Getting to Know the Servicemembers Civil Relief Act (SCRA)
Have you recently been called up for active duty? Are you preparing for a long-term deployment that may affect your ability to meet legal or financial commitments? Or are you nearing the end of your active duty service? If the answer to any of these questions is "yes," it’s particularly important that you understand your rights—and responsibilities—under the Servicemembers Civil Relief Act (SCRA) of 2003. This article briefly describes the SCRA, explains how to invoke the law’s protections, and tells you where to turn for legal help and more information.
SCRA in Brief
The primary purpose of the SCRA is to ease legal and financial burdens on military personnel and their families brought on by the demands of active duty. In the words of the Act, the provisions were designed to allow servicemembers to “devote their entire energy to the defense needs of the Nation.”
SCRA extends relief to all Army, Air Force, Coast Guard, Marine Corps, and Navy servicemembers on active duty, including reservists, members of the National Guard and Air National Guard who have been activated for duty, and active-service commissioned officers of the Public Health Service and National Oceanic and Atmospheric Administration. A number of SCRA provisions also extend to spouses and other dependents, such as protection against eviction and relief related to the termination of residential and motor vehicle leases.
Primary SCRA Provisions
SCRA offers a variety of provisions to help active duty personnel meet their legal and financial obligations. But relief under the SCRA is not always automatic. You must affirmatively invoke or request relief. That is why you should familiarize yourself with the law’s provisions and work with your nearest Armed Forces Legal Assistance Office to identify and invoke any SCRA protections that apply to your particular circumstances.
Some of the more commonly invoked provisions include:
- Six percent cap on interest rates. You can reduce or cap interest rates on any credit card, mortgage, or other loan you or your spouse obtained before you entered active duty to 6 percent per year for the period you remain on active duty. To take advantage of this reduced interest rate, you must establish that your active duty assignment materially affects your ability to pay the loan (for instance, if going on active duty requires that you take a substantial pay cut). These reduced rates do not apply to loans you obtained or new credit charges you made while on active duty. Nor do these rates apply to federal student loans.
- Credit Rating Protection. Lenders cannot deny or revoke credit, change the terms of an existing loan, or refuse to grant credit because you sought SCRA protections. Any claim of rights under SCRA cannot be used as the basis for a lender to conclude that you are unable to pay a debt or to generate an adverse credit report. Furthermore, an insurer may not refuse to insure you based on any SCRA protections you may invoke.
- Judicial Relief. If you are on active duty and it prevents you from attending a scheduled court appearance, SCRA allows you to request the postponement of civil court and civil administrative proceedings—including actions involving bankruptcy, divorce, or foreclosure—for at least 90 days. Note that this protection does not apply to criminal proceedings. In addition, if a court enters a default judgment against you because you failed to appear in court to defend a lawsuit or other action, you can request that the matter be re-opened and the default judgment set aside. The provisions that relate to judicial relief can be especially complicated, so be sure to consult with legal counsel at your nearest Armed Forces Legal Assistance Office regarding any civil court actions against you or you and your dependents.
- Protection against evictions. If you rent your home or apartment and the rent does not exceed a certain amount (which, for 2009, is $2,932.31 per month), then your landlord cannot evict you or your dependents while you are serving on active duty without first obtaining a court order. In addition, you can request that the court delay the execution of an order to evict you or your dependents for 90 days—but, unlike the stay of other judicial proceedings, the court will have the ability to decide whether to postpone eviction and, if so, for how long. The rent threshold typically changes each year to reflect inflation and any rise in housing costs.
- Ability to terminate property leases. You generally can get out of or terminate without penalty any residential and business property leases that began before your active-duty assignment. You also can terminate a lease you signed during active duty in the event of a change in your permanent duty station or if a new deployment will last more than 90 days. You must provide written notification of cancellation to your landlord—verbal notice is not enough.
- Cancellation of automobile leases. You can terminate a car or truck lease if you are called to active duty for 180 days or more after signing the lease. You also can terminate the lease if you receive orders for a permanent change of duty station outside the U.S. or are being deployed with a military unit for 180 days or more.
- Relief from foreclosures and forced sales. If you are on active-duty and it results in your inability to pay your mortgage or meet the terms of a purchase or installment contract, the SCRA may be able to help you. Real estate may not be foreclosed nor vehicles repossessed without a court order if you breach the terms of a purchase contract because of active military service. The servicemember may request a stay of such a proceeding under certain circumstances.
- Termination and reinstatement of insurance. If your health insurance was canceled when on active duty , it can be reinstated without loss of benefits, waiting periods, or penalties in most instances. Life insurance also is protected against lapse, termination, and forfeiture for nonpayment of premiums or indebtedness for the period of military service plus two years. You also can cancel professional liability insurance and have that insurance reinstated. Deadlines for applying for reinstatement differ depending on the type of insurance. For instance, you have only 30 days after release from active duty to request reinstatement of professional liability insurance and receive SCRA protections, but 120 days to request reinstatement of health insurance benefits.
- State Tax Relief. If you receive military orders that require you to move from your home state to another state, your “domicile” or state of legal residence for tax purposes does not change. SCRA prevents you from having to pay state taxes on your military income—or personal property, such as a car—to any state other than your home state of legal residency. For example, if your state of legal residence is Texas and the military sends you to Virginia, you won’t have to pay Virginia’s state income tax on your military earnings, nor will you have to pay personal property taxes to the state of Virginia. If you or your spouse earns non-military income, you may have to pay income taxes to the state where you’re stationed, if that state has an income tax. But the state cannot use your military earnings to increase either your tax liability or your spouse’s.
Although you can waive or cancel your rights under the SCRA, such a waiver must be in writing and signed by you during or after your active military service to be valid. If you sign a waiver of your SCRA rights before you enter military service, the waiver will not be valid. Carefully review all documents (for example, insurance policies) to be sure there are no embedded waivers. If you are considering signing a waiver at any time—before, during, or after military service—do not do so without consulting an Armed Forces Legal Assistance Attorney.
How to Invoke Protections Under SCRA
Although the SCRA is designed to protect you and your family, most of its provisions require you to take action to request relief—and to do so in a timely manner. Some protections require written notification, such as the cancellation of a housing rental agreement. Other provisions, such as requesting an SCRA-mandated 6 percent loan rate, require that you show you have been “materially affected” by reason of military service. In most cases, you will need to provide a copy of your active duty orders to gain relief under the Act.
The timeframe for requesting relief also varies: Some protections require you to take action before or during your activation, while others allow you to act within 30 to 180 days of your release from active duty.
Talk to Your Armed Forces Legal Assistance Attorney
SCRA is a complicated piece of public law. Before you seek relief, waive your rights to SCRA protections, or if you have questions about the type of relief you may be entitled to, it’s a good idea to talk to an Armed Forces Legal Assistance Attorney. Use the Armed Forces Legal Services Locator to find legal assistance near you.
Consult your legal assistance office regarding correspondence requesting relief, especially in matters involving lawsuits and court appearances, insurance, and taxes. Typically, in requesting any kind of relief, you will have to include a copy of your orders and deliver your written notification by hand, private business carrier, or return-receipt mail (preferably certified) to the appropriate party.
When SCRA Protections Apply
SCRA provisions generally take effect on the first day of active duty and remain in effect during the period of active duty—and in some instances beyond. For example, the Act allows a court to postpone a proceeding to enforce collection of a tax or sale of a property for up to 180 days after you are released from active duty.
What’s New? How the SCRA Differs from the Law It Replaced
SCRA expands the protections provided under the original Soldiers’ and Sailors’ Civil Relief Act (SSCRA) of 1940, which was in effect until 2003. Because many of today’s servicemembers may be more familiar with the old law, we have highlighted some important changes:
- A break for higher rents. Updates protection for servicemembers and their families from eviction from housing due to nonpayment of rent. In 2006, the ceiling rate was $2615.16 per month. The new rate reflects today’s higher cost of living and is annually adjusted to account for inflation.
- Interest on Credit. Clarifies the provision that caps interest rates at 6 percent for credit obligations (for instance, credit cards, loans, and mortgages) incurred before you entered active duty. Interest rates may be reduced to 6 percent while the servicemember is on active duty if active service affects the servicemember’s ability to pay. The Act now clearly states that excess interest is permanently forgiven and is not due once the servicemember leaves active duty. Furthermore, monthly payments are reduced by the amount of interest saved during the period covered.
- Increased Life Insurance Coverage. Raises significantly the maximum policy amount protected against default for nonpayment of premiums while serving on active duty—up to $250,000 or the maximum set for Servicemember’s Group Life Insurance, which is now $400,000. Private life insurance policies in force for not less than 180 days before a servicemember’s entry on active duty may not be terminated for nonpayment of premiums while the servicemember is on active duty. Premium payments also may be deferred for up to two years after release from active duty.
- Tax Relief for Working Spouses. Protects servicemember families from double taxation that might occur when a spouse who works is taxed in a state other than the state of their permanent legal residence. SCRA prevents states from using the military income of the servicemember to determine the spouse’s tax rate when they do not maintain their permanent legal residence in the state of the spouse’s employment.
Tips for Financial Preparedness
Any mobilization, deployment, or permanent change of station move involves considerable planning and preparation. The best way to ensure a smooth transition that minimizes stress on you and your family is to have your finances and paperwork in order. See Money & Mobility for some checklists that will assist you in being ready, such as:
- Family Financial Checklist
- Legal Documents List
- Important Paperwork Checklist
- Tips For Talking About Money With Your Spouse
Once you have worked through these lists and discussed your orders with your family, you will be better prepared to take advantage of the protections afforded you by the SCRA. Again, it is essential that you speak with legal counsel anytime you are contemplating invoking the protections provided by the law.
- Text of the SCRA (Public Law 108-189) (PDF 106 KB)
- SCRA information on the Department of Defense’s Military One Source. DOD also operates a toll-free number: (800) 342-9647.
- SCRA information from the Department of Justice at www.servicemembers.gov.
- Armed Forces Legal Services Locator
- U.S. Army Judge Advocate General
- SCRA Guide (Homeland Security)
- SCRA Disclosure Notice (Department of Housing and Urban Development) (PDF 102 KB)
- SCRA Frequently Asked Questions (Department of Housing and Urban Development)
- Money & Mobility