Consumer Law In the News

Debt Traps Reach Our Troops

It might surprise you to know that personal debt has a potentially devastating impact on national security. How is that so? Well, according to Military Money, it arises in the context of men and women in the Armed Forces whose debt levels are deemed too high to risk sending them overseas! See this article by Carl Surran, “More Debt-Ridden Troops Held Back From Overseas Duty” at the Military Money website. A relevant excerpt:

Data supplied by the Air Force, Navy and Marines show that the combined number of security clearances revoked for financial reasons rose every year between 2002 and 2005, climbing from 284 at the start of the period to 2,654 in 2005. Results for 2006 were incomplete but partial numbers indicated that the trend was continuing. . . . Financial problems are the overwhelming reason security clearances are revoked, triggered when debt payments reach 30 percent to 40 percent of salary (the exact amount depends on the branch of service). Military members who fall deeply into debt are considered vulnerable to bribery or treason and can be stripped of clearances they may need to serve overseas.

(Emphasis added.)

Military members also have some unique protections; you might recall that last year, Congress enacted a prohibition against lending to military members at rates higher than 36% APR. I blogged about that law earlier on this site right here.

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