We may all agree we owe our troops a debt of gratitude, but the Pentagon has had to worry about debts of a more tangible sort that affect soldiers’ ability to do their jobs.

As a bankruptcy attorney in Indiana, I’m always reading up on money-related issues in order to be better prepared to help my bankruptcy clients. But even I was shocked to read a Pentagon report published two years ago about how loan centers near military bases were charging military families exorbitant interest rates to borrow cash. A new law had to be passed in 2007, the 2007 Military Authorization Act, making it illegal for creditors to grant payday loans and car title loans to members of the military.

I’ve written in earlier blogs about the dangers of payday loans, and how such loans are almost never a good idea for any borrower. Now I learn that the problem with payday loans to soldiers and sailors had gotten so severe that some recruits were not given security clearance to go overseas, solely based on the amount of debt they were carrying! Referring to high interest payday loans, the Pentagon report said, “Such lending hurts morale and adds to the cost of fielding an all-volunteer fighting force.” In a New York Times article, a navy captain was quoted as saying, “The last thing you want is a young sailor programming a Tomahawk missile in the Persian Gulf who is worrying about whether his car is being repossessed back home.”

Before the 2007 law was passed, it’s estimated that almost 200,000 military families were entrapped by high-cost payday lending each year! The problem was considered so severe and so pressing that the Department of Defense listed payday lending as one of the top ten key issues impacting the qualify of life of U.S. military personnel!

A couple of months ago, in “Payday Loans – Debt Help or Debt Trap?” , I explained that in my bankruptcy law offices in four cities in Indiana, I often meet with people who have tried every form of loan there is, including payday loans, and that without question, the payday loans have come at the greatest cost to borrowers. I want to stress again here: even if filing bankruptcy is not the best choice in a given situation, there are more productive ways to deal with debt than payday loans! Before you turn in at the “PayDay Loans Here” sign, or click on the next online offer for a payday loan, please talk with a debt professional to explore better options..