The Servicemembers Civil Relief Act (SCRA): A Comprehensive Guide

military officers writing

As a service member, you’re asked to put your life on hold for weeks, months, and sometimes years. But what happens to your financial obligations back home while you’re away? The Servicemembers Civil Relief Act (SCRA) provides legal and financial protections to active-duty servicemembers to ensure their livelihoods are secure while away.

Who is Covered by the SCRA?

The SCRA applies to:

  • Members who are currently serving in the Army, Marine Corps, Navy, Air Force, and Coast Guard on active duty.
  • Members of the Reserve component serving on active duty
  • Members of the National Guard mobilized for more than 30 consecutive days.
  • Active duty commissioned officers of the Public Health Service or the National Oceanic and Atmospheric Administration

SCRA protections can also extend to dependents and those with a valid power of attorney for the servicemember.

When Does the SCRA Protect You?

The SCRA covers you during your military service, beginning with the date you received the order to report for active duty, military service, or order of induction. Additionally, any time you are legally absent from active duty, such as illness or leave.

Key Protections Under SCRA

Interest Rate Reduction

Servicemembers qualify for a lower interest rate on debts incurred before military service. The SCRA mandates a maximum interest rate of 6% on pre-service loans (also called pre-service obligations) including:

  • Automobile leases
  • Student loans
  • Home loans
  • Incurred credit card debt

However, the SCRA interest rate reduction is not automatic. Servicemembers must notify their lender in writing and include a copy of their orders to active duty. Servicemembers can request an interest rate reduction from their lender at any time while serving on active duty and up to 180 days after release from active duty1.

For mortgages, the interest rate reduction extends for an additional year after the end of active-duty service. Any interest over and above 6% during active duty must be forgiven. Significantly, lenders cannot increase the interest rate above 6% after servicemembers leave active duty.

Protections Against Default Judgments in Civil Cases

Usually, if you are sued and do not appear in court, the court automatically rules in favor of the plaintiff. This process is known as a default judgment. If you are sued while on active duty and do not appear in court due to your military service, the judge must appoint an attorney to represent your interests. This attorney will prevent the courts from awarding a default judgment against you.

Protections Against Foreclosure

No sale, foreclosure, or seizure of property for nonpayment of pre-service mortgage debt is valid if it occurs during or within nine months after your active-duty service unless it complies with a court order.

Protections Against Repossession

Under certain circumstances, the SCRA prohibits creditors from seizing your personal property, such as your vehicle, without a court order. For example, suppose you break a contract by failing to make your monthly payments. In that case, the creditor must first file a lawsuit and obtain an order from a judge before they can repossess your vehicle or other personal property. To qualify, you must have signed the loan agreement and paid at least the deposit or first installment payment before you entered military service.

Termination of Leases

Under the SCRA, you can terminate residential housing and automobile leases without penalty if you entered the lease before you started active duty1. You can also terminate leases signed while in military service if you receive orders for a permanent change of station (PCS) or to deploy for not less than 90 days.

Additional Protections

In addition to these key protections, the SCRA also provides other benefits such as:

  • The right to cancel phone contracts without penalty.
  • Protection from storage unit foreclosure
  • Deferred income taxes
  • Eviction prevention

Representation for SCRA Violations

While serving in the military, the SCRA is serving you by providing robust protection against vehicle repossession. Your rights are the same whether you are on active duty or on leave for an illness. Contact our office if you believe your rights under the SCRA have been violated. Our attorneys have decades of experience serving in and representing those of the armed forces. Send the details of your case through our contact page, or call (919) 526-0450 to speak with an intake specialist.