| The
following SCRA summary is provided by the
U. S. Army Judge Advocate General’s Corps.
The
Servicemembers Civil Relief Act of 2003 (SCRA)
formerly known as the Soldiers’ and Sailors’
Civil Relief Act of 1940 (SSCRA) is a federal
law that gives all military members some
important rights as they
enter active
duty. It covers such issues as rental
agreements, security deposits, prepaid rent,
eviction, installment contracts, credit card
interest rates, mortgage interest rates,
mortgage foreclosure, civil judicial
proceedings, and income tax payments. It also
provides many important protections to military
members while on active duty.
The SCRA
protects
active duty military members and reservists or
members of the National Guard called to active
duty (starting on the date active duty orders
are received) and, in limited situations,
dependents of military members (e.g., certain
eviction actions).
To receive
protection under some parts of the SCRA, the
member must be prepared to show that military
service has had a "material effect" on the legal
or financial matter involved. Protection under
the SCRA must be requested during the member's
military duty or within 30 to 180 days after
military service ends, depending on the
protection being requested.
In many
situations, the SCRA protections are not
automatic, but require some action to invoke the
Act. For example, to obtain a reduction of your
pre-active duty mortgage or credit card interest
rates, you should send your lender/creditor a
written request and a copy of your mobilization
orders.
Legal advice
available.
If you think that you have rights under the SCRA
that may have been violated, or that you are
entitled to be shielded from a legal proceeding
or financial obligation by the SCRA protections,
you should discuss the matter with a legal
assistance attorney or a civilian lawyer as soon
as possible.
The Six
Percent Rule
For example, one
of the most widely known benefits under the SCRA
and now the SCRA is the ability to reduce
pre-service consumer debt and mortgage interest
rates to 6% under certain circumstances. How
does the 6 % interest rule work?
Consider this
example: Three months ago Mr. Smith and his wife
bought a car for $13,000, paying $1,000 down and
financing $12,000 at 9% interest. Last week, Mr.
Smith was called to active duty as Staff
Sergeant (SSG) Smith.
Before
entering active duty Mr. Smith earned $42,000
per year. As a staff sergeant he now earns
almost $27,000 (a staff sergeant with over 12
years of military service from Defense Finance &
Accounting Service
pay scale.
Because of the SCRA, SSG Smith may ask the car
financing company to lower the interest rate to
6% while he is on active duty -- military
service has
materially affected
his
ability to pay since he is earning less money on
active duty than before. SSG Smith should inform
the finance company of his situation in writing
with a copy of the orders to active duty
attached, and request immediate confirmation
that they have lowered his interest rate to 6%
under the SCRA. The finance company must adjust
the interest down to 6% unless it goes to court.
In court, the finance company, not SSG Smith,
would have to prove that SSG Smith's ability to
pay the loan has not been materially affected by
his military service. The 3% difference is
forgiven or excused, and SSG Smith need not pay
that amount. SSG Smith does need to continue
making the monthly payments of principal and
interest (at 6%) to avoid his account being
considered delinquent. Continuing payments
should also avoid any adverse credit reports
from the finance company. (See Section 207,
SCRA)
Note:
In some situations civilian employers have
agreed to pay the military member the difference
between the military pay and the civilian pay
earned
before
the call to active duty. In most such
situations, military service has not materially
affected the member's ability to pay so it is
unlikely that the SCRA 6% interest limitation
applies. Of course, if the military member’s
expenses increased (for example, the member must
pay for a second apartment at the duty station,
or the member's spouse gave up her job to move
with him) military service might have materially
affected the member and the SCRA 6% interest
limit could apply.
What if instead
of buying the car before he came on active duty,
SSG Smith left his car at home for his wife and
purchased a used car at his duty station. To do
so, he borrowed $4,000 at 9% interest. Since SSG
Smith took this debt
after
entering active duty the SCRA 6% interest limit
does not apply.
Need specific
legal advice?
If you think being called to active military
service has reduced your ability to meet your
financial obligations, contact your nearest
legal assistance office
to see if the SCRA applies.
Delay of Court
and Administrative Proceedings
A major change
provided by the SCRA is that it permits active
duty servicemembers, who are unable to appear in
a court or administrative proceeding due to
their military duties, to postpone the
proceeding for a mandatory minimum of ninety
days upon the servicemember's request. The
request must be in writing and (1) explain why
the current military duty materially effects the
servicemembers ability to appear, (2) provide a
date when the servicemember can appear, and (3)
include a letter from the commander stating that
the servicemember's duties preclude his or her
appearance and that he is not authorized leave
at the time of the hearing. This letter or
request to the court will not constitute a legal
appearance in court. Further delays may be
granted at the discretion of the court, and if
the court denies additional delays, an attorney
must be appointed to represent the
servicemember. (See Section 202, SCRA)
Termination of
Leases
Another
significant change provided in the SCRA, is
found in Section 305. The prior law only allowed
the termination of pre-service "dwelling,
professional, business, agricultural, or
similar" leases. The new provision in the SCRA
allows termination of leases by active duty
servicemembers who subsequently receive orders
for a permanent change of station (PCS) or a
deployment for a period of 90 days or more. The
SCRA also includes
automobiles
leased for personal or business use by
servicemembers and their dependents. The
pre-service automobile lease may be cancelled if
the servicemember receives active duty orders
for a period of one hundred and eighty (180)
days or more. The automobile lease entered into
while the servicemember is
on
active duty may be terminated if the
servicemember receives PCS orders to a (1)
location
outside
the continental United States or (2) deployment
orders for a period of one hundred and eighty
days or more. (See Section 305, SCRA)
Eviction for
Nonpayment of Rent
Although the SCRA
does not excuse soldiers from paying rent, it
does afford some relief if military service
makes payment difficult. Military members and
their dependents (in their own right) have some
protection
from eviction
under the Servicemembers Civil Relief Act
(SCRA), Section 301.
The landlord must
obtain a court order to evict a military member
or his/her dependents. The court must find the
member’s failure to pay is
not
materially affected by his/her military service.
Material effect is present where the service
member does not earn sufficient income to pay
the rent. Where the member is materially
affected by military service, the court
may
stay the eviction (
three months unless the court decides on a
shorter or longer period in the interest of
justice) when the military member or dependents
request it. There is no requirement that the
lease be entered into before entry on active
duty, and the court could make any other “just”
order under § 301 of the SCRA. The requirements
of this section are:
(1) The landlord is
attempting eviction during a period in which the
service member is in military service or after
receipt of orders to report to duty;
(2) The rented
premises is used for housing by the spouse,
children, or other dependents of the service
member; and
(3)
The agreed rent does
not exceed $2,400 per month.
Soldiers threatened with eviction for failure to
pay rent should see a legal assistance attorney.
(The amount is subject ot change in future years
and as of 2004 the ceiling is $2465.00)
Default
Judgment Protection
If a default
judgment is entered against a servicemember
during his or her active duty service, or within
60 days thereafter, the SCRA allows the service
member to reopen that default judgment and set
it aside. In order to set aside a default
judgment, the service member must show that he
or she was prejudiced by not being able to
appear in person, and that he or she has good
and legal defenses to the claims against
him/her. The servicemember must apply to the
court for relief within 90 days of the
termination or release from military service.
(See Section201, SCRA)
Life Insurance
Protection
The SCRA also
permits the servicemember to request deferment
of certain commercial life insurance premiums
and other payments for the period of military
service and two years thereafter. If the
Department of Veteran Affairs approves the
request, the United States will guarantee the
payments, the policy shall continue in effect,
and the servicemember will have two years after
the period of military service to repay all
premiums and interest. The SCRA increases the
amount of insurance this program will cover to
the greater of $250,000.00 or the maximum limit
of the Servicemembers Group Life Insurance. (See
Section 401, SCRA)
State Taxation
Clarification
The SCRA provides
that a nonresident servicemember's military
income and personal property are not subject to
state taxation if the servicemember is present
in the state only due to military orders., The
state is also prohibited from using the military
pay of these nonresident servicemembers to
increase the state income tax of the spouse.
Under prior law, some states did not tax the
nonresident servicemember directly, but did
include the nonresident servicemember's income
in the spouse's income, resulting in higher
taxes for the spouse. (See Section 511, SCRA)
Health
Insurance Reinstatement
The SCRA further
provides for the reinstatement of any health
insurance upon termination or release from
service. The insurance must have been in effect
before
such service commenced and terminated during the
period of military service. The reinstatement of
the health insurance is not subject to
exclusinons or a waiting period if the medical
condition in question arose before or during the
period of service, the exclusion or waiting
period did not apply during coverage, and the
medical condition has not been determined by the
Secretary of the Veteran Affairs to be a
disability incurred or aggravated by military
service. The reinstatement of health insurance
protection does not apply to a servicemember
entitled to participate in employer-offered
insurance (See rules regarding employer offered
health insurance care in the Uniformed Services
Employment and Re-employment Act). And finally,
the servicemember must apply for the
reinstatement of the health insurance within 120
days after termination or release from military
service. As always submit such request to the
insurance company in writing with a copy of the
orders for active duty and release from active
duty. (See Section 704, SCRA)
DefenseLINK
offers information on how to obtain
Soldier's and Sailors Certificates,
often required before a default judgment may
approved when suing a member of the military.
Presumably these certificates are still
applicable under the SCRA when signed by the
Secretary concerned.
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Soldiers’ & Sailors Civil Relief Act
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