Soldiers’ and Sailors’ Civil Relief Act
of 1940 (SSCRA), a law that protects active duty service members, was recently
updated and amended. It's now called the Service members Civil Relief Act of
2003 (SCRA) . Learn about your rights under the SCRA here.
There is a great deal of misunderstanding about this law. Many
people mistakenly believe that it protects them anytime they are on active duty
and anytime they are stationed outside the United States on official military
orders. This is not the case. Protections depend on the
situation and must be considered on a case by case basis. For instance, if you
have a situation in which you are being sued or someone is attempting to
collect a debt from you, the SCRA may offer full, partial or no protection.
Any member of the uniformed services serving on active
duty is covered under the Act including Reserve and Coast Guard
members called to active duty, as well as officers of the Public Health Service
and the National Oceanic and Atmospheric Administration. If you are on active
duty, you are under the protection of the Soldiers and Sailors Relief Act from
the day you enter active duty until the day you separate. If you have a credit
card, mortgage, loans, car payments, pay rent for dependents or face potential
civil litigation, you have the potential to benefit from the act.
The Service members Civil Relief Act of 2003, covers such
issues as rental agreements, security deposits, prepaid rent, eviction,
installment contracts, credit card interest rates, mortgage interest rates,
mortgage foreclosure, civil judicial proceedings, and income tax payments. It
also provides many important protections to military members while on active
duty.
The SCRA protects active duty military members and
reservists or members of the National Guard called to active duty
(starting on the date active duty orders are received) and, in limited
situations, dependents of military members (e.g., certain eviction actions).
To receive protection under some parts of the SCRA, the member
must be prepared to show that military service has had a "material
effect" on the legal or financial matter involved. Protection
under the SCRA must be requested during the member's military duty or
within 30 to 180 days after military service ends, depending on the protection
being requested.
In many situations, the SCRA protections are not
automatic, but require some action to invoke the Act. For example, to
obtain a reduction of your pre-active duty mortgage or credit card interest
rates, you should send your lender/creditor a written request and a copy of
your mobilization orders.
If you think that you have rights under the SCRA that may have
been violated, or that you are entitled to be shielded from a legal proceeding
or financial obligation by the SCRA protections, you should discuss the matter
with a legal assistance attorney or a civilian lawyer as soon as possible.
How does the 6 % interest rule work?
For example, one of the most widely known benefits under the
SSCRA and now the SCRA is the ability to reduce pre-service consumer debt and
mortgage interest rates to 6% under certain circumstances.
Consider this example: Three months ago Mr. Smith and his wife
bought a car for $13,000, paying $1,000 down and financing $12,000 at 9%
interest. Last week, Mr. Smith was called to active duty as Staff Sergeant
(SSG) Smith. Before entering active duty Mr. Smith earned $42,000 per
year. As a staff sergeant with over 12 years of military service he now earns
only about $27,000.
Because of the SCRA, SSG Smith may ask the car
financing company to lower the interest rate to 6% while he is on active duty
because his military service has materially affected his ability to pay
since he is earning less money on active duty than before.
SSG Smith should inform the finance company of his situation in
writing with a copy of the orders to active duty attached, and request
immediate confirmation that they have lowered his interest rate to 6% under the
SCRA. The finance company must adjust the interest down to 6%
unless it goes to court.
In court, the finance company, not SSG Smith,
would have to prove that SSG Smith's ability to pay the loan has not
been materially affected by his military service. The 3% difference is forgiven
or excused, and SSG Smith need not pay that amount. SSG Smith does need to
continue making the monthly payments of principal and interest (at 6%) to avoid
his account being considered delinquent. Continuing payments should also avoid
any adverse credit reports from the finance company. (See Section 207, SCRA)
Important Note: In some situations civilian employers
have agreed to pay the military member the difference between the military pay
and the civilian pay earned before the call to active duty. In
most such situations, military service has not materially affected the member's
ability to pay so it is unlikely that the SCRA 6% interest limitation applies.
Of course, if the military member’s expenses increased (for example, the
member must pay for a second apartment at the duty station, or the member's
spouse gave up her job to move with him) military service might have materially
affected the member and the SCRA 6% interest limit could apply.
But what if instead of buying the car before he came on active
duty, SSG Smith left his car at home for his wife and purchased a used car at
his duty station. To do so, he borrowed $4,000 at 9% interest. Since SSG Smith
took this debt after entering active duty the SCRA 6% interest
limit does not apply.
If you think being called to active military service has
reduced your ability to meet your financial obligations, contact your nearest
legal assistance office to see if the SCRA applies.
Delay of Court and Administrative Proceedings
A major change provided by the SCRA is that it permits active
duty servicemembers, 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. The request
must:
- Be in writing;
- Explain why the current military duty materially effects the
servicemembers ability to appear;
- Provide a date when the servicemember can appear; and
- Include a letter from the commander stating that the
servicemember's duties preclude his or her appearance and that he is not
authorized leave at the time of the hearing. This letter or request to the
court will not constitute a legal appearance in court. Further delays may be
granted at the discretion of the court, and if the court denies
additional delays, an attorney must be appointed to represent the
servicemember. (See Section 202, SCRA)
Termination of Leases
Another significant change provided in the SCRA, is found in
Section 305. The prior law only allowed the termination of pre-service
"dwelling, professional, business, agricultural, or similar" leases. The new
provision in the SCRA allows termination of leases by active duty
servicemembers who subsequently receive orders for a permanent change of
station (PCS) or a deployment for a period of 90 days or more.
The SCRA also includes automobiles leased for
personal or business use by servicemembers and their dependents. The
pre-service automobile lease may be cancelled if the servicemember receives
active duty orders for a period of one hundred and eighty (180) days or more.
The automobile lease entered into while the servicemember is on active duty may
be terminated if the servicemember receives PCS orders to a (1) location
outside the continental United States or (2) deployment orders for a period of
one hundred and eighty days or more. (See Section 305, SCRA)
Eviction for Nonpayment of Rent
Although the SCRA does not excuse soldiers 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 Servicemembers Civil Relief Act (SCRA),
Section 301.
The landlord must obtain a court order to evict a military
member or his/her dependents. The court must find the member’s failure to
pay is not materially affected by his/her military service.
Material effect is present where the service member does not earn sufficient
income to pay the rent. Where the member is materially affected by military
service, the court may stay the eviction ( three months unless
the court decides on a shorter or longer period in the interest of justice)
when the military member or dependents request it.
There is no requirement that the lease be entered into before
entry on active duty, and the court could make any other “just” order
under § 301 of the SCRA. The requirements of this section are:
- The landlord is attempting eviction during a period in which
the service member is in military service or after receipt of orders to report
to duty;
- The rented premises is used for housing by the spouse,
children, or other dependents of the service member; and
- The agreed rent does not exceed $2,400 per month.
Military members threatened with eviction for failure to pay
rent should see a legal assistance attorney. (The amount is subject to change
in future years and as of 2004 the ceiling is $2465.00)
Default Judgment Protection
If a default judgment is entered against a servicemember during
his or her active duty service, or within 60 days thereafter, the SCRA allows
the service member to reopen that default judgment and set it aside. In order
to set aside a default judgment, the service member must show that he or she
was prejudiced by not being able to appear in person, and that he or she has
good and legal defenses to the claims against him/her. The servicemember must
apply to the court for relief within 90 days of the termination or release from
military service. (See Section201, SCRA)
Life Insurance Protection
The SCRA also 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. If the Department of Veteran Affairs
approves the request, the United States will guarantee the payments, the policy
shall continue in effect, and the servicemember will have two years after the
period of military service to repay all premiums and interest. The SCRA
increases the amount of insurance this program will cover to the greater of
$250,000.00 or the maximum limit of the Servicemembers Group Life Insurance.
(See Section 401, SCRA)
State Taxation Clarification
The SCRA provides that a nonresident 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 nonresident
servicemembers to increase the state income tax of the spouse. Under prior law,
some states did not tax the nonresident servicemember directly, but did include
the nonresident servicemember's income in the spouse's income, resulting in
higher taxes for the spouse. (See Section 511, SCRA)
Health Insurance Reinstatement
The SCRA further provides for the reinstatement of any health
insurance upon termination or release from service. The insurance must have
been in effect before such service commenced and terminated
during the period of military service. The reinstatement of the health
insurance is not subject to exclusions or a waiting period if the medical
condition in question arose before or during the period of service, the
exclusion or waiting period did not apply during coverage, and the medical
condition has not been determined by the Secretary of the Veteran Affairs to be
a disability incurred or aggravated by military service.
The reinstatement of health insurance protection does not apply
to a servicemember entitled to participate in employer-offered insurance (See
rules regarding employer offered health insurance care in the Uniformed
Services Employment and Re-employment Act). And finally, the servicemember must
apply for the reinstatement of the health insurance within 120 days after
termination or release from military service. As always submit such request to
the insurance company in writing with a copy of the orders for active duty and
release from active duty. (See Section 704, SCRA)
STATUTES OF LIMITATION (SEC. 206)
(a). TOLLING OF STATUTES OF LIMITATION DURING MILITARY
SERVICE: The period of a servicemember’s military service
may not be included in computing any period limited by law,
regulation, or order for the bringing of any action or proceeding in a court,
or in any board, bureau, commission, department, or other agency of a State (or
political subdivision of a State) or the United States by or against the
servicemember or the servicemember’s heirs, executors, administrators, or
assigns.
(b). REDEMPTION OF REAL PROPERTY: A period of
military service may not be included in computing any period provided by law
for the redemption of real property sold or forfeited to enforce an obligation,
tax, or assessment.
(c). INAPPLICABILITY TO INTERNAL REVENUE LAWS:
This section does not apply to any period of limitation prescribed by or under
the internal revenue laws of the United States.
Service members involved in civil litigation can request a delay
in proceedings if they can show their military responsibilities preclude their
proper representation in court. This provision is most often invoked by service
members who are on an extended deployment or stationed overseas. If you
receive notice of court proceedings DO NOT do anything until you've contacted
your unit or installation legal office.
Conversion Guide Converts
the old SSCRA section numbers to the new Servicemembers Civil Relief Act of
2003 (SCRA) sections.
Rich's Enterprises, L.L.C.,
Prattville Alabama
Legal Disclaimer
Fair Debt
Collection Home >> Search Site
>> Most Asked Questions
>> Servicemembers Civil Relief Act of 2003 (SCRA)
Search Pages A - I
Search Pages I - Z |