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Capital One to pay $12 million over illegal military foreclosures

In the United States, deployed military service members are entitled to certain rights with regard to secured and unsecured debt. Under the Servicemembers Civil Relief Act, deployed soldiers are entitled to a reduced credit card debt interest rate during deployment, and deployed military personnel cannot be foreclosed on for a missed mortgage payment.

Service members in Tennessee should be aware of a recent case involving a large bank overcharging military members during deployment and improperly foreclosing on their properties. On July 26, the U.S. Justice Department announced that Capital One has agreed to settle charges of violating the Servicemembers Civil Relief Act for a fine of $12 million.

The government states that Capital One foreclosed on homes of soldiers while they were deployed. Members of the armed forces who are facing bankruptcy or foreclosure should know that the law affords them special protections, especially during deployment. An attorney familiar with this area of bankruptcy law is often necessary to resolve these situations.

Affected military personnel will be compensated by Capital One as part of the settlement. For each vehicle that was repossessed incorrectly, the company will compensate the former owner $10,000. Service members whose homes were foreclosed on will receive $125,000. Additional funds have been allocated to remedy overcharges on credit card interest rates.

Though a court must approve the settlement for it to be binding, the government's recent announcement should be seen as a victory for those interested in protecting consumers from being victimized by lenders who disregard the law.

Source: Huffington Post, "Capital One To Pay Millions After Being Charged With Improper Military Foreclosures," Pete Yost, July 26, 2012

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