(MONEY Magazine) – U.S. Army Capt. Leif Espeland has seen it all--and not just on Iraq's dusty battlefields. The Army chaplain, a Minnesotan serving in the Fourth Infantry Division, frequently consoles young, idealistic men and women over the havoc the war is playing on their financial lives. "They come into the Army hoping to make a better life, think about the future and earn a little college money," he says. Unfortunately, "they sometimes wind up destitute."

U.S. soldiers serving abroad are protected from creditors by the 1940 Soldiers and Sailors Civil Relief Act, which prevents interest-rate increases or property seizures while they're stuck overseas. But soldiers in Iraq aren't around to invoke the law--and routine bills, interest and penalties can pile up.

Staff Sgt. Jay Bush, serving near Ba'quba, thought he had everything squared away with automatic payments. "I got here and found out two months later that nothing had gone through," he says. "I was getting evicted, and my car was being repossessed." Luckily, his mother was able to bail him out--but not every soldier has adequate backup at home. Specialist Lacy Fein, a 22-year-old divorced mother of two, was forced to put her "mature" 17-year-old sister at the helm of her household in Michigan's Upper Peninsula.

Sometimes combat pay can partly make up for being here. Sgt. Clint Jacobs of Georgia says that the extra $700 a month helps pay for a doctor his pregnant wife prefers over the one on base in Fort Hood, Texas.

But it's seldom adequate during a crisis. Sgt. Michael Cardenas' wife lost her job back in Abilene, Texas. Then her car broke down. Cardenas tried to be supportive, but without regular telephone or e-mail contact, he was left with little to do but worry. "The extra money was helping out," he says. "But it wasn't enough to get the car out of the shop, deal with day care and pay all the bills."

--BORZOU DARAGAHI