What to know about the Servicemembers Civil Relief Act (SCRA)

June 14th, 2021 by
What to know about the the Servicemembers Civil Relief Act (SCRA)

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There is a law that provides financial and legal protections to those who are actively serving in the Army, Marine Corps, Navy, Air Force, and Coast Guard.

This also covers those members of the Reserve when serving on active duty, members of the National Guard who are mobilized under federal orders for 30 consecutive days, or any active duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration.

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This legislation is known as the Servicemembers Civil Relief Act (SCRA).

The Consumer Financial Protection Bureau says SCRA can also be extended to those who hold Power of Attorney for a servicemember. The act can even protect dependents as well in some cases.

The five most asked about protections that the act covers.

Maximum 6 percent interest rate on any pre-service loans

Loans that can qualify for this rate are automobile, home, student loans, and credit card debt could be eligible for the interest rate reduction.

To qualify for this relief, you must notify your lender in writing. Include a copy of your orders to active duty service or a letter from your commanding officer that states the date you began active duty service.

This reduction in interests lasts as long as you are on active duty. In some cases with mortgages, it can last for up to a full year at the end of your active duty.

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Your lender cannot add the amount of interest above the 6 percent back into the loan later or after you leave active duty.

This modification can be requested at any time while you are on active duty and up to 180 days after being released from active duty. 

Protection against default judgments in civil cases

If on active duty, you have certain legal protections under SCRA.

These protections include having a default judgment in a civil matter.

When court orders in favor of the plaintiff (the person who is suing you) and you did not appear or defend yourself against the lawsuit, the court may not enter a judgment until after it appoints an attorney to represent you if you are on active duty at the time of the case being heard. The court can also delay the proceedings for up to 90 days if other conditions are met as well. 

Servicemembers have protections against home foreclosure

Unless you waived your rights when you took out a mortgage before you entered active duty service, you cannot be foreclosed on without a court order.

You don’t even have to disclose your military status to your lender at the time of the loan being processed.

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A court may, or upon the request of the servicemember, pause or stay a foreclosure hearing, or adjust the loan, providing that the servicemember cannot pay the original payment due to their active duty status.

Servicemembers have protections against repossession of property

Under the SCRA, there may be some circumstances where your creditors will not be able to repossess your personal property such as your car without a court order.

In order to be protected by this act, you must have purchased or leased a car or other personal property before entering active duty service and you must have made a deposit or made a payment on the car or personal property before entering active duty. 

Servicemembers may be able to terminate leases without penalties

You may be able to terminate your residential lease that is your place of living for you or your dependents should you be called to active duty.

If you signed a lease prior to going on active duty or you are on active duty but receive a change of location status or deployment orders for more than 90 days, you may then be eligible to terminate your residential lease without penalty according to the Servicemembers Civil Relief Act (SCRA).

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This can also apply to a car lease as well as long at other criteria are met, such as if you are called to active duty for more than 180 days or will be deployed out of state or country.

In the case of car leases, you will need to read the fine print of your lease agreement to see if there are stipulations that may prevent you from exercising this protection, like allowing you to take your leased car out of state with no penalties. 

Bottom Line: This act allows those who are serving our country piece of mind that they are protected when it comes to legal and financial matters.


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