Plenty is written about the federal Servicemembers Civil Relief Act of 2003 (SCRA), but very little has been written on Ohio’s protection for active duty military servicemembers. In fact, Ohio’s code section is so short that is is one sub-section long and buried among other creditor/debtor provisions. Few cases have been litigated about it. Big Ohio’s SCRA is a big deal.
Ohio’s SCRA law provides that lenders of active duty military personnel must reduce the interest rate charged down to 6%, retroactive to the date of enlistment. That is, the lender must provide a refund for all interest paid over 6% since the date of enlistment. It covers virtually all debts (put a question mark next to mortgages). There is no limitation to ongoing active debts, either. There is no prohibition on a military service member requesting a refund of interest on debts that have been paid off already.
The service member may request the rate reduction and interest refund until 180 days after their active duty service has ended. There is no statute of limitations other than this limitation. For example, a service member may request a refund from a debt paid off in 2006 in the year 2030, so long as they are still active duty when the request is made (or within 180 days of being active duty).
Ohio’s law is significant because the federal version only requires lenders reduce rates on those debts in existence at the time of enlistment. Ohio goes further, to cover all debts during active duty service, no matter the date of enlistment nor the date the debt was incurred.
The law went into effect on May 18, 2005, so that will be the earliest date you can receive a refund of overpaid interest. Also, the law is NOT automatic. You must request the rate reduction in writing in order to obtain it - so share this post with your friends! In order to receive the reduction, Ohio’s SCRA law says you must provide your creditor/lender:
Written notice of your military of gubernatorial orders calling you to active duty,
A copy of those orders, and
Any orders further extending active duty.
We recommend you making a copy and sending this certified mail. You must send the letter within 180 days of your termination or release from active duty.
This law ALSO applies to spouses of active duty personnel, so make sure your spouse also requests the reduction for their accounts too. You may want to include proof of the relationship (such as a marriage certificate) to get your spouse’s Ohio SCRA benefits. Your lender might request some additional documentation to give you the reduction, and we generally recommend complying with reasonable requests (such as a letter from your CO).
Please note that the Ohio SCRA may not apply to banks that are federally chartered. We are not aware of any Ohio case finding preemption (allowing a bank to turn down your request), but it is a risk you should be aware of if you decide to litigate your case. We are aware from people who have called our firm that Navy Federal Credit Union does not recognize the Ohio SCRA under a claim of preemption. However, several callers have said Chase Bank will honor the Ohio SCRA, despite it being a federal bank. Thus, it may be helpful to ask all of your lenders for the benefit irrespective of their banking status.
Finally, it may be possible for a creditor to apply to the court to charge you over 6%, but only in certain instances. If your lender gives you any problems crediting your account under Ohio’s SCRA, give our law firm a call at (614) 944-5219. We would be happy to help protect the rights of our military personnel.
Ohio’s SCRA can be found at R.C. 1343.031.