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Service Members and Bankruptcy: An Open Letter To Holly Petraeus

Posted By admin || 3-Mar-2011

Congratulations to Holly Petreus, who was recently appointed to head the team that's creating the Office of Service members Affairs within the new Consumer Financial Protection Bureau. The Office of Service members Affairs is charged with helping service members and their families make sound financial decisions and avoid pitfalls.   Thank you for reminding our nation's largest banks that the Service members Civil Relief Act prohibits mortgage servicers from foreclosing on active duty service members and limits how much interest service members can be charged on consumer debt.

But we have a few more suggestions that we think could be helpful for our nation's military members:

  1. Extend the amount of time that mortgage servicers are prohibited from filing foreclosure on a service member from 90 days after active duty to up to a year after active duty.  The economy is still terribly weak.  Many of our military families are suffering financially because they cannot find work which has a living wage.  Many fall victim to foreclosure because they don't have enough time to get on their feet after their active duty is finished.
  2. Allow service members to receive mortgage modifications in bankruptcy.  Many experts have been pushing mortgage modification in bankruptcy for years; but it hasn't happened.  If there is any demographic that needs mortgage modification in bankruptcy, it is military families.  Many military families don't understand the fine print when signing up for a mortgage.  The result of this lack of time and experience with mortgage contracts leave service members vulnerable. After a tour of duty abroad they come back to find that they really can't afford the mortgage they signed up for. That's where mortgage modification in bankruptcy can help.
  3. Put stronger restrictions on payday loans targeting military service members and their families.  Many payday lenders are wiggling around the restrictions and it is hurting our service members.

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