Financial Relief for Military Families

The California Military and Veterans Code, in Division 4, Chapter 3, contains “The California Military Families Financial Relief Act.”

Section 800 provides that, in addition to any other benefits provided by law and to the extent permitted by federal law, a reservist who is called to active duty may defer payments on any of eight specified obligations while serving on active duty. In order for an obligation or liability of a reservist to be subject to the provisions of this chapter, the reservist or the reservist’s designee is required to deliver to the obligor two specified documents.

In addition, if required by a financial institution, proof that the reservist’s employer does not provide continuing income to the reservist while the reservist is on active military duty, including the reservist’s military pay, of more than 90% of the reservist’s monthly salary and wage income earned before the call to active duty.

The deferral period on financial obligations is the lesser of 180 days or the period of active duty plus 60 calendar days and applies only to those payments due subsequent to the notice provided to a lender. In addition, the total period of the deferment cannot exceed 180 days within a 365-day period.

If a lender defers payments on a closed end credit obligation or an open-end credit obligation with a maturity date, the lender must extend the term of the obligation by the amount of months the obligation was deferred. However, any mortgage payments deferred pursuant to this section are due and payable upon the sale of the property or other event specified in the documents creating the obligation permitting the lender to accelerate the loan, other than a deferral of payments under this section.

Section 801 defines the term “mortgage.” Section 802 specifies that a reservist is not relieved with a mortgage subject to an impound account for the payment of property taxes, special assessments, mortgage insurance, and hazard insurance from making monthly payments of an amount which is at least sufficient to pay these amounts, unless the borrower and lender agree to a lesser amount.

Section 803 defines the terms “reservist,” “military orders,” and “military service.” Section 804 states that, during specified periods, the reservist may defer the payment of principal and interest on the specified obligations. No penalties or interest (for delayed payments) are to be imposed on the nonpayment of principal or interest during this period.

Section 805 provides that a stay, postponement, or suspension under this chapter of the payment of any tax, fine, penalty, insurance premium, or other civil obligation or liability of a person in military service does not provide the basis for affecting credit ratings, denial or revocation of credit, or a change by the lender in the terms of an existing credit arrangement.

Section 806 states that any entity, which was providing any type of health care coverage to a reservist at the time the reservist was ordered to active duty, must reinstate the health care coverage without waiting periods or exclusion of coverage for preexisting conditions.

Section 807 specifies that the holder of a loan or retail installment sales contract with respect to which the debtor has purchased prepaid credit disability insurance must give notice to the debtor not less than 30 days before the expiration date of the insurance that the debtor will not be protected during the period between that expiration date and the deferred maturity date of the loan or contract unless the insurance is extended. The debtor may, at his or her option, direct the holder to add the amount of the additional premium to the unpaid balance of the loan or contract.

Section 808 provides that, during the specified period, the reservist may defer payments for leased vehicles without breach of the lease or the foreclosure or repossession of the vehicle. If a lender defers payments, the lender must extend the term of the lease by the amount of months the lease was deferred. The term “vehicle” is defined.

Section 830 specifies that, in those instances where a financial obligation is sold, any requirement to defer payments as specified in this chapter transfers to the purchaser of the obligation.

Section 811 states that the spouse or legal dependent, or both, of a reservist who is called to active duty, is entitled to the benefits accorded to a reservist under this chapter, provided that the reservist is eligible for the benefits.

Section 812 notes that a person violating any provision of this chapter is liable for actual damages, reasonable attorney’s fees, and costs incurred by the service member or other person entitled to the benefits and protections of this chapter.

Section 813 provides that any person who receives a good faith request from a service member for relief pursuant to this chapter and who believes the request is incomplete or otherwise not legally sufficient, or that the service member is not entitled to the relief requested, is required to, within 30 days of the request, provide the service member with a written response acknowledging the request, setting forth the person’s basis for believing or asserting that the request is incomplete or not legally sufficient, or that the service member is not entitled to the relief requested.