State legislation on military loans

In the Old Testament of the Holy Bible, the Lord decreed that a tithe of 10% of all your earnings be given to the tribe of Levi, for they cannot work, but administer only to the spiritual needs of the nation. We always look at the Bible as our guide for what is moral and the foundation of our laws to be legal. Why then are we charging exorbitant fees on the loans of our hapless military personnel, considering that they are the custodians of our country’s security? Are we not duty bound to also return the favor, by making their lives and those of their families idyllic if not perfect? We should be conscience stricken for the miserable treatment they endured from us. Or do we need some disaster to strike, before we come to our senses?

Finally, a law has been passed in Congress to curb such excesses. Congress has outlawed the military payday loans, the auto title loans, to all active-duty military personnel and their dependents, and caps a maximum 36% APR (annual percentage rate) on all other military loans. The law is explicit in contents, for it bans the issuance of personal checks, the title of a vehicle as collateral for loans, previous loans will not be allowed to roll over (so exorbitant fees can be avoided), requiring the borrower to waive any right to contest it in court, including the Service Members Civil Relief Act. All credit transactions should show transparency, so servicemen would know what charges have been imposed, and in no way should it exceed the maximum cap of 36% APR.

Also, if borrowers want to pay off his obligation ahead of the time agreed upon, he should be allowed to do so without the accrued penalties. Creditors violating this law will be subject to fines and a jail term of up to one year or both depending on the gravity of the offense. This law shall be in effect on the first day of October 2007.

Creditors are advised to refrain from collecting fees from students who have been called to active military service and are mandated to provide them with an ample grace period on their return from duty to settle outstanding obligations. Students who withdrew from school because they are called for military duty, will not be required to return the financial funds they received for books and living expenses. Colleges and Universities are asked to refund tuition, institutional charges or comparable credit to students forced to withdraw from school to fulfill their constitutional military obligation.

There are questions filtering around, why the law on Payday Loans applies only to military personnel? Is it because the lowest paid military serviceman, only has a salary cap of a little less than US $ 1,200 and such amount too meager for their needs? What about those poor fellows receiving a little more than US $ 800, are they not also prone to the predatory tactics of some unscrupulous lending institutions? The road to bankruptcy and financial ruin is much more prominent with low income earners. Shouldn’t the law apply to both?