[Federal Register Volume 59, Number 80 (Tuesday, April 26, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-10070]
[[Page Unknown]]
[Federal Register: April 26, 1994]
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DEPARTMENT OF DEFENSE
Office of the Secretary
32 CFR Parts 43a and 50
[DoD Directive 1344.9]
RIN 0790-AF65
Indebtedness of Military Personnel
AGENCY: Office of the Secretary, DoD.
ACTION: Proposed rule.
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SUMMARY: In order to comply with Public Law the Hatch Act Reform
Amendments of 1994, the Department of Defense is in the process of
promulgating a regulations with regard to members of the Armed Forces
which includes provisions for the involuntary allotment of the pay of a
member of the Armed Forces for indebtedness owed a third party as
determined by the final judgment of a court of competent jurisdiction,
and as further determined by competent military or executive authority,
as appropriate, to be in compliance with the procedural requirements of
the Soldiers' and Sailors' Civil Relief Act of 1940; and which gives
consideration for the absence of a member of the Armed Forces from an
appearance in a judicial proceeding resulting from the exigencies of
military duty. While the Department of Defense has traditionally by
regulation required members to pay their just financial obligations, no
mechanism previously existed to enforce payments of just debts with the
exception of payments owned for child or spousal support. The proposed
revision of Department of Defense Directive 1344.9 (32 CFR part 50)
establishes a program for involuntary allotments to require members to
pay their just debts. The impact to the government of this legislation
is much greater than to the public. The Department of Defense must hire
additional personnel to process and review applications, as well as
incur administrative processing costs (e.g., mailing, record keeping,
xeroxing, and providing of processing forms). Additionally, the program
will require personnel time in the form of review and providing
assistance (e.g., military legal assistance) to members against whom an
application for involuntary allotment is pending. The cost to the
applicant for an involuntary allotment against a member's pay will be
minimal in terms of time and money. The applicant will have to provide
information which should already be in the applicant's possession,
incur postage costs, and expend approximately 15 minutes completing the
application form. In return for their effort, applicants with
enforceable claims will be entitled to receive from the military member
an involuntary allotment of pay on a monthly basis towards satisfaction
of the judgment debt owed.
DATES: Written comments on this proposed rule must be received by June
27, 1994.
ADDRESSES: Forward comments to the Office of the Under Secretary of
Defense (Personnel and Readiness), Requirements and Resources, Legal
Policy, room 4C763, 4000 Defense Pentagon, Washington, DC 20301-4000.
FOR FURTHER INFORMATION CONTACT:
Major Alan L. Cook, (703) 697-3387.
SUPPLEMENTARY INFORMATION: Appendix A to 32 CFR part 50 requires the
use of two forms. The first form is an involuntary allotment
application. Use of a standard form is required because the Hatch Act
Reform Amendments of 1994 require a determination by competent military
or executive authority that the final judgment of a court of competent
jurisdiction giving rise to the involuntary allotment application
complies with the requirements of the Soldiers' and Sailors' Civil
Relief Act. Additionally, in order to ensure due process for
involuntary allotment applications, several certifications and
acknowledgements are required by the applicant. In the absence of a
standardized form, the cost to the government of reviewing non-standard
forms for compliance would be unfairly burdensome in comparison to the
minimum cost to an applicant of obtaining and using a standard form to
make application. Furthermore, use of a standard form saves the
applicant time and money by not requiring the applicant to obtain a
copy of the Department of Defense Directive and reading it in order to
ensure proper submission of information to obtain an involuntary
allotment. The second form for involuntary allotment notice and
processing creates a standardized methodology within the Department of
Defense, to include the Military Departments, to ensure uniform
processing procedures. This saves both time and money for the review
authorities. Both forms are in the process of development. However,
their basic contents and requirements are clearly delineated in
appendix A to 32 CFR part 50. It has been determined that 32 CFR part
50 is not a significant regulation action. The rule does not: (1) Have
an annual effect on the economy of $100 million or more or adversely
affect in a material way the economy, a sector of the economy,
productivity, competition, jobs, the environment, public health or
safety, or State, local, or tribal governments or communities; (2)
Create a serious inconsistency or otherwise interfere with an action
taken or planned by another agency; (3) Materially alter the budgetary
impact of entitlements, grants, user fees, or loan programs or the
rights and obligations of recipients thereof; or (4) Raise novel legal
or policy issues arising out of legal mandates, the President's
priorities, or the principles set forth in this Executive Order. It has
also been determined that this rule is not subject to the Regulatory
Flexibility Act (5 U.S.C. 601) because it will not have a significant
adverse economic impact on a substantial number of small entities. The
primary financial effect on administering the rule will be a reduction
in administrative costs and other burdens resulting from the
simplification and clarification of certain policies. Finally, it has
been determined that 32 CFR part 50 may impose reporting or record
keeping requirements under the Paperwork Reduction Act of 1980 (44
U.S.C. 3501-3520) and that the paperwork reduction process is under
review.
List of Subjects in 32 CFR Parts 43a and 50
Claims, Credit, Military personnel.
Accordingly, under the authority of 10 U.S.C. 301, title 32 of the
Code of Federal Regulations, chapter I, subchapter C, is proposed to be
amended to read as follows:
PART 43A--[REMOVED]
1. Part 43a is removed.
2. 32 CFR part 50 is added to read as follows:
PART 50--INDEBTEDNESS OF MILITARY PERSONNEL
Sec.
50.1 Purpose.
50.2 Applicability and scope.
50.3 Definitions.
50.4 Responsibilities.
50.5 General policies.
50.6 Full disclosure and standards of fairness by creditors.
Appendix A to part 50-Processing Procedures
Appendix B to Part 50-Certificate of Compliance
Appendix C to Part 50-Standards of Fairness
Authority: Pub. L. 103-94 and 10 U.S.C. 113(d).
Sec. 50.1 Purpose.
This part
(a) Sets established Department of Defense policy governing
delinquent indebtedness of members of the Military Services, and
establishes policy for involuntary allotments from the disposable pay
of military members to satisfy judgment indebtedness in accordance with
Public Law 103-94.
(b) Sets forth procedures for processing claims of such
indebtedness and applications for involuntary allotments from the
disposable pay of military members.
(c) Incorporates the provisions of Public Law 90-321, Public Law
95-109 and Public Law 103-94.
Sec. 50.2 Applicability and scope.
(a) The provisions of this part apply to the Office of the
Secretary of Defense, the Military Departments, the Chairman of the
Joint Chiefs of Staff and the Joint Staff, the Defense Agencies, and
the DoD Field Agencies (hereafter referred to as ``DoD Components'').
The term ``Military Services,'' as used herein, refers to the Army, the
Navy, the Air Force, and the Marine Corps.
(b) The provisions of this part do not apply to:
(1) Indebtedness of a member of the Military Services to the
Federal Government.
(2) Processing of indebtedness claims to enforce judgments against
military members for alimony or child support.
(3) Claims by State or municipal governments under the processing
procedures for complaints. Note, a State or municipal government must
comply with Appendix A to this part when seeking an involuntary
allotment.
Sec. 50.3 Definitions.
(a) Absence. Is a member's lack of an ``appearance,'' at any stage
of the judicial process, as evidenced by failing to physically attend
court proceedings, be represented at court proceedings by counsel of
the member's choosing, or to timely respond to pleadings, orders or
motions.
(b) Appearance. Is the presence and participation of a member of
the military services throughout the judicial proceeding from which the
judgment was issued that is the basis for a request for enforcement
through involuntary allotment.
(c) Applicant. The original judgment creditor, a successor in
interest, or attorney or agent thereof who requests an involuntary
allotment from a member of the Military Services pursuant to procedures
described in appendix A to this part.
(d) Court. A court of competent jurisdiction within any State,
territory, or possession of the United States.
(e) Debt collector. An agency or agent engaged in the collection of
debts described under Public Law 95-109.
(f) Disposable pay. In determining the amount of disposable pay due
to a member and subject to involuntary allotment under the provisions
of Public Law 103-94 and this part:
(1) Include basic pay and compensation payable under 37 U.S.C.
chapter 3.
(2) Exclude:
(i) Amounts awarded for suggestions.
(ii) Special and incentive pays payable under 37 U.S.C. chapter 5.
(iii) Accrued leave payments under 37 U.S.C. chapter 9.
(iv) Payments to missing persons under 37 U.S.C. chapter 10.
(v) Separation payments, including involuntary separation pay under
10 U.S.C. 1174 voluntary separation incentive (VSI) under 10 U.S.C.
1175, special separation benefit (SSB) under 10 U.S.C. 1174a, reservist
special separation pay (RSSP) under Public Law 102-484, section 4416,
and reservist involuntary separation pay (RISP) under Public Law 102-
484, section 4418.
(vi) Allowances paid under 37 U.S.C. Chapter 7 and other
reimbursements for expenses incurred in connection with duty in a
Military Service or allowances in lieu thereof.
(vii) Payments not specifically enumerated in paragraph (f)(1) of
this section.
(3) Deduct:
(i) Amounts owed by a member to the United States.
(ii) Amounts deducted for employment taxes.
(iii) Amounts mandatorily withheld for the Armed Forces Retirement
Home.
(iv) Fines and forfeitures ordered by a court-martial or by a
commanding officer.
(v) Amounts properly withheld for Federal, State, or local income
tax purposes, if the withholding of the amount is authorized or
required by law and if amounts withheld are not greater than would be
the case if the member claimed all dependents to which entitled. The
withholding of additional amounts pursuant to 26 U.S.C. 3402(i) may be
permitted only when the member presents evidence of a tax obligation
which supports the additional withholding.
(vi) Deductions for Servicemen's Group Life Insurance premiums;
(vii) Deductions for the dental benefits plan premiums.
(viii) Amounts otherwise required by law to be deducted from a
member's pay (except payments under of 42 U.S.C. 659, 661, 662, and
665.
(g) Exigencies of military duty. Is a military assignment or
mission essential duty that, because of its urgency, importance,
duration, location, or isolation, necessitates the absence of a member
of the military services from appearance at a judicial proceeding.
Absence from an appearance in a judicial proceeding is normally
presumed to be caused by exigencies of military duty during periods of
war, national emergency, or when the member is deployed (see appendix A
to this part, paragraph B2.c.(5)(a)).
(h) Judgment. A final judgment must be a valid, enforceable order
or decree, issued not earlier than two years before the date of an
application for an involuntary allotment, by a court from which no
appeal may be taken, or from which no appeal has been taken within the
time allowed, or from which an appeal has been taken and finally
decided. The judgment must award a sum certain amount and specify that
the amount is to be paid by an individual who, at the time of
application for the involuntary allotment, is a member of the Military
Services.
(i) Just financial obligations. A legal debt acknowledged by the
military member in which there is no reasonable dispute as to the facts
or the law; or one reduced to judgment which conforms to the Soldiers'
and Sailors' Civil Relief Act (SSCRA), if applicable.
(j) Member of the military services. Includes Regular, Reserve, and
National Guard members who are not retired.
(k) Preponderance of the evidence. A greater weight of evidence, or
evidence which is more credible and convincing to the mind. That which
best accords with reason and probability (see Black's Law Dictionary).
(l) Proper and timely manner. A manner which under the
circumstances does not reflect discredit on the military service.
Sec. 50.4 Responsibilities.
(a) The Under Secretary of Defense (Personnel and Readiness)
(USD(P&R)) shall:
(1) Have policy oversight concerning involuntary allotment of
military pay; and
(2) Shall establish policies and procedures governing the
assistance to be provided by military authorities to creditors of
military personnel who have debt complaints.
(b) The Comptroller of the Department of Defense shall establish
procedures supplemental to those contained in this part which are
necessary to administer and process involuntary allotments from members
of the Military Services; this includes the authority to promulgate
forms necessary for the efficient administration and processing of
involuntary allotments.
(c) The Heads of DoD Components, or their designees, shall urge
military personnel to meet their just financial obligations, since
failure to do so damages their credit reputation and affects the public
image of all DoD personnel (DoD Directive 1000.10,\1\ subsection D.4.,
DoD Directive 1000.11,\2\ and DoD Directive 5500.7.\3\
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\1\Copies may be obtained, at cost, from the National Technical
Information Service, 5285 Port Royal Road, Springfield, VA 22161.
\2\See footnote 1 to Sec. 50.4(c).
\3\See footnote 1 to Sec. 50.4(c).
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(d) The Director, Defense Finance and Accounting Services, or his
or her designee, shall:
(1) Assure implementation of this part and compliance with its
provisions.
(2) Determine whether the provisions of the Soldiers' and Sailors'
Civil Relief Act (SSCRA) have been complied with under the provisions
of Public Law 103-94.
(3) Act as the DoD Executive Agent for forms prescribed by this
part, or otherwise necessary to process involuntary allotments.
(e) The Secretaries of the Military Departments shall help ensure
compliance with the requirements of this part, to include:
(1) Requiring commanders to counsel members to pay their just
debts, including complying, as appropriate, with court orders and
judgments for the payment of alimony or child support.
(2) Ensuring notification and counseling of members against whom
creditors are seeking involuntary allotments pursuant to a court
judgment in accordance with the provisions of this part.
(3) Designating those commanders who shall be responsible for
determining whether a member's absence from a judicial proceeding was
caused by exigencies of military duty.
(4) Emphasizing prompt command action to assist with the processing
of involuntary allotment applications.
Sec. 50.5 General policies.
(a) Members of the Military Services are expected to pay their just
financial obligations in a proper and timely manner. However, DoD
Components have no legal authority, except as stated in paragraphs
(a)(1) and (a)(2) of this section, to require members to pay a private
debt or to divert any part of their pay for its satisfaction.
(1) Legal process instituted in civil courts to enforce judgments
against military personnel for the payment of alimony or child support
will be acted upon in accordance with the provisions of Public Law 93-
647, as amended, and part 7, chapter 7, section B. of DoD 7000.14-
R,\4\, Volume 7.
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\4\See footnote 1 to Sec. 50.4(c).
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(2) Involuntary allotments pursuant to the provisions of Public Law
103-94 shall be established in accordance with the provisions of this
part.
(b) Whenever possible, indebtedness disputes should be resolved
through amicable means. Claimants desiring to contact a military member
concerning a claim of indebtedness may obtain the member's military
address by writing to the locator service of the Military Department
concerned, and enclosing the appropriate fee for the service, as
provided under DoD Instruction 7230.7.\5\
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\5\See footnote 1 to Sec. 50.4(c).
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(c) The following general policies apply to processing of debt
complaints.
(1) Creditors are encouraged to use the processing procedures for
debt complaints described in appendix A to this part. Complaints
meeting the requirements of this part will receive prompt processing
assistance from commanders.
(2) Assistance in indebtedness matters will not be extended to
those creditors:
(i) Who have not made a bona fide effort to collect the debt
directly from the military member;
(ii) Whose claims are patently false and misleading;
(iii) Whose claims are obviously exorbitant; or
(iv) Who are in an ``off-limits'' status, or who have been
determined to be practicing unfair consumer or commercial practices
detrimental to the morale and welfare of service members, pursuant to
applicable directives of the military services, to include the Armed
Forces Disciplinary Control Board and Off-Installation Liaison and
Operations regulations.\6\
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\6\See footnote 1 to Sec. 50.4(c).
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(3) Some States have enacted laws which prohibit creditors from
contacting a debtor's employer with respect to indebtedness or
communicating facts on indebtedness to an employer unless certain
conditions are met. The conditions which must be met to remove this
prohibition are generally such things as reduction of a debt to
judgment and obtaining written permission of the debtor.
(i) At DoD installations in States having such laws, the processing
of debt complaints will not be extended to those creditors who are in
violation of the State law. Commanders may advise creditors that this
rule has been established because it is the general policy of the
Military Services to comply with State law when that law does not
infringe upon significant military interests.
(ii) This policy will govern even though a creditor is not licensed
to do business in the State where the debtor is located. A similar
practice will be commenced in any State enacting a similar law with
respect to debt collection.
(4) Under the provisions of Public Law 95-109, contact by a debt
collector with third parties, such as commanding officers, for the
purpose of aiding debt collection is prohibited without a court order,
or the debtor's prior consent, given directly to the debt collector.
Creditors are generally exempt from Public Law 95-109, but only when
they collect on their own behalf.
(d) The following general policies apply to processing of
involuntary allotments (except statutory allotments for child support
or alimony).
(1) In those cases in which the indebtedness of a military member
has been reduced to a judgment, an application for an involuntary
allotment from the disposable pay of the member may be made pursuant to
the procedures described in appendix A to this part. These procedures
provide the exclusive remedy available under Public Law 103-94.
(2) Involuntary allotment requests will not be processed for
creditors who, either at the time of application for the involuntary
allotment or at the time the debt was incurred that forms the basis for
the court judgment, are in an ``off-limits'' status, or who have been
determined to be practicing unfair consumer or commercial practices
detrimental to the morale and welfare of service members, pursuant to
applicable directives of the military services, to include the Armed
Forces Disciplinary Control Board and Off-Installation Liaison and
Operations regulation.
(3) An involuntary allotment from a member's disposable pay shall
not be commenced in any indebtedness case in which:
(i) Exigencies of military duty caused the absence of the member
from the judicial proceeding at which the judgment was rendered.
(ii) There has not been compliance with the procedural requirements
of the SSCRA.
(4) Only one involuntary allotment pursuant to Public Law 103-94
and this part may be authorized from the disposable pay of a member at
any given time.
(5) An involuntary allotment shall not exceed the lesser of 15
percent of a member's disposable pay, or the maximum amount authorized
under the garnishment law of the State where the judgment was entered.
An involuntary allotment shall not be authorized if the pay of a
similarly situated civilian employee is not subject to garnishment
under the applicable State law and Public Law 103-94.
(6) The amount of an involuntary allotment under Public Law 103-94
and this part when combined with deductions as a result of garnishments
or statutory allotments for spousal support and child support under 42
U.S.C. 659, 661, 662, or 665, may not exceed the maximum percentage
specified in 15 U.S.C. 1673. In any case in which the maximum
percentage would be exceeded, garnishments and involuntary allotments
for spousal and child support shall take precedence over involuntary
allotments authorized under Public Law 103-94 and this part.
Involuntary allotments established pursuant to Public Law 103-94 shall
be reduced or stopped as necessary to avoid exceeding the maximum
percentage allowed.
Sec. 50.6 Full disclosure and standards of fairness by creditors
The Truth in Lending Act prescribes the general disclosure
requirements which must be met by those offering or extending consumer
credit, and 12 CFR part 226 prescribes the specific disclosure
requirements for both open-end and installment credit transactions. In
place of Federal Government requirements, State regulations apply to
credit transactions when the Federal Reserve Board has determined that
the State regulations impose substantially similar requirements and
provide adequate enforcement measures. Commanding officers, with the
assistance of judge advocates, should check regulations of the Federal
Reserve Board to determine whether Federal or State laws and
regulations govern.
Appendix A to Part 50--Processing Procedures
A. Debt Complaints
1. It is incumbent on those submitting indebtedness complaints
to show that the disclosure requirements of the Truth in Lending
Act, and 12 CFR part 226 have been met and that the Standards of
Fairness (appendix C to this part) have been applied.
2. Creditors subject to 12 CFR part 226, and assignees claiming
thereunder, shall submit with their request for debt processing
assistance an executed copy of the Certificate of Compliance
(appendix B to this part), and a true copy of the general and
specific disclosures provided the military member as required by the
Truth in Lending Act. Requests which do not meet these requirements
will be returned without action to the claimant.
3. A creditor not subject to 12 CFR part 226, such as a public
utility company (as set forth in Sec. 226.3 thereof), shall submit
with the request a certification that no interest, finance charge,
or other fee is in excess of that permitted by the law of the State
in which the obligation was incurred.
4. A foreign-owned company having debt complaints shall submit
with its request a true copy of the terms of the debt (English
translation) and shall certify that it has subscribed to the
Standards of Fairness.
5. Indebtedness complaints which meet the requirements of this
part will be processed by DoD Components. Processed means that Heads
of DoD Components, or designees, shall:
a. Review all available facts surrounding the transaction
forming the basis of the compliant, including the member's legal
rights and obligations, and any defenses or counterclaims the member
may have.
b. Advise the member that (1) just financial obligations are
expected to be paid in a proper and timely manner, and what the
member should do to comply with that policy; (2) financial and legal
counseling services are available under the provisions of DoD
Directive 1344.7\1\ in resolving indebtedness; and (3) that a
failure to pay just debts may result in the creditor obtaining a
court judgment which could form the basis for collection of pay from
the member pursuant to an involuntary allotment.
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\1\See footnote 1 to Sec. 50.4(c).
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c. If a member acknowledges a debt as a result of creditor
contact with a DoD Component, advise the member that assistance and
counseling may be available from the on-base military banking
office, or the credit union serving the military field of
membership, or other available military community service
organizations.
d. Direct that the appropriate commander advise the claimant
that (1) those aspects of DoD policy prescribed in Sec. 50.5 are
pertinent to the particular claim in question; and (2) the member
concerned has been counseled concerning his or her obligations with
respect to the claim. The commander's response will not undertake to
arbitrate any disputed debt, or to admit or deny the validity of the
claim. Under no circumstances will the response indicate whether any
action has been taken against the member as a result of the
compliant.
B. Involuntary Allotments
1. Involuntary Allotment Application
a. Regardless of the Service affiliation of the military member
involved, an application to establish an involuntary allotment from
the disposable pay of a military member shall be made by sending a
signed application on DD Form aa,\2\ ``Involuntary Allotment
Application,'' to the Defense Finance and Accounting Service (DFAS)
at the following address. Defense Finance and Accounting Service,
Cleveland Center, Code L, PO Box 998002, Cleveland, OH 44199-8002.
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\2\This form will be developed. The final form will be included
as an appendix to this part.
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(1) Each application must include a copy of the final judgment
certified by the clerk of court, proof of actual service on the
member, and such other documents as may be required by paragraph
B.1.b. of this part.
(2) A garnishment summons or order is insufficient to satisfy
this final judgment requirement and is not needed in order to apply
for an involuntary allotment under this appendix.
(3) Proof of actual service on the military member shall, in the
case of any default judgment, and may, in other cases, be
demonstrated by including with the application for involuntary
allotment a copy of the return of service showing personal service
on the member or, where service by certified or registered mail is
permitted by the rules of court, of the return receipt for such mail
signed by the member. Involuntary allotments will not be authorized
without evidence of actual service. In cases where jurisdiction was
obtained by substituted service (such as service by publication or
by mailing to a last known address), or where the judgment was
entered on a confession of judgment, no involuntary allotment will
be authorized and the application will be returned to the creditor.
b. Applications for involuntary allotment, must contain the
following information, certifications, and acknowledgment:
(1) The full name, social security number, and branch of service
of the military member against whose disposable pay an involuntary
allotment is sought. Although not required, inclusion of the
member's current duty station and duty address on the application
form will facilitate processing of the application.
(2) The applicant's full name and address. If the applicant is
not a natural person, the application must be signed by an
individual with the authority to act in behalf of such entity. If
the allotment is to be in favor of other than the judgment creditor,
proof of the right to succeed to the interest of the original
judgment creditor is required and must be attached to the
application.
(3) A certification that the judgment has not been amended,
superseded, set aside, or satisfied; or, if the judgment has been
satisfied in part, the extent to which the judgment remains
unsatisfied.
(4) A certification that the judgment was issued while the
member was not on active duty. If the judgment was issued while the
member was on active duty, a certification that the member was
present or represented by an attorney of the member's choosing in
the proceedings, or if the member was not present or so represented,
a certification that the judgment or other court documents comply
with the rights of the member under the SSCRA.
(5) A certification that the member's pay could be garnished
under applicable State law and Public Law 103-94 if the member were
a civilian employee.
(6) A certification that, to the knowledge of the applicant, the
debt has not been discharged in bankruptcy not has the member filed
for protection from creditors under the bankruptcy laws of the
United States.
(7) A certification that the applicant will promptly notify the
designated DFAS official to discontinue the involuntary allotment if
the judgment is satisfied prior to the collection of the total
amount of the judgment through the involuntary allotment process.
(8) A certification that if the member overpays the amount owed
on the judgment, the applicant will refund the amount of overpayment
to the member within 30 days of discovery or notice of the
overpayment, whichever is earlier, and that if the applicant fails
to repay the member, the applicant understands he or she may be
denied the right to collect by involuntary allotment on other debts
reduced to judgments.
(9) A certification that at either the time of application for
the involuntary allotment or the time the debt was incurred that
forms the basis for the court judgment, the applicant (and the
judgment creditor, if different from the applicant) was (were) not
in an ``off-limits'' status, or had not been determined to be
practicing unfair consumer or commercial practices detrimental to
the morale and welfare of service members, pursuant to applicable
directives of the military services, to include the Armed Forces
Disciplinary Control Board and Off-Installation Liaison and
Operations regulation.
(10) A certification that the applicant (and the judgment
creditor, if different from the applicant) has (have) complied with
the Standards of Fairness contained in appendix C to this part.
(11) Acknowledgment that as a condition of application, the
applicant agrees that neither the United States, nor any disbursing
official or Federal employee whose duties include processing
involuntary allotment applications and payments, shall be liable
with respect to any payment or failure to make payment from moneys
due or payable by the United States to any person pursuant to any
application made in accordance herewith.
c. The original and three copies of the application and
supporting documents must be submitted by the applicant to DFAS.
d. A complete ``application package'' (the DD Form aa,
``Involuntary Allotment Application'', supporting documentation, and
three copies of the application and supporting documents), is
required for processing of any request to establish an involuntary
allotment pursuant to this part.
e. The designated DFAS official shall refuse to process any
application that does not conform with the requirements of this
part, is unsigned, is incomplete in any material regard, lacks
required documentation, or contains false certifications. If an
application is ineligible for processing under this part, the
application package shall be returned to the applicant with an
explanation of the deficiency. In cases involving repeated false
certifications by an applicant, the designated DFAS official may
refuse to accept or process additional applications by that
applicant for such period of time as the official deems appropriate
to deter against such violations in the future.
2. Processing of Involuntary Allotment Applications
a. Promptly upon receipt of DD Form aa, ``Involuntary Allotment
Application'', the designated DFAS official shall review the
``application package'' to ensure compliance with the requirements
of this part. If the application package is complete, the DFAS
official shall:
(1) Determine the location and address of the commander as
designated by the military service to have authority to give notice
of the involuntary allotment application to the member against whose
pay the involuntary allotment application in sought, and, if
required, to determine whether exigencies of military duty caused
the absence of the member from the judicial proceeding at which the
judgment was rendered;
(2) Mail one copy of the application package to the member and
two copies of the application package, along with DD Form bb,\3\
``Involuntary Allotment Notice and Processing,'' to the commander of
the military member;
---------------------------------------------------------------------------
\3\See footnote 1 to section B.1.a. to this appendix.
---------------------------------------------------------------------------
(3) Within 60 days of mailing of the copies of the application
package and DD Form bb, ``Involuntary Allotment Notice and
Processing'', DFAS will provide notice to the member and the
member's commander that automatic processing of the involuntary
allotment application will occur if a response is not received
within 90 calendar days from the original date of mailing.
Additionally, notice will be provided that automatic processing may
be delayed if the member's commander provides DFAS notice that the
member has been granted an extension to respond as authorized by
this part, the date the response is due, and the reason(s) for the
extension. In the absence of any additional correspondence from the
member's commander, DFAS may automatically process the involuntary
allotment application 15 calendar days after the extended date that
the commander notified DFAS the response was due.
(4) Retain the original of the application package.
b. Upon receipt of an application package and DD Form bb,
``Involuntary Allotment Notice and Processing,'' from the designated
DFAS official, the commander (as noted in paragraph B.2.a.(1) of
this Appendix) will immediately notify the member of the receipt of
the application, provide the member a copy of the entire application
package, and counsel the member using and completing Part I of DD
Form bb concerning the following.
(1) That an application for the establishment of an involuntary
allotment has been received and that the member could have up to 15
percent of disposable pay taken to satisfy the judgment upon which
the application is based.
(2) That the member has 15 calendar days from the date of
receipt of the notice to respond to the commander by completing Part
II of DD Form bb and submitting any information or documentation
deemed relevant by the member. That for good cause shown, the
commander may grant an extension of reasonable time (normally not
exceeding 30 calendar days) to submit a response. That during times
of deployment, war, national emergency, or other similar situations,
extensions exceeding 30 calendar days may be granted.
(3) That the member's response will either consent to the
involuntary allotment or contest it.
(4) That the member may contest the application for the
following reasons:
(a) The member's rights under the SSCRA were not complied with
during the judicial proceeding upon which the involuntary allotment
application is sought.
(b) Exigencies of military duty caused the absence of the member
from appearance in a judicial proceeding forming the basis for the
judgment upon which the application is sought.
(c) Information contained in the application is false or
erroneous in material part.
(d) The judgment has been fully satisfied, or has been
superseded or set aside.
(e) The judgment has been materially amended, or partially
satisfied. When asserting this defense, the member shall include
evidence of the amount of the judgment that remains in effect and is
unsatisfied.
(f) There is a legal impediment to the establishment of the
involuntary allotment (for example, the judgment debt has been
discharged in bankruptcy, or the judgment debtor has filed for
protection from the creditors under the bankruptcy laws of the
United States, or the applicant is not the judgment creditor nor a
proper successor in interest to that creditor).
(g) Either now or at the time the debt was incurred that forms
the basis for the court judgment, the applicant (and the judgment
creditor, if different from the applicant) was (were) in an ``off-
limits'' status, or had been determined to be practicing unfair
consumer or commercial practices detrimental to the morale and
welfare of service members, pursuant to applicable directives of the
military services, to include the Armed Forces Disciplinary Control
Board and Off-Installation Liaison and Operations regulation.
(h) Either now or at the time the debt was incurred that forms
the basis for the court judgment, the applicant (and the judgment
creditor, if different from the applicant) was (were) acting in a
manner that violated the Standards of Fairness promulgated as
Appendix C to this part.
(i) Or other appropriate reasons which must be clearly specified
and explained by the member.
(5) That, if the member contests the involuntary allotment, the
member shall provide evidence (documentary or otherwise) in support
thereof. The evidence provided must enable the decisional authority
to decide whether to approve the application for an involuntary
allotment. Furthermore, that any evidence submitted by the member
may be disclosed to the applicant for the involuntary allotment.
(6) That the member may consult with a legal assistance
attorney, or a civilian attorney at no expense to the government.
That if a legal assistance attorney is available, the member should
immediately arrange for an appointment. That if a legal assistance
attorney is not available, the member may request form the commander
an appropriate delay until such time as a legal assistance attorney
becomes available for consultation (in cases where a response will
not be submitted back to DFAS within 90 days from the date DFAS
mailed the copies of the application package, the commander must
immediately notify the designated DFAS official of the delay, the
date for an expected response, and the reason for the delay--e.g.,
unavailability of a legal assistance attorney for counseling).
Additionally, that requests for extensions of time based on the need
for legal assistance may be denied to members who fail to exercise
due diligence in seeking such assistance.
(7) That if the member contests the involuntary allotment on the
grounds that exigencies of military duty caused the absence of the
member from the judicial proceeding at which the judgment was
rendered, then the member's commander will review and make the final
determination on this contention, and notify the designated DFAS
official of the commander's decision by completing Part III of DD
Form bb and forwarding the form to DFAS.
(8) That if the member contests the involuntary allotment on any
basis other than exigencies of military duty, the application
package, DD Form bb, and the member's response, if any, will be
returned to the designated DFAS official for appropriate action.
(9) That if the member fails to respond to the commander within
the time period specified (including any extensions authorized by
the commander), the commander shall notify the designated DFAS
official of the member's failure to respond by completing Part III
of DD Form bb and forwarding the form to DFAS.
c. After counseling the member (as noted in paragraph B.2.a.(1)
of this appendix) the commander shall:
(1) Date and sign Part I of DD Form bb;
(2) Obtain the member's acknowledgment of counseling by having
the member sign in the appropriate space on Part I of DD Form bb;
(3) Determine if the member consents to the involuntary
allotment or needs the time authorized under this part to review the
application package and take appropriate action. If the member
consents to the voluntary allotment, the commander will direct the
member to appropriately complete Part II of DD Form bb. The
commander will then forward the DD Form bb to the designated DFAS
official.
(4) As soon as possible, but not later than the end of the
authorized time period for the member to submit his or her response,
the commander will forward by mail the DD Form bb and any response
received from member to DFAS.
(5) If the member fails to respond within the time authorized
for a response, or asserts that exigencies of military duty caused
the absence of the member from an appearance in the judicial
proceeding upon which the Involuntary Allotment Application is
sought, then the commander will complete Part III of DD Form bb
prior to forwarding of the form and the member's response, if any,
to the designated DFAS official.
(a) In determining whether exigencies of military duty caused
the absence of the member, the commander at the level designated by
the Service concerned shall consider the definition of ``exigencies
of military duty'' contained in this part, the evidence provided by
the member, any other reasonably available evidence (e.g., a copy of
the member's personnel record), and whether the military duties in
question were of such paramount importance that they precluded
making the member available to attend the judicial proceedings, or
rendered the member unable to timely respond to process, motions,
pleadings, or orders of the court.
(b) The evidentiary standard for a commander to determine
whether exigencies of military duty caused the absence of the member
from an appearance in the judicial proceeding upon which the
Involuntary Allotment Application is sought is ``a preponderance of
the evidence''.
(6) Provide the member a copy of the completed DD Form bb within
five days of mailing to the designated DFAS official.
d. Upon receipt of DD Form bb, ``Involuntary Allotment Notice
and Processing,'' and any additional evidence submitted by the
member, the designated DFAS official will conduct a review of the
entire application package, DD Form bb, ``Involuntary Allotment
Notice and Processing,'' and any evidence submitted by the member,
to determine whether the application for an involuntary allotment
will be approved and established.
(1) In those cases where the commander of the member has
completed Part III of DD Form bb, and determined that exigencies of
military duty caused the absence of the member from an appearance in
a judicial proceeding upon which the involuntary allotment
application is sought, the designated DFAS official shall deny the
involuntary allotment application. The designated DFAS official will
provide the applicant written notice of the denial and the reason
therefor. Additionally, the designated DFAS official shall advise
the applicant that the responsibility for determining whether
exigencies of military duty existed belonged to the member's
commander, that the commander's decision is final, that DFAS has no
authority to change the commander's decision regarding exigencies of
military duty, and that any correspondence concerning this issue
should be addressed to the Service concerned.
(2) In all cases other than as described in paragraph B.2.d(1)
of this section, the designated DFAS official shall deny an
involuntary allotment application, and give written notice to the
applicant of the reason(s) for denial, if the designated DFAS
official determines that:
(a) The member's rights under the SSCRA were not complied with
during the judicial proceeding upon which the involuntary allotment
application is sought.
(b) The pay of a similarly situated civilian employee is not
subject to garnishment under applicable State law and Public Law
103-94, and the regulations promulgated thereunder.
(c) Information contained in the application is false or
erroneous in material part.
(d) The judgment has been fully satisfied, or has been
superseded or set aside.
(e) The judgment has been materially amended, or partially
satisfied. In such a case, the request for involuntary allotment may
be approved only to satisfy that portion of the judgment that
remains in effect and unsatisfied; the remainder of the request
shall be denied.
(f) There is a legal impediment to the establishment of the
involuntary allotment (for example, the judgment debt has been
discharged in bankruptcy, or the judgment debtor has filed for
protection from the creditors under the bankruptcy laws of the
United States, or the applicant is not the judgment creditor nor a
proper successor in interest to that creditor).
(g) Either now or at the time the debt was incurred that forms
the basis for the court judgment, the applicant (and the judgment
creditor, if different from the applicant) was (were) in an ``off-
limits'' status, or had been determined to be practicing unfair
consumer or commercial practices detrimental to the morale and
welfare of services members, pursuant to applicable directives of
the military services, to include the Armed Forces Disciplinary
Control Board and Off-Installation Liaison and Operations
regulation.
(h) Either now or at the time the debt was incurred that forms
the basis for the court judgment, the applicant (and the judgment
creditor, if different from the applicant) was (were) acting in a
manner that violated the Standards of Fairness promulgated as
Appendix A to this part.
(i) A separate involuntary allotment (pursuant to Public Law
103-94 and this part) already exists against the member's disposable
pay.
(j) Because of spousal and child support garnishments or
statutory allotments, the member has insufficient funds from which
to pay the requested involuntary allotment without violating the
applicable maximum percentage prescribed in 15 U.S.C. 1673.
(k) The applicant has abused the processing privilege (e.g., an
applicant, having been notified of the requirements of this part,
repeatedly refuses or fails to comply therewith).
(l) Or other appropriate reasons which must be clearly explained
to the applicant.
(3) In all cases other than as described in paragraphs B.2.d.(1)
and (2) of this section, the designated DFAS official shall approve
the involuntary allotment application and establish an involuntary
allotment against the disposable pay of the member.
e. The designated DFAS official shall, at any time after
establishing an involuntary allotment, cancel or suspend such
allotment and notify the applicant of that cancellation if a member
submits legally sufficient proof, by affidavit or otherwise, that
the allotment should not continue because of the existence of the
factors enumerated in paragraph B.2.d(2) of this section.
3. Payments
a. Except as provided in paragraph B.3.c. of this section,
payment of an involuntary allotment shall commence within 30 days
after the designated DFAS official has approved the involuntary
allotment.
b. Payments under this part shall not be required to be made
more frequently than once each month, and the designated official
shall not be required to vary normal pay and disbursement cycles.
c. If the designated DFAS official receives several applications
concerning the same member of a Military Service, payments shall be
satisfied on a first-come, first-served basis.
d. Payments shall continue until the sum certain amount of the
judgment is collected. Interest or other costs earned during the
collection period can be collected only by submitting a separate
judgment and involuntary allotment application.
e. If the member is found not to be entitled to money due from
or payable by the Military Services, the designated official shall
return the application and advise the applicant that no money is due
from or payable by the Military Service to the member. When it
appears that disposable pay available for the purpose of involuntary
allotment is exhausted temporarily or otherwise unavailable, the
applicant shall be told why and for how long that money is
unavailable, if known. If the member separates from active duty, the
applicant shall be informed that the allotment is discontinued.
f. The applicant shall notify the designated official promptly
if the judgment upon which the allotment is based is satisfied,
vacated, modified, or set aside, and the designated official shall
adjust or discontinue the involuntary allotment accordingly.
g. The Comptroller may, in DoD 7000.14-R, Volume 7, Part A,
designate the priority to be given to such involuntary allotments
among the deductions and collections taken from members' pay, except
that they may not give precedence over deductions required to arrive
at a member's disposable pay or garnishments for alimony and child
support payments and statutorily required child and spousal support
allotments. In the absence of a contrary designation by the
Comptroller, all other lawful deductions (except voluntary
allotments by the member) and collections shall take precedence over
these involuntary allotments.
Appendix B to Part 50--Certificate of Compliance
I certify that the---------------------------------------------------
upon extending credit-------------------------------------------------
(Name of Creditor)
to---------------------------------------------------------------------
on (Date)-------------------------------------------------------------
complied with the full disclosure requirements of the Truth-in-
Lending Act and Federal Reserve Board Regulation Z, and the Fair
Debt Collection Practices Act (or the laws and regulations of State
of ____________________), and that the attached statement is a true
copy of the general and specific disclosures provided the obligor as
required by law.
I further certify that the Standards of Fairness set forth in
DoD Directive 1344.9\1\ have been applied to the consumer credit
transaction to which this form refers. (If the unpaid balance has
been adjusted as a consequence, the specific adjustments in the
finance charge and the annual percentage rate should be set forth
below.)
\1\See footnote 1 to Sec. 50.4(c).
---------------------------------------------------------------------------
----------------------------------------------------------------------
(Adjustments)
----------------------------------------------------------------------
----------------------------------------------------------------------
(Date of Certification)
----------------------------------------------------------------------
Signature of Creditor or Authorized Representative
----------------------------------------------------------------------
(Street)
----------------------------------------------------------------------
(City, State and Zip Code)
Appendix C to Part 50--Standards of Fairness
1. No finance charge contracted for, made, or received under any
contract shall be in excess of the charge which could be made for
such contract under the law of the place in which the contract is
signed in the United States by the military member.
a. In the event a contract is signed with a U.S. company in a
foreign country, the lowest interest rate of the State or States in
which the company is chartered or does business shall apply.
b. However, interest rates and service charges applicable to
overseas military banking facilities will be as established by the
Department of Defense.
2. No contract or loan agreement shall provide for an attorney's
fee in the event of default unless suit is filed, in which event the
fee provided in the contract shall not exceed 20 percent of the
obligation found due. No attorney fees shall be authorized if the
attorney is a salaried employee of the holder.
3. In loan transactions, defenses which the debtor may have
against the original lender or its agent shall be good against any
subsequent holder of the obligation. In credit transactions,
defenses against the seller or its agent shall be good against any
subsequent holder of the obligation, provided that the holder had
actual knowledge of the defense or under conditions where reasonable
inquiry would have apprised the holder of this fact.
4. The military member shall have the right to remove any
security for the obligation beyond State or national boundaries if
the military member of the family moves beyond such boundaries under
military orders and notifies the creditor, in advance of the
removal, of the new address where the security will be located.
Removal of the security shall not accelerate payment of the
obligation.
5. No late charge shall be made in excess of 5 percent of the
late payment, or $5,00, whichever is the lesser amount, or as
provided by law or applicable regulatory agency determination. Only
one late charge may be made for any tardy installment. Late charges
will not be levied where an allotment has been timely filed, but
payment of the allotment has been delayed. Late charges by overseas
banking facilities are a matter of contract with the Department of
Defense.
6. The obligation may be paid in full at any time or through
accelerated payments of any amount. There shall be no penalty for
repayment. In the event of prepayment, that portion of the finance
charges which has inured to the benefit of the seller or creditor
shall be prorated on the basis of the charges which would have been
ratably payable had finance charges been calculated and payable as
equal periodic payments over the terms of the contract, and only the
prorated amount to the date of prepayment shall be due. As an
alternative, the ``Rule of 78'' may be applied.
7. If a charge is made for loan insurance protection, it must be
evidenced by delivery of a policy or certificate of insurance to the
military member within 30 days.
8. If the loan or contract agreement provides for payments in
installation, each payment other than the down payment, shall be in
equal or substantially equal amount, and installments shall be
successive and of equal or substantially equal duration.
9. If the security for the debt is repossessed and sold in order
to satisfy or reduce the debt, the repossession and resale will be
governed by the laws of the State in which the security is
requested.
10. A contract for personal goods and services may be terminated
at any time before delivery of the goods or services without charge
to the purchaser. However, if goods made to the special order of the
purchaser result in preproduction costs, or require preparation for
delivery, such additional costs will be listed in the order form or
contract.
a. No termination charge will be made in excess of this amount.
Contracts for delivery at future intervals may be terminated as to
the undelivered portion.
b. The purchaser shall be chargeable only for that proportion of
the total cost which the goods or services delivered bear to the
total goods called for by the contract. This is in addition to the
right to rescind certain credit transactions, involving a security
interest in real estate provided by Public Law 90-321 and Federal
Reserve Board Regulation Z (12 CFR part 226).
Dated: April 20, 1994.
L.M. Bynum,
Alternate OSD Federal Register, Liaison Officer, Department of Defense.
[FR Doc. 94-10070 Filed 4-25-94; 8:45 am]
BILLING CODE 5000-04-M
