513.4—Conditions creditors must meet before getting help in debt processing.
(a) Statutory and other regulatory requirements.
(1)
The Truth-in-Lending Act, Pub. L. 90-321 (15 U.S.C. 1601 ), lists the general disclosure rules that must be met by creditors. It does not cover private parties who extend credit only rarely to help a person. (See § 513.4(f)(1) ).
(2)
Federal Reserve Board Regulation Z ( 12 CFR part 226) lists specific disclosure rules for all credit transactions under the Truth-in-Lending Act.
(3)
Certain States have rules that may apply to credit transactions in lieu of Federal Reserve Board Regulation Z. However, the Federal Reserve Board must first decide if the State sets largely the same rules and enforcement measures. States currently exempted from Regulation Z are Connecticut, Maine, Massachusetts, Oklahoma, and Wyoming.
(4)
DOD Standards of Fairness (app B) define fair and just dealings with soldiers. DA Pam 360-520, chapter 4, contains simplified explanations of these standards. Note that certain debt complaints are exempt ( § 513.4(f) ).
(5)
Certificate of Compliance certifies the creditor has complied with the full disclosure requirements of Federal or State laws and regulations, State laws regarding contact with the employer of the debtor, and the application of the Standards of Fairness to the consumer credit transaction.
(7)
The Fair Debt Collection Practices Act contains other conditions a creditor must meet. (See § 513.1(g) ).
(b) State laws.
Florida, Louisiana, Maryland, Massachusetts, New York, North Carolina, and Wisconsin have passed laws that forbid creditors from contacting employers. This includes commanders, unless certain conditions are met. These conditions are the reduction of a debt to court judgment or the written permission of a debtor. The judgment must conform to the Soldiers' and Sailors' Civil Relief Act of 1940, as amended (50 U.S.C. app, section 501et seq., (1970)) if applicable. (See DA Pam 27-166.) Other States may enact similar laws; if they do, the same conditions will apply. Creditors wanting to make use of the debt processing privilege must first certify their compliance with the relevant State's law about contact with an employer. These laws, however, do not apply if the debtor is located in a State that has not passed such a law.
(i)
A signed copy of the Certificate of Compliance with DOD Standards of Fairness (app B) showing compliance with one of the following:
(iii)
The general and specific disclosure information given the soldier before signing the contract.
(iv)
A copy of a judgment or written permission from the soldier allowing the creditor to contact his or her employer about the debt, if applicable. (See § 513.4(b) ).
(v)
Photocopies of actual correspondence or documentary proof showing that every effort has been made to get payment by direct contact with the soldier. The creditor must give the soldier a chance to answer each inquiry. (Forty-five days for those in the contiguous 48 States and the District of Columbia; 60 days for all others.)
(3)
Creditors not subject to Regulation Z, such as public utility companies, will send a certification with their request. It must state that no interest, finance charge, or other fee exceeds that permitted by the laws of the State in which the service was requested.
(ii)
Documentary proof showing that every effort has been made to get the payment by direct contact with the soldier.
(5)
Creditors who have followed these terms may contact the soldier's commander for help. If the commander is contacted, the creditor must give the commander a chance to answer the inquiry. (Forty-five days for those in the contiguous 48 States and the District of Columbia; 60 days for all others.) If unsuccessful, after reasonable efforts to collect the debt, creditors may request help from USACFSC. In such cases, the information must be the same as that sent the commander. (See § 513.4(c)(6) ). The request should be sent to the Commander, USACFSC, ATTN: DACF-IS-PA, ALEX VA 22331-0522.
(d) Debt complaints returned to creditors without action.
Requests for help in processing debt complaints will be returned without action with an explanation if—
(i)
Documents showing compliance with the Truth-in-Lending Act, Federal Reserve Board Regulation Z, or State regulation.
(v)
Legible copies of actual correspondence or documentary proof showing that every effort has been made to get the payment by direct contact with the soldier. (See § 513.4(c)(1)(v).)
(5)
A U.S. company operating overseas exceeds the lowest interest rate of the State or States where chartered or doing business in the United States.
(6)
The contract or loan agreement provides that the debtor must pay the creditor's attorney fees, unless the following limitations in § 513.4(d)(6) (i) through (iii) are included. No attorney's fee may be charged for services done by a salaried employee of the creditor.
(9)
The late charge is in excess of 5 percent of the late payment, or $5, whichever is the lesser amount. Only one late charge may be made for any late installment. Late charges will not be made where an allotment has been timely filed, but payment has been delayed.
(10)
The creditor has not given the soldier a chance to answer a previous inquiry. (Forty-five days for those in the contiguous 48 States and the District of Columbia; 60 days for all others.)
(11)
The claimant is a debt collector without a court order or a signed letter of consent by the soldier. (See § 513.1(g).)
(e) Cancellation of debt processing privilege.
(1)
Creditors who refuse or fail repeatedly to follow these terms will be referred through channels to the Commander, USACFSC, Attn: DACF-IS-PA, Alex, Va 22331-0522, by the commander.
(ii)
Inform commanders worldwide by electrical message that the debt processing privilege of a specific creditor has been revoked.
(iii)
Inform the creditor that his or her debt processing privilege has been revoked and state the reasons for this action.
(f) Exemptions from Full Disclosure and Standards of Fairness.
The debt complaints discussed below are exempt from the Full Disclosure and Standards of Fairness. This does not prevent the debtor from questioning service charges and negotiating a fair and reasonable settlement.
(1)
Claims from private parties selling personal items (for example, car, furniture, appliances) on a one-time basis.
(2)
Claims from companies or individuals giving services in which credit is given only to help the soldier (for example, utilities, milk, laundry, medical, and related services).
(3)
Claims by endorsers, comakers, or lenders who intend only to help the soldier in getting credit. These claims, however, may not benefit the above through receipt of interest or otherwise.
(7)
Claims as security liens on real property (for example, a house). This does not include improvements or repairs.