Thanks to the Soldiers’ and Sailors’ Civil Relief Act of 1940, members of National Guard and reserve units who have been called to active duty for the war in Iraq get important financial assistance at home: a reduced rate of 6 percent on credit-card debit, mortgage debt and other debt.

One of the most significant provisions under the Act limits the amount of interest for active military personnel to 6 percent per year during the period of military service. This provision applies to all debts incurred prior to the start of active duty and includes interest on credit card debt, mortgages, car loans and other debts. The relief applies to all the co-signers on a debt, even if they are not active-duty military. Interest in excess of 6 percent must be forgiven. It can’t be deferred.

The only exception to this rule is if the creditor can prove in court that military service hasn’t materially affected the debtor’s ability to repay at the higher interest rate. While notice is not legally required, as a practical matter active-duty military should always immediately notify creditors, who typically won’t have any means of knowing if a debtor has entered active military service. The interest rate reduction doesn’t apply to student loans; however in the past active-duty reservists have been able to obtain deferments.

The Act also provides protection from eviction if you and your family’s rent is not more than $1,200 a month. It at times can allow a serviceperson to break a lease. It also places limits on repossessions, foreclosures and tax sales, whether the actions target the serviceperson or a cosigner. The Act does have exceptions, however, and it is important to consult with an attorney before attempting any dramatic changes in your personal situation. The Act allows you to bring your own lawsuit if you are the victim of dunning notices, creditor fraud, improper debt collection, or harassment over financial obligations.

The roots of the Soldiers’ and Sailors’ Civil Relief Act reach back to the Civil War, when Congress protected Union soldiers and sailors from civil court actions. Comparable protections were enacted during World War One. The protections in today’s Act reflect one of the most comprehensive benefits the government extends to our military. It reflects our country’s enduring gratitude to the men and women in its armed forces.

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