Sample Letter to Request Reduction to 6% Interest

(Adapted from The Judge Advocate General’s Legal Center & School, U.S. Army, JA 260)

[DATE]

[CREDITOR ADDRESS]

Dear [Sir or Madam]:

I am currently obligated to your company for a loan bearing an interest rate of [%]. I understand that this obligation was entered into on [DATE].

Since incurring this obligation, I entered active military service in the U.S. [SERVICE] on [DATE]. This entry into active military service has materially affected my ability to meet this obligation. Under these circumstances, federal law prescribes the maximum interest rate that I may be charged.

The Servicemembers Civil Relief Act (50 U.S.C. App. § 527) prescribes a ceiling of 6% annual interest on any obligation under the circumstances described above. This interest rate must be maintained for the entire period that I am on active duty. The percentage cap includes all service charges, renewal charges, and fees. The rate is applied to the outstanding balance of the obligation as of the date of entry onto active duty mentioned above. Any interest charge above this statutory ceiling must be forgiven, not accrued.

Please ensure that your records reflect this statutory ceiling and that any charges in excess of a 6% annual rate are withdrawn. You should also be aware that federal law (50 U.S.C. App. § 532) circumscribes the manner in which you may enforce certain rights under the contract, including any right to repossession of property.

I thank you in advance for your attention to this matter. Should there be any questions, please feel free to contact me at the address above.

Sincerely,

[NAME]
[ADDRESS]

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