The Servicemembers Civil Relief Act (SCRA) is a federal law designed to protect servicemembers in a wide range of consumer and legal transactions.
The SCRA postpones or suspends certain civil obligations to enable servicemembers to devote their full attention to duty and to relieve stress on their families. The SCRA covers outstanding credit card debt, mortgage payments, taxes, lease termination, eviction and life insurance protection. The SCRA covers all active duty servicemembers, reservists, and members of the National Guard while on active duty.
The SCRA became law in 2003 and significantly expanded the Soldiers and Sailors Civil Relief Act of 1940 (SSCRA).
Note: Servicemembers give up some SCRA rights if they sign an agreement with a waiver during or after their military service.
The SCRA is a law created to provide extra protections for servicemembers in the event that legal or financial transactions adversely affect their rights during military or uniformed service. These protections enable servicemembers to devote their entire energy to the defence needs of the Nation.
The SCRA applies to the following servicemembers:
- Active duty members of the Army, Marine Corps, Navy, Air Force, and Coast Guard;
- Members of the Reserve component when serving on active duty;
- Members of the National Guard component mobilised under federal orders for more than 30 consecutive days; or
- Active duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration.
SCRA rights may be exercised by anyone holding a valid power of attorney for the servicemember. Some SCRA protections also, in limited situations, apply to dependents.
Protection generally terminates one year after the date of discharge of active duty. Personnel who are absent from duty as a result of being wounded or being granted leave are also granted protection under the act.
Brief Outline of Benefits
|The Six Percent Rule||A Service member has the ability to reduce consumer debt and mortgage interest rates to 6% under certain circumstances. This applies only to debts and mortgages that were entered into prior to entry on active duty. In the case of mortgages, this reduction in interest extends for one year from release from active duty.|
|Delay of Court and Administrative Proceedings||The SCRA permits active duty Service members who are unable to appear in a court or administrative proceeding due to their military duties to postpone the proceeding for a mandatory minimum of ninety days upon the Servicemember’s request. This provision specifically includes Child custody hearings.|
|Termination of Leases||This benefit allows termination of leases by active duty Service members who subsequently receive orders for a permanent change of station (PCS), a deployment for a period of 90 days or more, or because of a stop move order (retroactive to March 2020). Rent amounts that are unpaid for a period preceding the date of lease termination are paid on a prorated basis. The lessor may not impose an early termination charge.|
|Automobile Leases||This benefit allows termination of automobile leases leased for personal or business use by Service members and their dependents if the Servicemember subsequently receives orders for a PCS outside the continental United States or from Alaska or Hawaii to the continental United States or a deployment for a period of 180 days or more. Lease amounts that are unpaid for the period preceding the termination date are paid on a prorated basis. The lessor may not impose an early termination charge.|
|Telephone Service Contracts||This benefit allows termination of a telephone contract (this includes cellular telephone services) at any time after the date personnel receive military orders to relocate or deploy for a period of 90 days or more to a location that does not support the contract. A dependent may terminate a contract if the Servicemember is a beneficiary of the contract and could terminate it, if the contract were the Servicemembers.|
|Eviction for Non-Payment of Rent||Although the SCRA does not excuse Service members from paying rent, it does afford some relief if military service makes payment difficult. Military members and their dependents (in their own right) have some protection from eviction under the SCRA, Section 301.|
|Default Judgement Protection||If a default judgement is entered against a Servicemember during their active duty service or within 60 days thereafter, the SCRA allows the Servicemember to reopen that default judgement and set it aside if certain conditions are met.|
|Life Insurance Protection||The SCRA permits the Servicemember to request deferment of certain commercial life insurance premiums and other payments for the period of military service and two years thereafter.|
|Enforcement of Storage Liens||A Servicemember with property or effects subject to a lien, including liens for storage, repair or cleaning of property, is protected from foreclosure or enforcement of the lien during the period of military service plus three months unless a court finds that the Servicemember’s ability to meet the obligation is not materially affected by military service. Sec. 307 (50 U.S.C. app. § 537).|
|State Taxation Clarification||The SCRA provides that a non-resident Servicemember’s military income and personal property are not subject to state taxation if the Servicemember is present in the state only due to military orders. The state is also prohibited from using the military pay of these non-resident Service members to increase the state income tax of the Spouse.|
|Military Spouses Residency Relief Act (2009)||New provisions to the SCRA (called the Military Spouses Residency Relief Act) have been added that may extend similar tax protections to some military Spouses. The extension of this protection is contingent upon meeting certain qualifying factors. Local JAG Legal Assistance attorney can help clients determine whether they meet these qualifications.|
To locate a Legal Assistance office, go to: https://legalassistance.law.af.mil/.
|Health Insurance Reinstatement||The SCRA provides for the reinstatement of any health insurance upon termination or release from service if the insurance was in effect before such service commenced and terminated during the period of military service.|
|Foreclosures||The SCRA requires a court order before the foreclosure of a mortgage entered into prior to active duty. This protection extends for a period of nine months from release from active duty.|
|Seizure of Property||The SCRA requires a court order before a creditor can seize property secured by a purchase contract (specifically including automobiles) entered into prior to active duty.|
What are the Five Protections That Servicemembers Ask About?
According to the US Department of Justice, these are five protections that servicemembers often ask about:
Protection #1: Reducing the Interest Rate on any Pre-Service Loans to a Maximum of 6 Percent
If you took out an automobile, home, or student loan or incurred credit card debt prior to becoming a servicemember (also known as a “pre-service obligation”), or if you took out such a loan jointly with your spouse, then you are entitled to have your interest rate reduced to a maximum of 6 percent per year. To receive this benefit you must notify your lender in writing and include a copy of your orders to active duty service or a letter from your commanding officer that shows the date you began active duty service.
The rate reduction for pre-service obligations applies during the period of active duty service for most loans and, for mortgages, for an additional year after the end of active duty service. When you make a proper request for an interest rate reduction under the SCRA, your lender must reduce your interest rate on pre-service obligations to 6 percent for the entire time you are serving on active duty. Your lender can not add the amount of interest above 6 percent back into the loan later on after you leave active duty. You can request an interest rate reduction from your lender at any time while you are serving on active duty and up to 180 days after release from active duty.
A lender can not revoke your loan or credit account, change the terms of your credit, or refuse to grant you credit just because you exercised your SCRA rights. In addition, a lender can not furnish negative information to a credit reporting company just for invoking your SCRA rights. Remember, the SCRA requires your lender to reduce your interest rate in certain circumstances – but you still have to pay back your debts.
Protection #2: Protections against Default Judgements in Civil Cases
If you are sued while a servicemember on active duty, you have certain legal protections under the SCRA. These include some protections from a default judgement in a civil action. A default judgment is a court order in favour of the party or “plaintiff” suing you when you did not appear or defend yourself against the lawsuit.
Some of your rights under the SCRA include:
- Before the court can enter a default judgement, the party suing you must file an affidavit with the court stating whether or not you are in active duty service, and provide facts in support of that statement. If the party suing you is unable to determine whether you are in active duty service, the affidavit must state that fact.
- If you are in active duty service and have not appeared in a case against you, the court may not enter a default judgement until after it appoints an attorney to represent you.
- The court also has to permit a delay of proceedings for at least 90 days if certain conditions are met.
Protection #3: Protections against Foreclosure on their Home
If you took out a mortgage before entering active duty service, you can not be foreclosed on without a court order, unless you have waived your rights. This protection applies while you are on active duty and for an additional one year after leaving active duty. This protection also applies in states that do not require a court order to foreclose and whether or not you told your lender or servicer about your servicemember status.
Under this SCRA protection, a court may also on its own – and must upon request by a servicemember – pause or stay a foreclosure proceeding or adjust the loan, provided that the servicemember’s ability to pay the loan is materially affected by his or her active duty service.
As noted in Protection #2, the SCRA also provides servicemembers with protections against default judgements, which are rulings against a party to a lawsuit because he or she did not appear in court. This protection applies to foreclosure cases before a judge.
Protection #4: Protections against Repossession of their Property
In some circumstances, the SCRA prohibits creditors from repossessing your personal property, including your vehicle, without a court order. That means that even if you violate a contract by, for example, failing to make your monthly payments, the creditor must first file a lawsuit and get an order from a judge before your vehicle or personal property can be repossessed. This protection applies only if you:
- Purchased or leased a vehicle, or other personal property, before entering active duty service; and
- Made a deposit or instalment payment on a vehicle, or other personal property, before entering active duty service.
These federal protections under the SCRA are in addition to any other protections you might have under your state law.
Even if you are protected by the SCRA from repossession without a court order, failing to pay your bills could result in violating your contract. As a result, you may be charged fees associated with your failure to pay, such as a late fee. Your missed payments can also be reported to credit reporting companies, and the creditor can try to collect the debt, including by filing a lawsuit against you.
Protection #5: Termination of Residential Housing and Automobile Leases without Penalty
The SCRA provides servicemembers with the right to terminate residential leases of property that is occupied or intended to be occupied by a servicemember or his or her dependents. If you signed a lease for housing prior to active duty service, or if you are already serving on active duty and receive Permanent Change of Station (PCS) or deployment orders for a period of at least 90 days, then you should be able to terminate your housing lease without penalty.
To terminate your housing lease, you or someone exercising a power of attorney on your behalf must submit to your landlord a written notice of termination and a copy of your orders – or a letter from your commanding officer – by hand delivery, or by private carrier, by regular postal mail with return receipt requested, or by electronic means (i.e. e-mail, communications portal designated by lender or agent).
If your lease requires monthly rent payments, termination of a housing lease is effective 30 days after the first date on which the next rental payment is due and payable after the date on which the termination notice is delivered.
In addition to this right for residential leases, under certain circumstances, the SCRA also allows servicemembers to cancel or terminate an auto lease without paying early termination charges or penalties. In order to terminate an auto lease without penalty under the SCRA, you must have entered into the lease:
- Prior to entering active duty, and then been called onto active duty for 180 days or longer; or
- During active duty, and then received orders for:
- A PCS from a location inside the continental United States (CONUS) to a location outside the continental United States (OCONUS), or a PCS from a location OCONUS to any new location, or
- Deployment with a military or uniformed unit or in support of a military or uniformed operation for 180 days or longer.
To terminate your auto lease, you or someone exercising a power of attorney on your behalf, must submit to your landlord a written notice of termination and a copy of your orders – or a letter from your commanding officer – by hand delivery, by private carrier, by regular postal mail with return receipt requested, or by electronic means (i.e., e-mail, communications portal designated by lender or agent).
Carefully read your lease terms and consider your situation before signing a contract. The SCRA does not allow you to terminate your contract if you receive PCS orders from one CONUS location to another CONUS location, so if you know you may receive those type of PCS orders, make sure your lessor will allow the vehicle you intend to lease to be taken out of state.
The SCRA provides many legal and financial protections to enable servicemembers to focus on their mission with less worry about what is happening back home.
If you have any questions about your rights under the SCRA, contact your closest military legal office for more information. You can find the closest military legal office at: legalassistance.law.af.mil.