This is a paper on the Servicemembers Civil Relief Act (SCRA) Reduction of Interest Rate to 6% Legal Brief. Servicemembers may be able to reduce the interest rate on their pre-service credit cards, car loans, mortgages, installment contracts, interest charged by the IRS, secured debts under a confirmed bankruptcy plan, and other debts or obligations to 6% per year under the SCRA. However, federally insured guaranteed student loans are not eligible for this rate reduction under the Higher Education Act. The SCRA specifically includes debt owed by the Servicemember individually or jointly with a spouse. Debt jointly owed by a Servicemember and individuals other than a spouse has also been eligible for the interest rate reduction. It does not matter which one of you initially incurred the debt. The important issue is that both of you are legally obligated to repay the debt, for example both names are on the loan repayment documents. The 6% interest rate cap only applies to debts that were made prior to entering active military service and it remains in effect only during the period of your active military service. Interest in excess of 6% must be forgiven, not just merely postponed, and the amount of the monthly payment must be reduced to reflect the actual interest rate being charged. Under the SCRA, interest includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) pertaining to the debt. See 6% percent reduction of interest rate letter included.
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