The Department of Justice promotes financial security for servicemembers, recent veterans, and military family members through its Servicemembers Civil Relief Act ("SCRA") actions brought on behalf of the United States. The SCRA is a federal law that provides protections for military members as they enter active duty. It covers issues such as rental agreements, security deposits, prepaid rent, eviction, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosure, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments.
About the SCRA
Who Does the SCRA Protect?
The SCRA provides a wide range of benefits and protections to those in military service. Military service is defined under the SCRA as including: 1) full-time active duty members of the five military branches (Army, Navy, Air Force, Marine Corps and Coast Guard); 2) reservists on federal active duty; and 3) members of the National Guard on federal orders for a period of more than 30 days. Finally, servicemembers absent from duty for a lawful cause or because of sickness, wounds or leave are covered by the SCRA. Commissioned officers in active service of the Public Health Service (PHS) or the National Oceanic and Atmospheric Administration (NOAA) are also covered by the SCRA.
The SCRA also provides certain benefits and protections to servicemember dependents and, in certain instances, to those who co-signed a loan for, or took out a loan with, a servicemember. The term “dependent” includes a servicemember’s spouse, children, and any other person for whom the servicemember has provided more than half of their financial support for the past 180 days.
When Do SCRA Protections Begin?
For most servicemembers, SCRA protections begin on the date they enter active duty military service. For military reservists, protections begin upon the receipt of certain military orders.
What are Some of the Most Common Benefits and Protections Under the SCRA?
The SCRA’s benefits and protections include a 6 percent interest rate cap on financial obligations that were incurred prior to military service; the ability to stay civil court proceedings; protections in connection with default judgments; protections in connection with residential (apartment) lease terminations; and protections in connection with evictions, mortgage foreclosures, and installment contracts such as car loans. More detailed information on these benefits and protections appears below.
The SCRA's Interest Rate Cap
The SCRA limits the amount of interest that can be charged on certain financial obligations that were incurred prior to military service to no more than 6 percent per year, including most fees. In order to have the interest rate on a financial obligation such as a credit card or a mortgage capped at 6 percent per year, a servicemember must provide the creditor with a copy of his or her military orders and a written notice. The written notice and military orders must be provided to creditor within 180 days of the end of the servicemember’s military service
In response a creditor must forgive – not defer – interest greater than 6 percent per year. The creditor must forgive this interest retroactively. The creditor is also prohibited from accelerating the payment of principal in response to a properly made request for a 6 percent interest rate cap.
For mortgages, interest is capped at 6 percent during the entire period of military service and for one year after the period of military service. For all other obligations, interest is capped at 6 percent only for the duration of the period of military service.
A creditor may avoid reducing the interest rate to 6 percent per year only when a court determines that the servicemember’s ability to pay interest at rate higher than 6 percent per year is not “materially affected” by the servicemember’s military service.
The following types of financial obligations are currently eligible for the 6 percent SCRA interest rate benefit: credit cards; automobile, ATV, boat and other vehicle loans; mortgages; home equity loans; and student loans.
The SCRA's Protections Against Default Judgements
Even if you are a servicemember, if you are behind in your mortgage, your creditor (bank/lender) may foreclose upon that mortgage. However, in any civil court proceeding in which a defendant servicemember does not make an appearance, including a foreclosure that proceeds through a court process, a plaintiff creditor must file an affidavit with the court stating one of 3 things:
- That the defendant is in military service;
- That the defendant is not in military service; or
- That the creditor is unable to determine whether or not the defendant is in military service after making a good faith effort to determine the defendant’s military service status.
Please note that foreclosures can proceed in one of two ways, either judicially (through a court process), or non-judicially (without a court’s involvement). The way in which the SCRA treats the two types of foreclosure proceedings is very different, and states typically dictate which way foreclosures will proceed within their borders.
The SCRA states that for civil court proceedings where a defendant servicemember has not made an appearance and it seems that he or she is in military service, a court may not enter a default judgment against that defendant until after it appoints an attorney to represent the interests of that defendant servicemember. The court must stay a civil court proceeding for at least 90 days if that appointed attorney has been unable to contact the defendant servicemember, or if there may be a defense to the action that requires that the defendant be present.
The SCRA's Protections with Respect to Foreclosures that Do Not Go Through A Court Process (Non-Judicial Foreclosures)
Under the SCRA, during a period of military service, and for one year after a period of military service, a creditor must get a court order prior to non-judicially foreclosing on a servicemember’s mortgage. The mortgage at issue must have been taken out by a servicemember prior to entering military service in order for this protection to be applicable. A person who knowingly violates this provision of the SCRA may be fined and/or imprisoned for up to one year.
Courts have the ability under the SCRA, and a duty in certain instances, to stay a non-judicial foreclosure proceeding or adjust the payments, if the servicemember’s ability to meet the obligation is materially affected because of his or her military service.
The SCRA'sProtections With Respect To Installment Contracts And Repossessions
The SCRA states that a creditor may not repossess a vehicle during a borrower’s period of military service without a court order as long as the servicemember borrower either placed a deposit for the vehicle, or made at least one installment payment on the contract, before entering military service.
The SCRA's Protections With Respect To Residential Lease Terminations
With respect to residential apartment leases, the SCRA requires that the premises be occupied (or are intended to be occupied) by a servicemember or a servicemember’s dependent(s). Additionally, the lease must either be executed by a person who later enters military service, or is in military service and later receives permanent change of station (PCS) orders or deployment orders for a period of at least 90 days. To terminate a residential lease, the servicemember must submit a written notice and a copy of his or her military orders – or a letter from a commanding officer – by certain methods to the landlord or landlord’s agent.
If a servicemember pays rent on a monthly basis, once he or she gives proper notice and a copy of his or her military orders, then the lease will terminate 30 days after the next rent payment is due.
Waiver Of Rights Under The SCRA
Any of the rights and protections provided for in the SCRA may be waived. For contracts, leases (including apartment leases) and mortgages, all modifications, terminations and cancellations require a written waiver of rights. Such written waivers are effective only if executed during or after the relevant period of military service. Written waivers must be in at least 12 point font. In order to be effective, the written waiver must be its own document.
How Does The Department Of Justice Enforce The SCRA?
Under the SCRA, the Attorney General is authorized to file a federal lawsuit against any person (or entity) who engages in a pattern or practice of violating this law. The Attorney General may also file such a suit where the facts at hand raise “an issue of significant public importance.” When the Attorney General files a lawsuit under the SCRA, he has the authority to seek monetary damages on behalf of individual servicemembers. The Attorney General also has the authority to seek civil penalties, equitable relief, and declaratory relief.
How Do I File An SCRA Complaint With The Department Of Justice?
You should contact your nearest Armed Forces Legal Assistance Program office to see if the SCRA applies. Dependents of servicemembers can also contact or visit local military legal assistance offices where they reside. Please consult the military legal assistance office locator for each branch of the armed forces.
In order to have your SCRA case reviewed by the Department of Justice (“Department”), you must first seek the assistance of your military legal assistance office. If that office cannot resolve the complaint, it may choose to forward the complaint to the Department. The Department then will review the matter to determine whether Department action is appropriate.
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