the military personnel’s performance because they’d be preoccupied thinking about the money they owe.

Many service members can fall into unpaid debts, and they find it more challenging to focus on their duty. Fortunately, there are legal protections that military personnel and their families can use for assistance.

Military Debt Collection Laws You Should Know

legal protections from debt collection

How do military members deal with just financial obligations? Several laws protect military personnel from incurred debt.

The Servicemembers Civil Relief Act (SCRA)

The Servicemembers Civil Relief Act (SCRA) grants military personnel particular legal and financial protections. While on active duty, military personnel are given protection from outstanding credit card debt, mortgage payments, pending court trials, taxes, and lease terminations.

The SCRA can delay, change, or even suspend financial or civil obligations for service members when on active duty or abroad. These protections may apply to loans and debt incurred before active duty began. The SCRA can reduce military members’ annual interest rate to 6 percent, prohibit debt collectors from foreclosing military service members’ personal property, and protect them from car repossession.

When the protections of the SCRA are enacted in a proper and timely manner, the SCRA can grant service members plenty of time to focus on their work. The SCRA is binding upon debt collectors like financial institutions, landlords, and banks.

A debt collector won’t be able to bother them while deployed on a mission. To be transparent, debt collectors don’t have the right to revoke a security clearance or get someone demoted. However, the negative information told to credit reporting agencies can have dire repercussions.

Given the privileges the SCRA grants active duty servicemembers, it’s only practical for them to take advantage of these protections. With services like the Servicemembers Civil Relief Act Centralized Verification Service, it’s easier for military personnel to get the documentation they need to activate these privileges.

Fair Debt Collection Practices Act (FDCPA)

Meanwhile, the Fair Debt Collection Practices Act (FDCPA) protects military members from debt collectors who use abusive, unfair, or deceptive practices to collect debt. Under this law, a debt collector is not allowed to tell your commanding officer about your debt, threaten you with persecution under the Uniformed Code of Military Justice or threaten an action they’re not allowed to pursue.

Moreover, the Fair Debt Collection Practices Act stipulates that the debt collector should furnish the military member with a written notice of the debt within five days after first communicating with them. This law imposes limitations on communication with that military individual.

For example, a debt collector isn’t allowed to try to communicate with military personnel during unusual times, meaning before 8 in the morning or after nine at night. If the debtor acts through an attorney, the debt collector should only communicate with the attorney. Debt collectors cannot threaten to use violence or use vulgar language. Harassment is also prohibited.

Fundamentally, this law facilitates a decent method for debt collection and grants military individuals ways of dealing with creditors in a civilized manner. While the creditor is still entitled to have the individual pay their debt, the way they contact that person should be made rightfully.

Consumer Financial Protection Bureau (CFPB)

The Consumer Financial Protection Bureau (CFPB) is an agency of the United States government responsible for consumer protection from the financial sector. The CFPB has a dedicated office, the Office of Servicemembers Affairs (OSA), that works to help military families overcome unique challenges.

This is through educational resources, monitoring complaints, and working with other relevant agencies to solve their financial problems. The CFPB shares valuable information about navigating the military financial cycle, the Servicemembers Civil Relief Act (SCRA), and strengthening the Military Lending Act (MLA).

To protect the welfare of military personnel, the CFPB is actively researching the utilization rate of the SCRA and monitoring complaints about debts attributed to identity theft. The CFPB also monitors service members’ complaints, protects service members from military allotment abuses, and compares credit records of young service members and civilians.

In fact, the CFPB has been involved in recovering millions in relief for service members, veterans, and their families from companies that targeted them with illegal practices or scams.

What Happens If You Have Debt In The Military?

Debt In The Military

The law grants active duty members plenty of protection. If you’re in service, you should know what debt collectors are not allowed to do.

Things Debt Collectors Can’t Do

  1. Set timelines and make threats. Debt collectors aren’t allowed to make threats and set deadlines to make you feel helpless. It would help if you stayed calm when dealing with them. You should be firm and confident when in communication with a debt collector.
  2. Harass you at work. The Fair Debt Collection Practice Act (FDCPA) clearly states that if you request a debt collector stop harassing you at work, they will have to honor your request.
  3. Tell other people about your debt. Debt collectors can’t tell others, especially your superiors in service, about your debt. This is unless they’re legally obligated to pay that debt. They’re only allowed to contact third parties to locate you.
  4. Garnish wages. Debt collectors aren’t allowed to garnish wages unless the court permits them.
  5. Collect expired debts. Debt collectors aren’t allowed to sue you or damage your credit report if you refuse to repay debts that exceed the statute of limitations. However, a debt collector doesn’t need to tell you the statute of limitations has expired on your debt. If you make payments on an old debt, it can become collectible once more.
  6. Improve your credit rating. Once your debt has been sent to the collector, it will stay in your account for seven years and six months. Collectors may say they will change your account to ‘paid in full’ status, but it won’t affect your credit score.
  7. Force you to pay deceased relatives’ debts. Collectors may try to make you pay for a deceased relative’s debt. However, they’re not allowed to do this unless you co-signed for the money.


Handling debt collection is never easy, but there are laws in place to protect service members from unjust debt collection and harassment. Whether you’re a National Guard or Coast Guard member, you should be aware of your rights to protect yourself and the people you care about.

If you have any questions or concerns, you should seek legal counsel from a military attorney. They would be able to give you the best advice moving forward. Being on Active Duty requires plenty of sacrifices, and service members should be able to protect their well-being. Fortunately, there are laws by their side to repel people who might abuse them.

Laws like the SCRA grant service members protections so they can focus on what they do for the country. Thus, you should understand your rights.


Does SCRA apply to debt collectors?

Yes, the SCRA applies to debt collectors, as they apply to landlords, banks and financial institutions. A debt collector must adhere to the stipulations of the SCRA.

Does SCRA cover credit reporting?

A lender can’t provide damaging information to a credit reporting company because you invoke your SCRA rights. Thus, the SCRA does cover credit reporting.

What does a debt collector do?

A debt collector must collect a debt from individuals who owe others money. Under the law, they should treat debtors with respect.

What are the consequences of SCRA?

The SCRA can have hefty fines for violators. Note that this varies on a case-to-case basis.

Can veterans get SCRA?

The SCRA covers active-duty personnel only. However, there are other legal protections granted to veterans.

Can debt collectors sue active duty military?

The SCRA protects active duty members from legal proceedings. Thus, they can’t be sued when on duty.

Can your debt be frozen if you join the U.S. military?

Technically, no, but you can be granted certain protections when you’re on active duty. This depends on the situation.

Attorney Roy Kaufmann serves as the Director of the Servicemembers Civil Relief Act Centralized Verification Service, located in Washington, D.C. As a recognized authority on the Servicemembers Civil Relief Act, Mr. Kaufmann has published hundreds of articles and hosted many webinars. His teachings help law firms and businesses to remain compliant with the SCRA rules and regulations so as to avoid costly fines.