32 CFR 513.4 - Conditions creditors must meet before getting help in debt processing.

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§ 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.
(6) Full disclosure information shows what the soldier should know about contract terms.
(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.
(c) Debt processing.
(1) Creditors, other than private parties described in 513.4(f)(1), must send—
(i) A signed copy of the Certificate of Compliance with DOD Standards of Fairness (app B) showing compliance with one of the following:
(A) The Truth-in-Lending Act.
(B) Federal Reserve Board Regulation Z.
(C) State regulations.
(ii) A true copy of the signed contract.
(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.)
(2) Foreign-owned companies having debt complaints must send—
(i) A true copy of the terms of the debt.
(ii) A certification that they have met the DOD Standards of Fairness.
(iii) An English translation of the above (if not already in English).
(iv) Documentation as in §§ 513.4(c)(1) (iv) and (v).
(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.
(4) Creditors not subject to the Truth-in-Lending Act must send—
(i) Legible copies of actual correspondence. (See § 513.4(c)(1)(v)).
(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.
(6) All requests for help must include—
(i) The soldier's full name, rank, and SSN.
(ii) Date and place of birth, if SSN is not known.
(iii) The amount and date of the original debt.
(iv) The terms of payment.
(v) The balance due.
(vi) Documents described in § 513.4(c) (1) through (4) which apply.
(7) Separate letters should be written on each account for prompt and efficient processing.
(8) Letters lacking data will be returned for added documents.
(d) Debt complaints returned to creditors without action. Requests for help in processing debt complaints will be returned without action with an explanation if—
(1) Creditors did not enclose the following:
(i) Documents showing compliance with the Truth-in-Lending Act, Federal Reserve Board Regulation Z, or State regulation.
(ii) Signed copies of the Certificate of Compliance with DOD Standards of Fairness.
(iii) A completed copy of form with the Full Disclosure Information. (See § 513.4(a)(6).)
(iv) Signed copies of the contract.
(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).)
(2) The soldier is located in a State whose laws forbid creditors from contacting employers.
(3) The claim is obviously false or misleading.
(4) The finance charge does not conform to the State law where the contract is signed.
(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.
(i) The fees will have to be paid only in the event of a default by the soldier.
(ii) The fees will have to be paid only if a lawsuit is filed.
(iii) The fees will not exceed 20 percent of the amount found due.
(7) A penalty for prepayment has been charged.
(8) A charge has been made for an insurance premium without satisfactory proof of—
(i) A policy or insurance certificate having been issued.
(ii) Delivery of a policy or certificate to the soldier within 30 days of issuance.
(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).)
(12) The debt is covered by an order of a bankruptcy court.
(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.
(2) The CG, USACFSC will—
(i) Cancel debt processing privileges if the queries clearly show that the creditor is—
(A) Not conforming with this regulation.
(B) Trying to make unreasonable use of the debt processing privilege.
(C) Trying to use the Army as a collection agency.
(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.
(4) Contract for the purchase, sale, or rental of real estate.
(5) Claims in which the total unpaid amount does not exceed $50.
(6) Claims based on a revolving or open-end credit account. The account must show—
(i) The periodic interest rate and the equivalent annual rate.
(ii) The balance to which the interest is applied to compute the charge.
(7) Claims as security liens on real property (for example, a house). This does not include improvements or repairs.
(8) Attorneys representing parties under § 513.4(f) (1) through (7).

Title 32 published on 2013-07-01

The following are only the Rules published in the Federal Register after the published date of Title 32.

For a complete list of all Rules, Proposed Rules, and Notices view the Rulemaking tab.

  • 2013-07-22; vol. 78 # 140 - Monday, July 22, 2013
    1. 78 FR 43796 - Indebtedness of Military Personnel
      GPO FDSys XML | Text
      DEPARTMENT OF DEFENSE, Department of the Army
      Final rule; removal.
      Effective July 22, 2013.
      32 CFR Part 513

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United States Code
U.S. Code: Title 10 - ARMED FORCES

Title 32 published on 2013-07-01

The following are ALL rules, proposed rules, and notices (chronologically) published in the Federal Register relating to 32 CFR 513 after this date.

  • 2013-07-22; vol. 78 # 140 - Monday, July 22, 2013
    1. 78 FR 43796 - Indebtedness of Military Personnel
      GPO FDSys XML | Text
      DEPARTMENT OF DEFENSE, Department of the Army
      Final rule; removal.
      Effective July 22, 2013.
      32 CFR Part 513