Compiled and Edited By David S. Chang
The Servicemember’s Civil Relief Act (SCRA) expanded and improved the former Soldiers’ and Sailors’ Civil Relief Act (SSCRA). The SCRA provides a wide range of protections for individuals entering, called to active duty in the military, or deployed servicemembers. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers. You can click here to visit the official site.
In addition the new law:
- Expands current law that protects servicemembers and their families from eviction from housing while on active duty due to nonpayment of rents that are $1,200 per month or less. Under the new provisions this protection would be significantly updated to meet today’s higher cost of living, covering housing leases up to $2,932.31 per month and then be adjusted annually to account for inflation.
- Provides a servicemember who receives permanent change of station orders or who is deployed to a new location for 90 days or more the right to terminate a housing lease.
- Clarifies and restates existing law that limits to 6 percent interest on credit obligations incurred prior to military service or activation, including credit card debt, for active duty servicemembers. The SCRA unambiguously states that no interest above 6 percent can accrue for credit obligations (that were established prior to active duty or activation) while on active duty, nor can that excess interest become due once the servicemember leaves active duty A? instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period. Note: This law only covers debt incurred prior to military service.
- Updates life insurance protections provided to activated Guard and reserve members by increasing from $10,000 to $250,000 the maximum policy coverage that the federal government will protect from default for nonpayment while on active duty.
- Prevents servicemembers from a form of double taxation that can occur when they have a spouse who works and is taxed in a state other than the state in which they maintain their permanent legal residence. SCRA will prevent states from using the income earned by a servicemember in determining the spouseA?s tax rate when they do not maintain their permanent legal residence in that state.
The SCRA covers all Active Duty servicemembers, Reservists and the members of the National Guard while on active duty. The protection begins on the date of entering active duty and generally terminates within 30 to 90 days after the date of discharge from active duty.
SCRA Installment Contract Protection
A servicemember who, prior to entry into active duty, entered an installment contract for the purchase of real or personal property (including motor vehicle), is protected under the SCRA if the servicemember’s ability to make the payments is “materially affected” by the military service.
- The servicemember must have paid, prior to entry onto active duty, a deposit or installment under the contract.
- The seller is then prohibited from exercising any right or option under the contract to rescind or terminate the contract, to resume possession of the property for nonpayment of any installment due, or to breach the terms of the contract, unless authorized by the court.
- The SSCRA protects servicemembers against foreclosures of mortgages, as long as the following facts are established:
- The relief is sought on an obligation secured by a mortgage, trust deed; or other security in the nature of a mortgage on either real or personal property;
- The obligation originated prior to entry on active duty;
- The property was owned by the servicemember or family member prior to entry on active duty;
- The property is still owned by the servicemember or family member at the time relief is sought.
- The ability to meet the financial obligation is materially affected by the servicemember’s active duty obligation.
SCRA Rental and Eviction Protection
Another key provision under the new Servicemember’s Civil Relief Act (SCRA) protects your dependents from being evicted while you are serving your country. If you rent a house or apartment that is occupied for dwelling purposes and the rent does not exceed $2720.95 per month, the landlord must obtain a court order authorizing eviction. This provision applies regardless of whether quarters were rented before or after entry into military service.
In cases of eviction from dwelling quarters, courts may grant a stay of up to three months or enter any other “order as may be just” if military service materially affects the service member’s ability to pay the rent. This provision is not intended to allow military members to avoid paying rent, said Lindemann, but rather to protect families when they cannot pay the rent because military service has affected their ability to do so.
A person holding a lien on the property or effects of a servicemember may not, during any period of military service of the servicemember and for 90 days thereafter, foreclose or enforce any lien on such property or effects without a court order granted before foreclosure or enforcement.
SCRA Interest Rate Limits
One of the most significant provisions under the Servicemember’s Civil Relief Act (SCRA) limits the amount of interest that may be collected on debts of persons in military service to 6 percent per year during the period of military service. The expanded SCRA further states that no interest above 6 percent can accrue for credit obligations while on active duty, nor can that excess interest become due once the servicemember leaves active duty A? instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.
SCRA Judicial Proceedings
The Servicemembers Civil Relief Act protects servicemembers from certain judicial proceedings until they return from military service, deployment or overseas tours of duty. These protections include:
Stay of Proceedings
If the person is in military service or is within 90 days after termination of or release from military service and has received notice of a civil action or proceeding.the court may on its own motion and shall, upon application by the servicemember, stay the action for a period of not less than 90 days.
Stay of Execution
If the person against whom action brought is, or within the last 90 days was, in military service the court may stay the execution of judgments, court actions, attachments and garnishments. If the member requests a stay, it must be granted unless the court finds the member’s ability to comply with the order or judgment is not materially affected by military status.
Before a court can enter a default judgment (for failure to respond to a lawsuit or failure to appear at trial) against a military member, the person who is suing the servicemember must provide the court with an affidavit stating the defendant is not in military service. If the plaintiff files no affidavit and defendant is in the military, the court will appoint an attorney to represent the defendant’s interests (usually by seeking a delay in the proceedings). The court may also require the plaintiff to secure bond to protect the defendant against harm. If a default judgment is entered against a military member, the judgment may be reopened if the member makes an application within 90 days after leaving active duty, shows he or she was prejudiced, and shows he or she had legal defense.
Statute of Limitations
Period of military service may not be included in computing any limitation period for filing suit, either by or against the servicemember. However, this does not apply to any period of limitation prescribed by or under the internal revenue (IRS) laws of the United States.
SCRA Insurance Protection
The Servicemembers Civil Relief Act protects servicemembers from losing health or life insurance coverage if they are called to active duty military service, deployment or overseas tours of duty.
Health Insurance Protection
If a person is called to active duty they are entitled to reinstatement of any health insurance that was in effect on the day before such service commenced, and was terminated effective on a date during the period of such service. There are many new provisions regardingReserve TRICARE visit the TRICARE section of military.com to learn more.
Life Insurance Protection
Member’s private life insurance policy is protected against lapse, termination, and forfeiture for nonpayment of premiums or if any indebtedness for period of military service plus two years. Professional liability insurance of persons called to active duty will be suspended upon written request to the insurance carrier for the period of the individual’s active duty. Insured or beneficiary must make application to the Veterans Administration for protection. In addition activated reserves become eligible for the Servicemember’s Group Life Insurance (SGLI). Click here to learn more about the recent changes to the SGLI.