I much appreciate your concern regarding your son's financial situation. But my immediate reaction upon hearing about his circumstances is that he would have been far better off obtaining counsel from the Staff Judge Advocate (military attorney) in support of his unit of assignment. Of course, the military is extremely STRAPPED for attorneys at this time, so it is certainly possible that no attorney is readily available to help him. Moreover, young soldiers attending Advanced Individual Training (AIT) are seldom given enough free time nor are they afforded as great an access to legal assistance as soldiers who have graduated.
I am NOT an attorney and CANNOT give you legal advice. But I have extensive business experience and expertise in the mortgage banking area AND I currently serve in the Army National Guard. In that latter capacity, I work in military intelligence and hold a TOP SECRET security clearance. So I readily understand your son's concern about his clearance status.
Generally speaking, the military is very serious about requiring its members to live up to their contractual obligations. And that includes provisions for allotment (garnishment) of pay to satisfy debts. But that discipline is also BALANCED by the military's interest in its soldiers being treated fairly and equitably pursuant to the law.
When your son began serving on active duty, he became entitled to the benefits of the Servicemembers Civil Relief Act (formerly the SOldiers and Sailors Civil Relief Act). Provisions of that act are shown at the web site of the Legal Information Institute of Cornell University ( ). The Act is generally found at Title 50 Appendix,
I am unable to give you any express legal advice as it pertains to YOUR SON's situation, but I would recommend to you particularly Section 527 pertaining to "Maximum rate of interest on debts incurred before military service":
You will find that this section provides:
(a) Interest rate limitation
(1) Limitation to 6 percent
An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember’s spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent per year during the period of military service.
(2) Forgiveness of interest in excess of 6 percent
Interest at a rate in excess of 6 percent per year that would otherwise be incurred but for the prohibition in paragraph (1) is forgiven.
(3) Prevention of acceleration of principal
The amount of any periodic payment due from a servicemember under the terms of the instrument that created an obligation or liability covered by this section shall be reduced by the amount of the interest forgiven under paragraph (2) that is allocable to the period for which such payment is made.
(b) Implementation of limitation
(1) Written notice to creditor
In order for an obligation or liability of a servicemember to be subject to the interest rate limitation in subsection (a), the servicemember shall provide to the creditor written notice and a copy of the military orders calling the servicemember to military service and any orders further extending military service, not later than 180 days after the date of the servicemember’s termination or release from military service.
(2) Limitation effective as of date of order to active duty
Upon receipt of written notice and a copy of orders calling a servicemember to military service, the creditor shall treat the debt in accordance with subsection (a), effective as of the date on which the servicemember is called to military service.
(c) Creditor protection
A court may grant a creditor relief from the limitations of this section if, in the opinion of the court, the ability of the servicemember to pay interest upon the obligation or liability at a rate in excess of 6 percent per year is not materially affected by reason of the servicemember’s military service.
As used in this section, the term “interest” includes service charges, renewal charges, fees, or any other charges (except bona fide insurance) with respect to an obligation or liability.
Similarly, Section 523 of the Act provides for the WAIVER of penalties by Court order where a servicemember's military service materially affected his ability to perform under the contract.
It appears to me that your son needs to IMMEDIATELY invoke his rights under the Servicemembers' Civil Relief Act. And that would seem to me to include a demand for recoupment of interest in excess of 6%. Moreover, I think that your son should at least CONSIDER bringing an action in SMALL CLAIMS COURT to recover by COURT ORDER any penalties assessed under Section 523.
There may also be some other protections available to your son through state or national debt collection laws.
While bill collectors are great at THREATENING and INTIMIDATING people. Very often these threats are HOLLOW. In most jurisdictions, a corporation MUST be represented by an attorney even in a small claims action. If your son files suit, it will COST Best Buys and/or the bill collector or BOTH more to DEFEND against the suit that the amount at stake. They will either SETTLE or FAIL TO APPEAR resulting in a default judgment against them.
My GUESS is that your son has MONEY COMING BACK TO HIM rather than owing any further amounts.
To the extent that Best Buy or the bill collector makes a FALSE report to credit reporting agencies, there are other litigation strategies that may be employed.
Your son should bear in mind that no matter HOW intimidating his Company Commander appears, his CO is his ALLY in this matter and is NOT going to automatically side with the creditor. That being said, the CO IS going to want to minimize the time and bother associated with the matter. He is NOT going to want it to be a distraction from your son's training or mission.
As to the matter of the security clearance, the KEY THING is for your son to be HONEST and FORTHCOMING about his situation. The Office of Personnel Management (OPM) and the Department of Defense are well aware that situations arise wherein a consumer DISPUTES an amount with a creditor. This will NOT impair your son's ability to obtain a clearance UNLESS he tries to CONCEAL the matter or is LESS THAN FORTHCOMING about it. This is particularly TRUE where he obtains the assistance of the Staff Judge Advocate. If he obtains legal assistance and is following the guidance of a lawyer, OPM and the military can hardly hold this against him where he has been honest and forthcoming. If anything, your son's reluctance to DISCUSS the matter with his CO suggests an evasiveness that can create a problem where no problem existed.
Bear in mind that the military spends tens of thousands of dollars to recruit and train young men for various assignments. A CO who ALLOWS soldiers to FAIL without seekign to help is going to have a very short career! I think your son may be ASSURED that no matter how tough that CO might appear, he really has the interests of his young soldiers at heart.
Feel free to contact me directly via e-mail OR to have your son contact me directly through AKO. I am in the AKO white pages. I already have my twenty year letter and have well enough weight on my color to feel quite comfortable going to bat for any young soldier in need of assistance and support!