Servicemembers' Civil Relief Act provides debt protection
by Christoph Mlinarchik and Capt. Patrick Clary
21st Space Wing Base Legal Office
8/23/2012 - PETERSON AIR FORCE BASE, Colo. -- According to the U.S. Supreme Court, the purpose of the Servicemembers' Civil Relief Act is to protect "those who dropped their affairs to answer their country's call." SCRA extends the protection of the Soldiers' and Sailors' Civil Relief Act of 1940, which covered a wide range of topics such as foreclosures, evictions, rental agreements, installment contracts, credit card and mortgage interest, civil litigation and income tax.
The policy of SCRA is to ensure those who serve and protect their nation are not unfairly penalized in their private lives by the challenges of military duty. SCRA applies to active duty military members, Reservists, and members of the National Guards. Military life sometimes creates obstacles for military service members to deal with personal, financial, legal and residential aspects of daily life. This article highlights three major SCRA benefits: 6 percent interest rates, terminations of leases, and protections in judicial proceedings.
Section 207 of SCRA mandates that debts incurred prior to entry to active duty must be lowered to no more than 6 percent. This applies to consumer debt, mortgage interest rates, and private student loans but not public, federally-insured student loans. To activate this protection, write a letter to the creditor requesting immediate reduction of the interest rate to 6 percent, and include a short statement of how the service member has been materially affected by military service with a copy of the orders to active duty. Any difference between the higher interest rate and 6 percent will be forgiven and need not be repaid. These benefits can save thousands of dollars over the life of a loan. Remember, this only applies to preservice debt, not debt accrued during military service.
SCRA Section 305 governs terminations of both housing and automobile leases. After receiving permanent change of station or deployment orders for 90 days or more, SCRA allows terminations of housing leases without penalty. All that is needed is written notice to the landlord along with a copy of the orders.
For automobile leases, leases signed before service can be canceled after receiving active duty orders for 180 days or more. If the automobile lease was signed after active duty began, it can be terminated upon receiving PCS orders to a location outside the continental United States or deployment orders for 180 days or more. Remember these termination rights can be waived. Be sure to check lease agreements for SCRA waivers and request any such language be removed before final signature. If you have any questions about language in your lease, stop by the legal office and have an attorney give you an opinion before signing it.
Due to ongoing duties, deployments and PCS orders, attending court in distant locations is not always feasible. If a defendant in a civil proceeding does not show up to court, the judge may automatically find in favor of the plaintiff, which is called a default judgment. To protect military personnel from default judgments, SCRA Section 201 mandates default judgments entered against service members during active duty or within 60 days thereafter be reopened and set aside. Request relief from the court within 90 days of the end of military service to invoke SCRA Section 201.
SCRA Section 202 provides for delays in court or administrative proceedings for those serving on active duty. The proceeding will be postponed for at least 90 days upon receipt of a written request. The request must include an explanation of how military duty affects the service member's ability to appear in court, a date when the service member can appear, and a letter from the commander stating that duty precludes appearance in court. Beyond the mandatory 90 days, further delays may be granted at the court's discretion. If further delays are denied in the service member's absence, an attorney will be appointed to represent the service member in absentia.
Contact a legal assistance attorney in the 21st Space Wing Base Legal Office for further questions or legal assistance regarding the SCRA. Legal assistance walk-in hours are 8-9 a.m. Monday and Wednesday, and from 1-2 p.m.Tuesday and Thursday.
