Retired U.S. Army Col. Mike Prendergast says military families already in financial trouble need options to get back on their feet, including debt settlement.

Prendergast, who served more than 31 years on active duty and later led the Florida Department of Veterans' Affairs, made the case in an Oct. 9 op-ed in the Tampa Free Press. He argued that debt settlement, a process in which a company negotiates with creditors to reduce what a borrower owes on unsecured debts, should remain available to service members and veterans.

"Military families need more than protection from predatory loans," Prendergast wrote. "Those already in financial trouble need options to get back on their feet."

Florida has about 1.38 million veterans as of fiscal 2023, the second-largest veteran population in the country behind Texas, according to the Florida Department of Veterans' Affairs. Prendergast's op-ed listed military installations across the state, including in Jacksonville.

The Association for Consumer Debt Relief, an industry trade group representing debt settlement providers, states that settlement clients reduce their debt by about 30% on settled accounts after fees.

Financial strain on service members

Prendergast, who served as a Military Police officer and paratrooper, wrote that young service members are targeted with credit offers early in their careers. He noted the University of Florida Extension calls service members "prime marketing targets" for credit products.

He wrote that financial distress among service members can complicate security clearance reviews, distract personnel from their duties and put pressure on families. A service member who loses a clearance cannot do the work he is trained to do, Prendergast wrote, and the unit deploys short-handed.

He pointed to a 2010 Washington Post report in which more than one in four military respondents said they owed over $10,000 on credit cards. He also cited a Consumer Financial Protection Bureau study that identified credit cards as among the debts most likely to be delinquent after young enlisted members leave active duty.

The policy dispute

Congress passed the Military Lending Act in 2006, establishing a 36% annual cap on the cost of covered credit for eligible service members and their dependents, Prendergast noted.

He directed his criticism at the American Financial Services Association, a lenders' trade group. He wrote that AFSA promotes lender hardship programs and credit counseling while opposing debt settlement. Those alternatives generally require borrowers to repay the full balance, he argued, leaving families who cannot afford full repayment without a practical solution.

Prendergast acknowledged debt settlement is not right for everyone and results are not guaranteed. But he wrote that hardship programs and repayment plans are not the answer for every family either.

Prendergast also served as chief of staff to former Gov. Rick Scott, executive director of the Florida Department of Veterans' Affairs and sheriff of Citrus County. His op-ed called on lawmakers in Tallahassee and Washington to preserve debt relief options for military families.