life insurance

Apache is functioning normally

Northwestern Mutual Launches Podcast to Provide Real, Expert Financial Advice to Guide the 75 Percent of Americans that Say They Could Be Missing Something Important When it Comes to Their Financial Plan¹ Eight-episode podcast launches as part of new marketing campaign and refreshed brand identity for the company, centered around the better conversations Northwestern Mutual’s … [Read more…]

Apache is functioning normally

Northwestern Mutual commemorates children and families affected by childhood cancer with inaugural proclamation for Childhood Cancer Awareness Month Mayor Cavalier Johnson declares Sept. 4 as “goldeNMoments Day” in the city of Milwaukee  MILWAUKEE, Sept. 4, 2024 /PRNewswire/ — Receiving a cancer diagnosis is unimaginable, but a reality for more than 1,000 children a day worldwide. … [Read more…]

Apache is functioning normally

The information provided on this website does not, and is not intended to, act as legal, financial or credit advice. See Lexington Law’s editorial disclosure for more information.

If you or someone you know has been a service member for the United States, then you’ve likely heard of the SCRA. However, you might not know exactly what the SCRA is or how it can help you. 

SCRA stands for Servicemembers Civil Relief Act. The SCRA (formerly called the Soldiers’ and Sailors’ Civil Relief Act) was enacted into law in 2003. This law aims to protect military personnel who are on active duty by limiting actions that can be taken against them. It also aims to reduce, postpone or stop any civilian obligations while a person is on active duty.

This law is intended to allow military personnel to focus on their military duties by reducing financial and legal burdens that might otherwise affect them. 

What Does the SCRA Cover?

The SCRA is quite extensive in protecting active military personnel and covers many different factors. Some of the most used features include limits on interest rates, foreclosures and more.

Interest Rates

Under the SCRA, creditors must limit the amount of interest for military personnel to six percent per year. This six percent maximum also applies to debts incurred before military service. Any interest that is higher than this maximum must be forgiven by the creditor. 

This limited interest rate applies to credit cards, mortgages, business obligations, fees, service charges, annual renewals and loans (like auto, recreational vehicle and home equity loans). However, this rule affects only some student loans. 

For mortgages, the reduced rate of six percent will continue for one year after active-duty service ends. 

A service member’s interest rate isn’t automatically reduced when they enroll in the military. Instead, the individual needs to reach out to their creditor with a copy of their military active-duty orders and a formal, written request to abide by the six percent interest maximum. 

There are some exceptions to the rule. Suppose a creditor appeals the request and the court finds that the service member’s ability to repay isn’t impacted by their active duty. In that case, the service member may have to pay the original interest rate.

Foreclosures and Repossessions

Under the SCRA, service members are protected against default judgments, including foreclosures and repossessions. When a service member doesn’t appear in court because they’re away on active duty, the court cannot issue a judgment.

Foreclosures

If the service member purchased a home before their military service, a lender cannot seize or foreclose on the house. The only exception is if the lender receives a court order for foreclosure. 

Some states don’t require a court order to foreclose on a home (nonjudicial foreclosures), but under the SCRA, service members are protected in these states too. 

Additionally, a foreclosure postponement extends to one year after military service ends, also known as “tail coverage.”

Repossessions

Lenders cannot repossess property—such as vehicles—for nonpayment or under a contract termination due to payment gaps. This applies to any missed payments during the service member’s military service. The only exception is if the lender receives a court order for repossession. 

Income Taxes

If a service member can show that their military service impacts their ability to pay their income taxes, payment the income taxes can be deferred. This rule applies to the IRS, state and local tax authorities. Additionally, the service member can’t be charged any interest or fees for the income tax deferral. 

Small Businesses 

If a service member owns a small business, creditors cannot come after them for business obligations or debts while the individual is on active duty. The SCRA protects the individual’s military pay and nonbusiness assets from the creditors associated with the small business. 

Credit

When a service member asserts their rights under the SCRA, creditors cannot respond by revoking or denying credit or changing the credit terms. For example, if an individual invokes the six percent interest rule, the creditor cannot respond by reducing their credit card limit. 

However, individuals should note that if a service member misses a payment, the creditor can report them to credit reporting companies. This late payment may then show up as a negative item on their credit report and may lower their credit score. 

Other

Voting

Service members retain the right to vote in their state of residency, even when they’re stationed for active duty in another state or country. They don’t need to change their voter registration and will be able to vote in their state of legal residence. 

Civil Judicial Proceedings

Any civil judicial proceedings, including family law proceedings, are postponed under the SCRA. If it is found that a defendant service member has not been able to attend court because they’re on active duty, the court cannot enter a default judgment against them. The service member then has to appoint an attorney to represent their interests as a defendant.

Life Insurance 

A life insurance company cannot increase payments or terminate coverage because an individual is on active duty. An exception to this rule is natural premium increases that come as a result of age. 

Insurance companies also can’t limit or restrict any type of coverage due to active-duty service. 

Who Is Eligible?

The SCRA covers all active-duty military members, including:

  • Army
  • Marine Corps
  • Air Force
  • Space Force
  • Coast Guard
  • Navy
  • Reserves and National Guard
  • Commissioned officers in active duty with the Public Health Service or the National Oceanic and Atmospheric Administration 

A service member’s eligibility begins the first day of their active-duty service commitment and ends between 30 and 90 days after finishing active duty. For some aspects covered by the SCRA, the SCRA protection can extend up to 180 days post-active duty. 

For Reserve and National Guard members, the eligibility for SCRA begins the very day they receive their mobilization orders. Even if Reserve and National Guard members are in unpaid status or not on active duty, the SCRA protections apply. 

SCRA protections can apply to the spouses and children of service members or to other individuals who relied on the service member for 50 percent or more of their financial support. This support had to start at least 180 days before using SCRA protections. 

Service members who are uncertain about the coverage for themselves or their loved ones can contact the Legal Assistance Office at their base.

Waiving Your Rights

A service member can waive their rights under the SCRA with a written document signed after their military service period starts. Waiving your SCRA rights before entering military service makes the action void. 

While you can waive your SCRA rights, it’s generally not recommended to do so. Make sure you consult an attorney before proceeding with this action, and read the documents carefully before signing. 

How to Take Advantage of the SCRA

The majority of your rights under the SCRA require you to take some form of action before protection takes effect. Tax authorities, lenders and courts often don’t know that a person is on active duty. To take full advantage of the SCRA, you should first understand all the benefits and your rights. 

For example, to get a refund on certain interest and fees you have to actively request relief by submitting paperwork so they can verify your active-duty military status, but it’s well worth the effort. 

In general, when you’re applying for SCRA benefits, you’ll need to provide the following information: 

  • Account number
  • Start date of the active-duty service
  • Request for relief in accordance with the SCRA
  • Copy of active-duty orders

Certain companies may give you additional SCRA benefits on top of everything else. One large bank offers active-duty personnel interest rates that are two percent lower than what the SCRA requires Many other creditors or financial institutions also offer additional benefits.

By understanding your SCRA benefits, you can set yourself up to take full advantage of everything being offered to you. This can help you significantly when you return from active duty. 

Note: Articles have only been reviewed by the indicated attorney, not written by them. The information provided on this website does not, and is not intended to, act as legal, financial or credit advice; instead, it is for general informational purposes only. Use of, and access to, this website or any of the links or resources contained within the site do not create an attorney-client or fiduciary relationship between the reader, user, or browser and website owner, authors, reviewers, contributors, contributing firms, or their respective agents or employers.

Source: lexingtonlaw.com

Apache is functioning normally

Northwestern Mutual Will Fund More than 50 Milwaukee-Based Schools and Nonprofits Aimed at Improving Student Outcomes The company has invested more than $67 million to advance quality of education in Milwaukee MILWAUKEE, Aug. 19, 2024 /PRNewswire/ — Northwestern Mutual, through its Foundation, is furthering its commitment to investing in high-quality education and funding more opportunities … [Read more…]

Apache is functioning normally

45 Rising Northwestern Mutual Advisors Listed Among America’s Best in Forbes’ Latest Next-Gen Ranking MILWAUKEE, Aug. 8, 2024 /PRNewswire/ — Forty-five Northwestern Mutual advisors have earned a spot on Forbes‘ 2024 list of America’s top up-and-coming wealth professionals. A national list, the publication’s annual “Top Next-Gen Wealth Advisors Best-in-State” recognition showcases the industry’s most promising talent … [Read more…]

Apache is functioning normally

More than 338,000 Americans moved for retirement in 2023, according to a January study from HireAHelper, a moving-services marketplace. And a quarter of them changed states, the study found.

Relocating in retirement isn’t simple. There are things to ponder, like whether you need new health insurance, how your new state taxes your income, whether a city has good health care and whether the culture is a match.

Kyle Newell, a certified financial planner (CFP) in Winter Garden, Florida, has a client who moved from Tampa, Florida, to Martha’s Vineyard in Massachusetts, where she lived for six months before deciding she wanted to move to Minnesota to be closer to family.

Thankfully, she made money on all the buying and selling, says Newell, who encourages clients to spend time where they plan to move to make sure it’s the best spot for them. It could be that you love the feeling of a certain place, he says, but it’s because you associate it with being on vacation, and living there is different.

Here are some things to think about before you start bubble wrapping your breakables.

1. Income taxes are just the starting point

Clients often ask David Berman, a CFP near Baltimore, about moving somewhere cheaper in retirement.

“It usually starts off very benignly: ‘Oh, you know, Florida doesn’t have an income tax and Maryland’s is eight and a half,’” Berman says. But when they do the math, taking into account things like property taxes, cost of living and even estate taxes, the difference often isn’t as large as clients expect.

Berman recommends talking to a professional before making a state jump, especially if you’re making other transactions before or after, such as the sale of a business. “Some states are more aggressive than others about chasing after their residents who are establishing residency elsewhere,” he says.

This also applies to people buying a second home and trying to declare residency there. If you live in a state like New York or New Jersey and try to establish residency at a second home in Florida, expect an audit, Berman says. “They are definitely looking for people who are fudging it,” he says.

Shopping for Medicare plans? We have you covered.

Medicare Advantage is an alternative to traditional Medicare offered by private health insurers. It covers the same benefits as Medicare Part A and Part B.

    UnitedHealthcare

    4.17

    CMS Star Rating

    from UnitedHealthcare

      States available

      49 states and Washington, D.C.

      Members in high-rated plans

      Medium (50% to 89%)

      Member satisfaction

      Average

    Call UnitedHealthcare

    Humana

    4.35

    CMS Star Rating

    from askchapter.org

      States available

      49 states, Washington, D.C., and Puerto Rico

      Members in high-rated plans

      High (90% or more)

      Member satisfaction

      Above average

    M-F 9am-9pm ET, Sa 10am-9pm ET

    Speak to a licensed insurance agent on askchapter.org

See more plans

2. You could get a Medicare do-over

If you have Medicare Advantage and you move out of your plan’s service area, you get a chance to reset your Medicare coverage. You can choose another Medicare Advantage plan or return to Original Medicare and — here’s the kicker — get another shot to sign up for Medigap. You typically have to sign up during Medigap open enrollment, which only lasts six months after you’re 65 and have Medicare Part B. (And Medigap can be tougher to buy later if you have health issues.)

“We call this the nuclear option because this is one of the few ways to get out of a Medicare Advantage plan later in life if a Medicare Advantage plan is no longer working for you,” says Melinda Caughill, co-founder and CEO of 65 Incorporated, which offers Medicare guidance. “You will have a guaranteed issue right to get a Medigap policy.” This means companies must offer you a plan at the same pricing as everyone else, regardless of health issues.

If you have Original Medicare with a Medigap plan, in most cases, that Medigap policy will follow you and take on the policy pricing of your new area. If you have a Medicare Part D prescription drug plan, you will need to choose a new plan if you’ve left the service area. And don’t forget to notify all the companies involved in your health care and/or dental coverage, as well as the Social Security Administration, about your move.

3. Renting first might be smarter

Unless you are super familiar with a location — in all seasons — be cautious about buying a home right away. “We try like crazy to talk our clients into renting for a year,” Berman says.

If you buy a house and have to sell it a year and a half later because you made the wrong choice on a city or neighborhood, the transaction costs will be substantial, Berman says. You’ll also owe capital gains taxes on any profit on the home sale if you’ve lived there for less than two years.

Thomas Cook, a CFP in Knoxville, Tennessee, has retired clients who recently moved to the state but are thinking of leaving. “They ultimately decided that Tennessee was not the right fit for them,” he says. But since they bought their home and prices have climbed since their purchase, they face paying capital gains taxes if they sell too soon.

4. The health care system needs a look

Access to health care should be a variable on your list. Crystal McKeon, a CFP in Houston, has a retired client who moved abroad and was diagnosed with cancer six months later. The country in question is equipped to handle it, but “it could’ve been very bad,” she says.

It’s important to think about not just your primary care doctor but also the general medical facilities available to you. “Otherwise, you could end up traveling pretty far to get good health care,” McKeon says.

5. Culture is important

Retirement happiness is also about the intangibles. Retirees who consider themselves happy spend significant time on interactive and social activities, according to a March report from life insurance company MassMutual. What’s the culture like? Will you be around people you enjoy?

Berman recalls a client who moved from Maryland to Arizona about five years ago — and is moving back due to the weather and the social climate. “One of the things to consider is the political dynamic, because it’s so contentious in today’s world,” he says. “What makes life enjoyable? The people around you, and the environment, and feeling good and safe. It’s definitely an issue.”

Cook recommends that people use social media to help with this. “It could be helpful to join a Facebook group ahead of time to get a feel for the culture,” he says.

Source: nerdwallet.com