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Military Blocks Troop Pay Check Allotments for Personal Property

Wallet with cash (U.S. Air Force photo/Senior Airman Grace Lee)

Service members will soon be blocked from setting up new paycheck allotments for personal property, Defense Department officials announced today.

The change, which officials said is designed to protect troops from "unscrupulous commercial lenders," will go into effect Jan. 1, according to the military announcement.

"This will significantly improve protections for all service members and their families, while not significantly reducing the flexibility to use allotments for a number of legitimate purposes," the release said.

Under the new policy, service members will be banned from setting up payment allotments for any vehicles, household goods, electronics or "other consumer items that are tangible and moveable."

Those types of allotments are typical used by service members to pay for big ticket items, often at rent-to-own stores which offer a variety of items at high interest rates.

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Currently troops can have up to six such allotments, set-up by the service member via a DD 2558 form.  Under the new rule, when setting up an allotment, troops will have to certify that it is not for "the purchase, lease, or rental of personal property of, or payment toward personal property," the release said.

The new rule will not impact current allotments, or those made by retirees or civilians, officials said.  Additionally, troops will still be permitted to use allotments for savings account deposits, investments, dependent support, mortgage and rent payments, government debt repayment or to make Combined Federal Campaign contributions, they said.

The changes come after a series of recommendations to Defense Department officials from the Consumer Protection Bureau. An arm of that entity focuses specifically on military issues, warning service members against predatory lenders and pursuing legal action against financial law breakers.

A 2012 analysis by that office show that the top 10 financial institutions that received allotments from service members included three "suspected abusers," the release said. Those institutions received $1.38 billion of the $3.767 billion in allotments paid by service members in 2012.

-- Amy Bushatz can be reached at amy.bushatz@monster.com

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