[Title 32 CFR 513]
[Code of Federal Regulations (annual edition) - July 1, 2002 Edition]
[Title 32 - NATIONAL DEFENSE]
[Chapter V - DEPARTMENT OF THE ARMY]
[Subchapter A - AID OF CIVIL AUTHORITIES AND PUBLIC RELATIONS]
[Part 513 - INDEBTEDNESS OF MILITARY PERSONNEL]
[From the U.S. Government Printing Office]
32NATIONAL DEFENSE32002-07-012002-07-01falseINDEBTEDNESS OF MILITARY PERSONNEL513PART 513NATIONAL DEFENSEDEPARTMENT OF THE ARMYAID OF CIVIL AUTHORITIES AND PUBLIC RELATIONS
PART 513--INDEBTEDNESS OF MILITARY PERSONNEL--Table of Contents
Sec.
513.1 General.
513.2 Administrative procedures for processing complaints.
513.3 Administrative and punitive actions.
513.4 Conditions creditors must meet before getting help in debt
processing.
[[Page 73]]
513.5 Procedures governing nonactive duty or discharged personnel.
Appendix A to Part 513--References
Appendix B to Part 513--Standards of Fairness
Appendix C to Part 513--Glossary
Authority: 10 U.S.C. 3012.
Source: 51 FR 7268, Mar. 3, 1986, unless otherwise noted.
Sec. 513.1 General.
(a) Purpose. This regulation prescribes Department of the Army (DA)
policy, responsibilities, and procedures in handling debt claims against
soldiers.
(b) References. Required and related publications and prescribed and
referenced forms are listed in appendix A.
(c) Explanation of abbreviations and terms. Abbreviations and
special terms used in this regulation are explained in the glossary.
(d) Responsibilities. (1) The Deputy Chief of Staff for Personnel
will set policy on processing debt claims against soldiers.
(2) The Commanding General, U.S. Army Community and Family Support
Center (CG, USACFSC) will--
(i) Set procedures for processing debt claims against soldiers.
(ii) Process debt claims received at USACFSC regarding soldiers.
(iii) Carry out the objectives of this regulation to protect the
rights of the soldier, his or her family members, and the interests of
the Army.
(iv) Advise and assist the directors of Headquarters, Department of
the Army (HQDA) agencies, commanders of the major Army commands, and
other commanders on matters pertaining to indebtedness of soldiers.
(3) Officers having general court-martial jurisdiction will--
(i) Ensure special emphasis on the indebtedness issue is given in
command information programs. This includes soldiers being informed of
their responsibility to manage their personal affairs satisfactorily and
pay their debts promptly. Also, inform soldiers of the possible
consequences of failure to pay their debts.
(ii) Take action on requests to file unfavorable information in a
soldier's official personnel file. (See Sec. 513.3.)
(4) First level field grade commanders will monitor instances of
soldiers' repeated failure to pay debts that are brought to their
attention. These commanders will take action, when proper.
(5) Immediate commanders will--
(i) Ensure that soldiers are informed of the following:
(A) DA policy on indebtedness.
(B) The possible consequences of failure to pay their debts.
(ii) Manage the processing of debt claims per the terms of this
regulation.
(iii) Answer all correspondence received from CG, USACFSC and other
DA officials.
(iv) Answer all correspondence received directly from claimants and
third parties (for example, Members of Congress). The commander will not
include unreleasable information without the soldier's written consent.
This complies with the Privacy Act of 1974. (See AR 340-21.) Commanders
should ask the Staff Judge Advocate (SJA) for guidance in unusual or
difficult situations.
(v) Inform the first level field grade commander of instances of
soldiers' repeated failure to pay their debts. Also, point out actions
taken or contemplated to correct the situation.
(vi) Refer correspondence or queries received from news media
organizations to the unit, installation, or command public affairs
officer for response.
(6) The unit, installation, or command public affairs officer will--
(i) Answer correspondence and queries received from news media
organizations.
(ii) Coordinate with the SJA before making any response.
(e) Policy. (1) Soldiers are required to manage their personal
affairs satisfactorily and pay their debts promptly. Failure to do so
damages their credit reputation and affects the Army's public image. The
Army, however, has no legal authority to force soldiers to pay their
debts. Also, the Army cannot divert any part of a soldier's pay even
though payment of the debt was decreed by a civil court. Only civil
authorities can enforce payment of private debts.
[[Page 74]]
(2) Debt claims against corporations and organizations to which a
soldier belongs, or of which a soldier is an officer, will not be
processed under this regulation. In this situation, the matter should be
pursued in civil court. If a judgment is received specifically against
the soldier, then this regulation will apply.
(3) Creditors who follow Sec. 513.4 will have their debt complaints
processed.
(4) Requests for help that do not follow Sec. 513.4 will be returned
without action with an explanation as discussed in Sec. 513.4(d).
(5) The Army will revoke debt processing privileges for creditors
who--
(i) Refuse to abide by this regulation.
(ii) Try to use the Army as a debt collection agency. (See
Sec. 513.4(e)).
(6) The Army does not try to judge or settle disputed debts, or
admit or deny whether claims are valid. The Army will not tell claimants
whether any adverse action has been taken against a soldier as a result
of the claim.
(7) If a soldier is not trying to resolve unpaid debts promptly or
complaints of repeated failure to pay debts are received, commanders
will consider the actions shown below. (See Secs. 513.2(a)(3)(xv) and
513.3.)
(i) Making the failure a matter of permanent record.
(ii) Denial of reenlistment (enlisted personnel).
(iii) Administrative separation from the Service.
(iv) Punishment under the Uniform Code of Military Justice (UCMJ).
When proper, such misconduct may be charged under articles 92, 123, 133,
or 134 of the UCMJ.
(8) Checks that are dishonored for any reason remain proof of
indebtedness until--
(i) Made good.
(ii) Proven to be the error of the financial institution on which
drawn, or the error of any other person or institution; such action then
absolves the soldier of fault. (See Sec. 513.2(c).)
(9) When necessary, commanders and soldiers are urged to seek help
from the SJA.
(f) Banks and credit unions. (1) Banks and credit unions located on
military bases must apply Department of Defense (DOD) Standards of
Fairness (app B) before making loans or credit agreements. Banks and
credit unions that do not meet this requirement will be denied help in
processing debt complaints.
(2) If soldiers are referred to off-base branches of an on-post bank
or credit union, the branches also must comply with the Standards of
Fairness before making loans or credit agreements.
(3) Interest rates and service charges for loans made by oversea
military banking facilities are set by DOD.
(g) Fair Debt Collection Practices Act (section 1692, title 15,
United States Code (15 U.S.C. 1692)). (1) A debt collector may not
contact any person other than the soldier, his or her lawyer or legal
counsel, or the creditor about any debt collection. The debt collector,
however, may contact the employer if he or she has a written and signed
consent from the soldier, or a court order permitting contact. The
written consent must include the debt collector's name. It is illegal
for debt collectors to use another name when collecting debts.
(2) Debt collectors who have obtained the needed written consent or
court order and who have followed Sec. 513.4 will have their debt
complaints processed.
(3) Creditors who collect only on their own behalf are exempt from
the Act.
(h) Individual repayment plan of the Bankruptcy Act. Chapter XIII of
the Bankruptcy Act (11 U.S.C. 1301, et seq.) provides for the protection
and relief of individuals with a regular income. It also sets rules for
paying debts under the supervision of U.S. Federal District Courts. Care
must be taken not to confuse ``bankruptcy'' and ``individual repayment
plans'' in order not to infringe on the rights of the soldier.
(i) Locator service. (1) Installations will honor requests for
central locator service by a banking office (AR 210-135) or credit union
(AR 210-24) located on a military installation. This service will be
free when banking offices and credit unions cite AR 37-60. This service
will be used to locate persons for settling accounts, checks that did
not clear, and delinquent loans. The U.S. Army Finance and Accounting
Center (USAFAC), Indianapolis, IN 46249-1016, will assist these banking
offices and
[[Page 75]]
credit unions to locate soldiers who cannot be located locally.
(2) Current military addresses for all soldiers may be obtained by
writing the Commander, U.S. Army Enlisted Records and Evaluation Center,
Fort Benjamin Harrison, IN 46249-5301. All requests must include the
soldier's full name, rank, and social security number (SSN). They should
include the date and place of birth if the SSN is not known. A check or
money order for $3.50 payable to the Treasurer of the United States must
be enclosed with each request. (See AR 37-60.)
(3) A debt collector should not write to the U.S. Army Enlisted
Records and Evaluation Center (USAEREC) if he or she knows the soldier
is represented by a civilian lawyer or military legal counsel. However,
the debt collector may write to USAEREC if he or she--
(i) Does not know or cannot easily find out the name and address of
the lawyer or legal counsel.
(ii) Does not receive a response from the lawyer or legal counsel.
(4) If a debt collector writes to USAEREC, a postcard cannot be
used. Also, the request cannot state that the locator service is being
sought in order to collect a debt. These actions would violate the Fair
Debt Collection Practices Act (Sec. 513.1(g)).
[51 FR 7269, Mar. 3, 1986; 51 FR 8824, Mar. 14, 1986, as amended at 51
FR 17961, May 16, 1986]
Sec. 513.2 Administrative procedures for processing complaints.
(a) Commander's actions. Upon receipt of a debt complaint, the
commander will--
(1) Review the case to ensure that the terms of this regulation have
been met.
(2) Consult the SJA if needed.
(3) Take the following actions:
(i) If any of the terms of Sec. 513.4(c) have not been met by the
creditor, return the complaint. Tell the writer that no action will be
taken until those terms are met.
(ii) Upon receipt of subsequent inquiries from USACFSC, Members of
Congress, or any other source, inform the writer that--
(A) The creditor has been told that his or her request lacked data
or documentation.
(B) The commander regrets that he or she cannot process the
complaint until the creditor supplies the necessary data.
(C) A reply previously has been made to the creditor. Enclose a copy
of the reply.
(iii) If the creditor refuses or repeatedly fails to comply with any
of these requirements, refer the complete case through channels to the
Commander, USACFSC, ATTN: DACF-IS-PA, ALEX VA 22231-0522. If it is
believed the creditor's debt processing privileges should be revoked,
include a recommendation stating the reasons.
(iv) If the soldier was not given full disclosure information when
the debt was incurred, refer him or her to the SJA office. The SJA
office will advise if the soldier has a right to file suit against the
creditor. The soldier may be entitled to twice the amount of the finance
charge, for a minimum of $100 up to a maximum of $1,000, plus court
costs and lawyer fees. This does not apply to debts incurred before 30
June 1969.
(v) If in doubt as to the legality of the contract, consult the SJA.
This action is to ensure that the contract terms do not violate Federal
and State laws.
(vi) Accept as valid proof, claims based on court judgments, orders,
or decrees.
(vii) If the debt or the amount of the debt is disputed or denied by
the soldier, reply directly to the creditor. Tell him or her that Army
policy requires that disputed debts be settled by civil courts. Do not,
in the reply, try to judge or settle any disputed debts, or admit or
deny the validity of the claim.
(viii) If the creditor has met all the requirements discussed in
Sec. 513.4, interview the soldier.
(A) Ensure that the soldier is properly advised of his or her rights
under the Privacy Act of 1974. DA Form 4817-R (Consent/Nonconsent To
Disclose Personal Information) will be completed.
(B) Notify the soldier of the debt complaint.
(C) Explain that the Army requires that soldiers pay their debts
promptly.
[[Page 76]]
Failure to do so damages credit reputations and affects the Army's
public image. Also, explain that the willful failure to resolve unpaid
debts may result in administrative or punitive actions as described in
Sec. 513.3.
(D) Tell the soldier of his or her legal rights and duties. If
appropriate, advise the soldier of his or her rights under article 31,
UCMJ. Also, inform the soldier that counseling service is available
under the Legal Assistance Program (AR 27-3).
(E) Review all available facts including the soldier's defenses,
rights, and counterclaims.
(F) Urge the soldier to seek budget counseling and consumer
protection advice, if proper. These services may be obtained from on-
post credit unions, Army Community Service Program Counselors (AR 608-
1), or through financial management seminars or workshops.
(G) Help the soldier in settling or in liquidating the debt. Give
the soldier a copy of DA Pam 360-520 if proper. Answer any questions
that he or she might have.
(H) Have the soldier sign a statement allowing or forbidding release
of information to the claimant (DA Form 4817-R). AR 340-17 and AR 340-
21, paragraph 3-3 govern this.
(I) Ask the soldier about his or her intentions. Give the soldier
the chance to furnish a voluntarily signed statement admitting or
denying the complaint or declining to do either.
(ix) Advise the claimant promptly that the soldier has been told of
the complaint.
(x) Summarize the soldier's intentions if the soldier allows release
of the information.
(xi) If proper, advise the claimant that indebtedness disputes must
be resolved in a civil court of competent jurisdiction.
(xii) Ask the claimant to write, if necessary, directly to the
soldier or his or her commander.
(xiii) Retain the statement allowing or forbidding release of
information to the claimant with the case file for future reference.
(See Sec. 513.3)
(xiv) Monitor actions closely to ensure promises made to claimants
are being met.
(xv) Consider administrative or punitive action, if proper (See
Secs. 513.1(e)(7) and 513.3.)
(xvi) Inform the first level field grade commander of instances of
soldiers' repeated failure to pay their debts. Also, point out actions
taken or contemplated to correct the situation.
(b) Procedures for routing debt complaints. (1) Send debt complaints
through proper channels to the soldier's commander for action.
(2) If the soldier is a patient attached to a medical holding
detachment (MHD), the complaint will be sent there for action. The
commander of the MHD will take action per this regulation.
(3) The command receiving the complaint will acknowledge the letter
and tell the writer of the referral. DA Form 209 (Delay, Referral, or
Follow-Up Notice) may be used for this purpose.
(4) All correspondence to the President, received from outside of
DOD, will be processed per AR 1-9.
(5) Send complaints to the soldier's new duty station if the soldier
has been reassigned. Advise the claimant of the soldier's reporting date
and the unit address to which correspondence should be sent.
(6) See Sec. 513.5 for procedures governing processing of claims for
nonactive duty or discharged personnel.
(c) Processing debt complaints based on dishonored checks. (1)
Writing checks against an account with no or not enough funds is a
serious matter. It may be a misdemeanor or a felony. This depends on the
amount of the check and the laws or statutes of the jurisdiction where
the check is presented for payment. The soldier is responsible for
making sure that money is in his or her bank account to cover checks
written on that account. Writing bad checks may result in disciplinary
or administrative action. Whether or not such action is taken, a
dishonored check for not enough funds remains proof of an indebtedness
except as provided in Sec. 513.1(e)(8).
(2) Commanders must answer all check complaints, other than those
discussed in Sec. 513.2(c)(3), even if such complaints concerns checks
errors caused by oversight or negligence. (AR 210-60 outlines ways for
handling dishonored
[[Page 77]]
checks written on Army installations and in Army facilities.)
(3) Checks made good within 5 days of notice do not require any
action if the complaint is based on--
(i) Bank or Government error.
(ii) Failure to date the check.
(iii) Inconsistent or not legible amounts shown on the check.
(iv) Lack of legible signature.
(4) Bad checks written by family members are not processed under
this regulation except in the following instance. The SJA finds that
these checks stand for debts for which the soldier may be held
personally liable under Federal or State laws (for example, checks
written for necessities such as rent, utilities, or food).
(d) Inquiries from USACFSC or DA officials. The commander must--
(1) Give USACFSC or DA officials complete data on all inquiries.
(2) Seek the advice of the SJA before replying to a court order if
necessary.
(3) State ``not applicable'' to items that do not apply.
(4) If applicable, advise USACFSC or DA officials--
(i) Whether the soldier acknowledges the debt.
(ii) Of the corrective action taken (to include the amounts and
dates payments will be made).
(iii) Of the method of payment (for example, personal check).
(iv) Whether the soldier allowed or forbade release of the
information given. (See DA Form 4817-R.)
(v) Whether the soldier is following the terms of a court order.
(vi) Whether the soldier's actions follow Army policy as stated in
this regulation.
(vii) In the reply, include your name, unit address, and your
automatic voice network (AUTOVON) number. If no AUTOVON Number is
available, include a commercial or other number where the unit can be
reached.
(5) Return to USACFSC or DA officials inquiries received after the
soldier has been transferred. Include a copy of his or her permanent
change of station orders.
[51 FR 7270, Mar. 3, 1986; 51 FR 8824, Mar. 14, 1986]
Sec. 513.3 Administrative and punitive actions.
(a) Considerations. Commanders will not tolerate irresponsibility,
neglect, dishonesty, or evasiveness. Failure to pay debts promptly and
honorably may require disciplinary or administrative action. If a
soldier is not trying to resolve unpaid debts promptly or complaints of
repeated failure to pay debts are received, commanders will consider--
(1) Making it a matter of permanent record (Sec. 513.3(b)).
(2) Denial of reenlistment (enlisted members) (AR 601-280).
(3) Administrative separation from the Service (AR 635-100 or AR
635-200).
(4) Punishment under the UCMJ. (See Sec. 513.1(e)(7).)
(b) Official personnel files. (1) The Army requires that all-
inclusive information of the qualifications of its soliders be on file.
This prevents selection of soldiers for positions of leadership, trust,
and responsibility whose qualifications are questionable.
(2) Documents/records created or received in connection with debt
complaints will be filed per AR 600-37 and the Army Functional Files
System (AR 340-2 and AR 340-18).
(3) The soldier may show his or her negligence, disregard, or
unwillingness to resolve the matter by repeatedly failing to pay his or
her debts. In these cases, the commander will decide whether to place a
letter of reprimand, admonition, or censure in the soldier's official
personnel files. AR 600-37, chapter 2, governs action taken to file
unfavorable information.
(4) If information does not merit filing in the soldier's official
personnel files, the commander will--
(i) Continue to monitor the situation.
(ii) Furnish further guidance and help.
(iii) Consider later action (Sec. 513.3(b)(3)) if warranted by
further evidence.
Sec. 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
[[Page 78]]
be met by creditors. It does not cover private parties who extend credit
only rarely to help a person. (See Sec. 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 (Sec. 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 Sec. 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 501 et 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 Sec. 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 Secs. 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
Sec. 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.
[[Page 79]]
(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 Sec. 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 Sec. 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 Sec. 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 Sec. 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
Sec. 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 Sec. 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
[[Page 80]]
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 Sec. 513.4(f) (1) through
(7).
Sec. 513.5 Procedures governing nonactive duty or discharged personnel.
(a) Procedures governing nonactive duty personnel. (1) Debt
complaints against former soldiers or others not on active duty will be
sent to the Commander, U.S. Army Reserve Personnel Center (ARPERCEN),
ATTN: DARP-PSE-VS, 9700 Page Boulevard, St. Louis, MO 63132-5200.
(2) After ARPERCEN verifies the status, the following officials will
act as prescribed below.
(i) Chief, National Guard Bureau, Wash DC 20310-2500, for soldiers
of the Army National Guard.
(ii) The area commander concerned for Ready Reservists assigned to
troop program units under their control. (See AR 140-1, para 1-6.)
(iii) ARPERCEN for nonunit soldiers assigned to Control Groups of
the Ready Reserve, Standby Reserve, and Retired Reserve.
(3) The officials cited in Sec. 513.5(a)(2) will ensure that debt
complaints are delivered to the person concerned, using military
channels. When the complaint cannot be delivered through military
channels, it will be sent to the last known mailing address of the
person by certified mail, using PS Form 3811 (Return Receipt,
Registered, Insured, and Certified Mail). It should be marked Return
Receipt Requested--Deliver to Addressee Only. This form is available at
U.S. post offices.
(4) After delivery of correspondence, the responsible official will
advise the claimant--
(i) Of the date and method of delivery.
(ii) That the military department does not control the personal
affairs of nonactive duty personnel. These personnel usually are in a
civilian status and are not subject to military discipline. Therefore,
the matter has been left to the person's discretion.
(iii) Of the person's mailing address only if the conditions in
Sec. 513.5(c) are met.
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(b) Procedures governing discharged personnel. (1) Debt complaints
against persons who have been discharged from the service (that is,
those now holding no military status) will be sent to ARPERCEN.
(2) ARPERCEN will return the correspondence, and all accompanying
documentation, and advise the claimaint--
(i) That the person is no longer a member of the Army or the Reserve
Components.
(ii) Of the date of discharge.
(iii) That the Army no longer has control or authority over the
discharged personnel. Therefore, the Army can take no further action in
this matter.
(iv) Of the person's mailing address only if the conditions in
Sec. 513.5(c) are met.
(c) Conditions for disclosing mailing address. Nonactive duty and
discharged personnel's mailing addresses will not be disclosed unless--
(1) The person consents in writing to the release of his or her
address.
(2) The claimant sends a court order directing the release of the
address.
(3) Any other reason that does not constitute a violation of the
Privacy Act of 1974.
(d) Retired personnel. (1) The claimant may be advised that
correspondence may be sent to the retired person as follows:
(i) Place correspondence in a stamped envelope with the retired
person's name typed or printed on the envelope.
(ii) Place a stamped envelope in a second envelope and mail to
Commander, ARPERCEN, Attn: DARP-PSE-VS, 9700 Page Boulevard, St. Louis,
MO 63131-5200.
(2) ARPERCEN will forward the correspondence to the retired person,
but cannot release the address per provisions of the Privacy Act of
1974.
Appendix A to Part 513--References
Section I
Required Publications.
AR 340-2
Maintenance and Dispostion of Records in TOE Units of the Active
Army, the Army Reserve and the National Guard. (Cited in
Sec. 513.3(b)(2)).
AR 340-17
Release of Information and Records from Army Files. (Cited in
Sec. 513.2(a)(3)(viii)(H)).
AR 340-18
The Army Functional Files System. (Cited in Sec. 513.3(b)(2)).
AR 340-21
The Army Privacy Program. (Cited in Secs. 513.1(d)(5)(iv) and
513.2(a)(3)(viii)(H)).
AR 600-37
Unfavorable Information. (Cited in Sec. 513.3(b) (2) and (3)).
DA Pam 27-166
Soldiers' and Sailors' Civil Relief Act. (Cited in Sec. 513.4(b)).
DA Pam 360-520
Credit: Master or Servant. (Cited in Secs. 513.2(a)(3)(viii)(G) and
513.4(a)(4)).
Uniform Code of Military Justice. (Cited in Secs. 513.1(e)(7)(iv),
513.2(a)(3)(viii)(D) and 513.3(a)(4)).
Section II
Related Publications.
A related publication is merely a source of additional information.
The user does not have to read it to understand this regulation.
AR 1-9
White House Liaison, Communications, and Inspections.
AR 11-2
Internal Control Systems.
AR 27-3
Legal Assistance.
AR 37-60
Pricing for Materiel and Services.
AR 140-1
USAR--Mission, Organization, and Training.
AR 210-24
Credit Unions.
AR 210-60
Control and Prevention of Abuse of Check Cashing Privileges.
AR 210-135
Banking Service on Army Installations.
AR 601-280
Army Reenlistment Program.
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AR 608-1
Army Community Service Program.
AR 608-99
Family Support, Child Custody, and Paternity.
AR 635-100
Officer Personnel (Separations).
AR 635-200
Enlisted Personnel (Separations).
DODD 1344.9
Indebtedness of Military Personnel.
Federal Reserve Board Regulation Z Truth in Lending.
Section III
Prescribed Forms.
DA Form 4817-R
Consent/Nonconsent to Disclose Personal Information. (Cited in
Secs. 513.2(a)(3)(viii) (A) and (H), and 513.2(d)(4)(iv)).
Section IV
Referenced Forms.
DA Form 209
Delay, Referral, or Follow-Up Notice.
PS Form 3811
Return Receipt, Registered, Insured, and Certified Mail.
Appendix B to Part 513--Standards of Fairness
B-1. No finance charge contracted for, made, or received under any
contract shall be in excess of the charge which could be made for such
contract under the law of the place in which the contract is signed in
the United States by the military member.
a. In the event a contract is signed with a U.S. company in a
foreign country, the lowest interest rate of the State or States in
which the company is chartered or does business shall apply.
b. However, interest rates and service charges applicable to
overseas military banking facilities will be established by the
Department of Defense.
B-2. No contract or loan agreement shall provide for an attorney's
fee in the event of default unless suit is filed, in which event the fee
provided in the contract shall not exceed 20 percent of the obligation
found due. No attorney fees shall be authorized if the attorney is a
salaried employee of the holder.
B-3. In loan transactions, defenses which the debtor may have
against the original lender or its agent shall be good against any
subsequent holder of the obligation. In credit transactions, defenses
against the seller or its agent shall be good against any subsequent
holder of the obligation, provided that the holder had actual knowledge
of the defense or under conditions where reasonable inquiry would have
apprised the holder of this fact.
B-4. The military member shall have the right to remove any security
for the obligation beyond State or national boundaries if the military
member or family moves beyond such boundaries under military orders and
notifies the creditor, in advance of the removal, of the new address
where the security will be located. Removal of the security shall not
accelerate payment of the obligation.
B-5. No late charge shall be made in excess of 5 percent of the late
payment, or $5 whichever is the lesser amount, or as provided by law or
applicable regulatory agency determination. Only one late charge may be
made for any tardy installment. Late charges will not be levied where an
allotment has been timely filed, but payment of the allotment has been
delayed. Late charges by overseas banking facilities are a matter of
contract with the Department of Defense. Late charges by Federal credit
unions are set at 20 percent of the interest due with a minimum of not
less than 5 cents.
B-6. The obligation may be paid in full at any time or through
accelerated payments of any amount. There shall be no penalty for
prepayment and in the event of prepayment that portion of the finance
charges which has inured to the benefit of the seller of the creditor
shall be prorated on the basis of the charges which would have been
ratably payable had finance charges been calculated and payable as equal
periodic payments over the terms of the contract and only the prorated
amount to the date of prepayment shall be due. As an alternative the
``Rule of 78'' may be applied.
B-7. If a charge is made for loan insurance protection, it must be
evidenced by delivery of a policy or certificate of insurance to the
military member within 30 days.
B-8. If the loan or contract agreement provides for payments in
installments, each payment, other than the down payment, shall be in
equal or substantially equal amounts, and installments shall be
successive and of equal or substantially equal duration.
B-9. If the security for the debt is repossessed and sold in order
to satisfy or reduce the debt, the repossession and resale will be
governed by the laws of the State in which the security is requested.
B-10. A contract for personal goods and services may be terminated
at any time before delivery of the goods or services without charge to
the purchaser. However, if goods
[[Page 83]]
made to the special order of the purchaser result in preproduction
costs, or require preparation for delivery, such additional costs will
be listed in the order form or contract.
a. No termination charge will be made in excess of this amount.
Contracts for delivery at future intervals may be terminated as to the
undelivered portion.
b. The purchaser shall be chargeable only for that proportion of the
total cost which the goods or services delivered bear to the total goods
called for by the contract. (This is in addition to the right to rescind
certain credit transactions involving a security interest in real estate
provided by Pub. L. 90-321, ``Truth-in-Lending Act,'' section 125 (15
U.S.C. 1601 (1976)) and the Federal Reserve Board Regulation Z (12 CFR
part 226 and Secs. 226.3, 226.9 (1978)).
Appendix C to Part 513--Glossary
Section I--Abbreviations
ARNGUS: Army National Guard of the United States
ARPERCEN: U.S. Army Reserve Personnel Center
AUTOVON: automatic voice network
DA: Department of the Army
DOD: Department of Defense
HQDA: Headquarters, Department of the Army
MHD: medical holding detachment
SJA: staff judge advocate
SSN: social security number
UCMJ: Uniform Code of Military Justice
USACFSC: U.S. Army Community and Family Support Center
USAEREC: U.S. Army Enlisted Records and Evaluation Center
USAFAC: U.S. Army Finance and Accounting Center
USAR: U.S. Army Reserve
U.S.C. U.S. Code
Section II--Terms
Check: A written order, usually on a standard printed form, directing a
bank or credit union to pay money.
Creditor: Any person or business that offers or extends credit, or to
whom or to which a debt is owed. This term includes lending institutions
(such as centralized charge systems) which, although not parties to the
original transactions, seek help in collecting debts.
Debt: Any legal debt acknowledged by the soldier, or in which there is
no reasonable dispute as to the facts or law, or which has been reduced
to judgment.
Debt collector: Any person or business that solely collects debts owed
to another person or business. (A debt collector is not a creditor.)
Disputed debt: Any debt, not reduced to a judgment, in which there is a
genuine dispute between the parties as to the facts or law relating to
the debt which would affect the obligation the soldier to pay.
Family member: As used in this regulation, an individual who qualifies
for dependency benefits under certain conditions as set by Army
regulations. (For example, spouse or unmarried child, to include
stepchildren, and adopted or illegitimate children.)
Judgment: Any decision given by a court of justice or other competent
tribunal as a result of proceedings instituted therein. As defined, a
judgment includes any administrative enforcement order
(Vollstreckungsanordnung) issued by the German federal post office
(Deutsche Bundespost) regarding unpaid telephone bills. Such orders come
within the coverage of this regulation regardless of where the soldier
is stationed.
Soldier: Commissioned and warrant officers and enlisted personnel.
[51 FR 7275, Mar. 3, 1986; 51 FR 8824, Mar. 14, 1986]