The Servicemembers Civil Relief Act (SCRA)

By on January 14, 2018
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Making a decision to serve your country is one of the most admirable decisions one can make; albeit a life-changing decision not to be made lightly. For those of you currently serving, we here at FSN salute you, and thank you for your service.

Being called away from your family and loved ones can be difficult, emotionally and financially. Are you prepared? The good news is that your government also appreciates your service, and provides protections for you and your family while you are away serving your country.

The Servicemembers Civil Relief Act (SCRA) is a federal law that provides certain protections for military members on active duty. The law restricts or limits civil actions against military members when it comes to issues with finances, rental agreements, mortgages, insurance, income tax, and judicial proceedings.

If you think you can benefit from the legal protections the SCRA can offer, be sure you understand the caveats. For example, in order to receive protections, you must be able to prove your situation is “materially affected”—unable to fulfill a particular obligation— by your military service. The law itself can be a little complicated to interpret. Sit down with an attorney who can explain your rights and help you get the most out of the SCRA benefits.

SCRA Overview

Under the SCRA, you are entitled to benefits that can make life easier for you and your family. Here is a brief overview of your rights under the SCRA.

SCRA Eligibility

The SCRA covers all servicemembers on active duty. It only covers Reservists and the members of the National Guard while on active duty. Your rights under the SCRA begin on the date of entering active duty and generally terminate within 30 to 90 days after returning from active duty.

Your Rights

While you are on active duty, and in some cases, before and after, you can enjoy relief in areas where there is potential to fall behind.

Deferred Taxes

The Internal Revenue Service (IRS), state, and local tax authorities are required to grant you a deferral from payment before and during active duty with no interest or penalty. Your ability to pay must be materially affected by your military service in order to receive the deferral.

Eviction Prevention

Regardless of the terms of your rental agreement, your landlord cannot evict you for nonpayment without a court order. Even then, if you can prove to the court that your ability to pay is materially affected by your active duty, the court must grant you a 90-day delay in eviction proceedings or adjust the terms of the lease to benefit both you and your landlord. To be eligible for this particular protection, your rent must not exceed $3,139.35 (2013) per month.

Life Insurance Coverage Protection

Life insurance companies cannot limit, restrict coverage, terminate coverage, or require additional premium payments just because you are in the military. Premiums can, however, be adjusted based on age and term insurance.

Postponement of Foreclosures

Servicemembers are protected from foreclosure and seizure of property due to missed mortgage payments for up to 9 months after active service unless a court order is issued.

Protection Against Default Judgments

If you are involved in a civil proceeding or administrative proceeding, the court must appoint a lawyer to represent you while you are on active duty. The court must grant a stay—a postponement of proceedings— of at least 90 days if it is determined your presence is required for defense.

Postponed Civil Court Matters

As mentioned before, you are entitled to a 90-day stay if your active duty prevents you from participating in civil or administrative court proceedings. Such proceedings may include divorce and foreclosure proceedings or child paternity and support cases.

Protection for Small-Business Owners

If you are a small-business owner, and you have business-related debts and obligations, your nonbusiness assets and military pay cannot be used to satisfy those debts. Creditors cannot go after your personal assets while you are on active duty.

Termination of Lease Agreements

You have the right to terminate certain lease agreements if you:

  • signed a lease and then started service
  • signed a lease during military service
  • received a permanent change of station orders
  • received orders to deploy in support of an operation for more than 90 days

Such agreements include automobile leases, business and professional leases, and residential leases. You must provide notice of termination in writing and a copy of your military order to the other party.

Termination of Phone Service

You have the right to terminate your cell phone contract if you receive orders to relocate to a location for more than 90 days that does not support the contract.

Prevention of Repossession of Property

While you are deployed, your property cannot be repossessed for nonpayment or any other breach of contract without a court order.

Reduced Interest Rates

When you are deployed, creditors are obligated to reduce interest rates on existing debt to 6%; debt incurred while on active duty does not receive the same benefit. Interest rate caps apply to mortgages for 1 year,  credit cards, car loans, business debt obligations, as well as fees and service charges. Reduced interest rates is one of the benefits that creditors can challenge if they believe you are able to pay the higher interest rate while on active duty.

Suspension of Professional Liability Insurance

If you are in a vocation that is deemed “professional” by the Secretary of Defense, such as healthcare and legal professionals, you can suspend your professional liability insurance and avoid paying premiums while you are on active duty. You must notify your insurance carrier of the suspension in writing. When you are ready to reinstate your policy, notify your insurance carrier within 30 days of returning from active duty.

Voting Rights

Your voting residency for state, federal, and local elections does not change no matter where you are stationed while on active duty. There are additional guidelines around voting for military members. Be sure you understand what you can and cannot do politically, and get assistance when necessary.

SCRA Waivers

You do have the right to waive your rights under the SCRA, but only waivers signed during military service are considered effective; you cannot waive your rights prior to entering military service. If you are thinking of waiving your rights, be sure you understand what that means, and consult with an attorney before signing any documentation.

Being away from your family on military service is not only financially difficult, it can be emotionally difficult. Fortunately, there are family readiness groups and advocacy programs to prepare you and your loved ones for your separation. Talk to your mentor, advocate, financial advisor and your attorney to ensure you are making decisions that are in the best interest of you and your family, and that will make life a little less difficult while you are away.

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About Toni Banks

Contributing writer for FSN - As a professional writer for the Legal, Finance, and Technology industries, Toni understands there is an overwhelming amount of information available to you and wading through confusing terminology and difficult concepts can be difficult. Her primary aim is to offer focused, clearly-written information on current topics that resonate with her readers. Find Toni on !

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