The Servicemembers Civil Relief Act

(This article first appeared in the March-April 2016 issue of The American Postal Worker magazine.) 

The Servicemembers Civil Relief Act (SCRA) was enacted to ease the financial and legal burdens brought on by the demands of active duty. It applies to members of the military and their dependents, including Reservists and National Guardsmen who are called to active duty for at least 30 days.

The federal law, 50 U.S.C. App. §§ 501-59, formerly known as the Soldiers’ and Sailors’ Relief Act of 1940, has been amended multiple times since its enactment to improve and clarify protections. It was amended again last year.

Protections are not automatic. Service members must request relief during active duty or within 30 to 180 days following military service. Protections are typically conditional upon whether military service “materially affected” a service member’s ability to meet his or her obligations.

SCRA Highlights

Interest rates on debts incurred prior to active duty must be reduced to 6 percent. Student loans that are federally guaranteed are excluded. The cap is extended one year beyond active military service on mortgages. Income tax obligations must be deferred if the obligation occurred before or during military service. Deferrals are issued without interest or penalty. Residency for state, federal or local tax and voting purposes are unaffected by absences caused by military service. Similar protections exist for spouses. During active duty, creditors cannot use non-business assets or military pay to satisfy small business debts.

The sale, foreclosure or seizure of property because of an inability to pay pre-service mortgage obligations will be considered invalid without court involvement if made during active duty or within nine months following active military service. Service members and their families cannot be evicted for non-payment of rent without a court order, regardless of agreement terms or local laws, provided the monthly rent does not exceed $3,329.84 per month. (Rates are adjusted annually.) The court must grant a 90-day delay in eviction proceedings or adjust lease obligations to preserve the interests of all parties.

Service members can terminate lease agreements, including residential, automobile, agricultural, professional and business, when the agreement was entered into prior to being called to active duty, or after orders for a permanent change of station are received, or when the member receives orders to deploy in support of a military operation for at least 90 days. Written notice and a copy of the military orders must be hand-delivered or mailed return-receipt to the leaser.

Property that is leased, rented or purchased prior to active duty cannot be repossessed, nor can a contract be terminated for nonpayment or any other breach while on active duty without a court order.

Termination of cell phone contracts and phone exchanges are also permitted if a contract for services was signed prior to receiving military orders to move to a location that does not support the service for at least 90 days.

When civil action or an administrative proceeding such as divorce, paternity, child support or foreclosure is filed against a service member, an attorney must be appointed and a stay of at least 90 days must be granted if there is a defense that cannot be presented without the presence of the service member. Additional stays can be awarded at the discretion of the court. Criminal proceedings are excluded.

Life insurance companies cannot terminate coverage, require additional premiums or limit coverage because of military service. Professional liability insurance may be suspended by contacting the insurance carrier in writing. Any premiums paid while on active duty must be refunded. Reinstatements must be made to the carrier within 30 days of release from active duty.

SCRA rights can be waived, but waivers are only valid when signed during or after active service. Service members who are considering signing a waiver or who want to invoke their SCRA rights should contact their legal assistance office for guidance and counsel.