Pub. 4 2013 Issue 1

www.wvbankers.org 8 According to December 2012 data from the federal Bureau of Labor Statistics, the unemployment rate for Gulf War Era veterans, hovering around eight percent, remains higher than the national rate. O ver the last decade, more than 2.3 million Americans were deployed to military duty in Iraq, Afghani- stan or both. Of that total, more than 1 million have since left the military. As these servicemembers return to their families and begin to seek jobs and new career paths, many encounter financial difficulties. It is important to keep such factors in perspective when contemplat- ing business issues related to the ethical and legal treatment of veterans. In our previous article, we began exploring the types of protections the Servicemembers Civil Relief Act (“the Act”) provides to servicemembers. We examined how those protections affect you as you do business with servicemembers and their families, and we addressed issues that may arise in litigation with a servicemember. In this article, we will review other sections of the Act that affect you. It is important to understand the protec- tions afforded servicemembers by the Act because a knowing violation could result in civil or criminal penalties. Any violation – even if unintentional – could result in reputational harm to your business. Here is a summary what you should know: 1.Delays in Litigation and Execution of Judgments. The Act requires courts to stay any action or the execution of any judgment against a servicemember for at least 90 days if the servicemember makes a motion requesting a stay. Once an action is stayed, no penalty may accrue for failure to comply with the terms of the underlying contract during the period of the stay. 2.Reduced Default Penalties. A court may reduce or waive any penalty or fine assessed by a bank against a servicemember for defaulting under a contract if (1) the servicemember was in military service at the time the penalty was incurred and (2) the ability of the servicemember to perform the obligation was materially affected by his or her military service. 3.Six Percent Interest Rate Limitation. The Act limits the interest rate on all interest bearing obligations to 6% during military service and for one year thereafter. This includes interest on mortgages, credit cards, auto loans, and any other type of lending. Interest that would otherwise be incurred during this time is forgiven, not deferred. A court may grant a bank relief from the interest rate limitation if it finds the servicemember’s ability to pay a higher interest rate is not materially affected by his or her military service. 4. Limitations on Rescinding or Foreclosing on an Installment Contract for the Purchase of Real or Personal Property. If a servicemember has entered into an installment contract for the purchase of real or personal property Servicemembers Civil Relief Act: Provisions Affecting Banking Institutions By Angela L. Beblo and Brienne T. Marco, Spilman Thomas & Battle, PLLC