Military servicemembers can be rest-assured their rights are protected upon entering active-duty assignments under the Servicemembers Civil Relief Act (SCRA). Such rights work to defer or reduce financial and legal obligations, relieving the burdens at home during military service.
The SCRA is a federal law expanded from its original conception, the Soldiers’ and Sailors’ Civil Relief Act of 1940, by the Civil Rights Division Department of Justice. It has since been amended from the 2003 version. Due to the complexities of the SCRA, it is recommended to consult a Legal Assistance Office to determine eligibility and protection.
SCRA Eligibility
Servicemembers are eligible to receive SCRA benefits the day they receive active-duty orders and coverage typically ends 30-180 days after date of discharge.
Military members must be active-duty members, reservists and National Guard who are activated, which include the military branches: Army, Marine Corps, Navy, Air Force and Coast Guard. Commissioned officers in active service of the Public Health Service and the National Oceanic and Atmospheric Administration are also covered. Note: Space Force became the sixth official U.S. military branch in December 2019.
Protections and Benefits
There is a wide range of coverage available to active-duty military. Conditions do apply in certain circumstances. It’s important to obtain professional advice.
Read for more category details below:
- Capped credit card interest rates — Reduction of interest rates to 6% on incurred debts before the active-duty start date. Interest rates apply to credit card debt, car loans, student financial aid, business obligations and other debts. Adverse credit reports are not valid for missed payments during the time of service.
- Business Owners — SCRA protects small business owner’s nonbusiness assets from creditors during active-duty.
- Termination of: (provided notice of written orders)
- Rental lease agreements — You may end a lease you signed before orders. Orders must last a duration of 90 days.
- Automobile leases — You may end a lease you signed before orders were placed upon deployment. Orders must last a duration of 180 days.
- Phone service — End a contract during active-duty. Includes phone, internet, and cable. Orders must last a duration of 90 days.
- Foreclosures and Repossessions — Foreclosures and seizure of properties may be postponed for the inability to make payments unless seized by a valid court order.
- No penalty deferral of income taxes — IRS must honor deferral of state and local taxes owed during your military service (if the ability to pay is materially affected by active-duty service.)
- Eviction prevention — Protected tenant’s rights if your ability to pay rent is materially affected by your military service. Subject to eviction if rent is higher than $3991.90 per month as of 2020. Amount varies from year-to-year. Storage facilities may not sell your belongings for failure to pay during military service unless given a court order.
- Civil proceedings — The court must postpone at least 90 days or grant representation if you cannot be present regarding civil cases. This includes family law proceedings such as divorce and child custody cases.
- Insurance Protection — Limitations of coverage, increased premiums, and termination are prohibited during active-duty orders.
- Voting rights — Voting rights remain unaffected for you and your spouse in your home state.
Receiving Benefits from Lenders
To receive SCRA benefits, servicemembers must provide lenders with documentation of active-duty orders or an official letter from the commander.
Verification of status may vary from lender-to-lender, but lenders typically require notification anywhere from 30 to 180 days to establish coverage.
The document should contain the following information:
- Account number
- Start date of activation
- Request or invocation of benefits pursuant to the SCRA, and
- A copy of active-duty orders. SCRA templates can be found at on-base legal offices.
Credit and Loans Benefits
Military members entering active-duty service are eligible for the SCRA 6% interest rate cap on all debts incurred prior to entry into active-duty service. Interest in excess of 6% must be forgiven by creditors and protection coverage lasts the duration of active-duty service.
SCRA loan interest caps include student loans, credit cards, mortgages and car loans.
Lease Benefits
Servicemembers can immediately terminate lease properties occupied by you or your dependents. Properties covered under SCRA include residential, professional, business and agricultural leases.
Notification can be provided in the form of active-duty orders or a letter from the commander. Oral notification does not count as an official notification and you will not receive SCRA protection.
Termination of the property lease guarantees any pro-rated advanced rental payment and return of the security deposit following move-out dues.
SCRA applies for military members who:
- You enter active duty during the lease period
- You signed a lease before active-duty and receive orders or deploy for a continuation of 90 days or more.
Month-to-month leases — The lease terminates effective 30 days after the first date on which the next rental payment is due given appropriate notification to the landlord.
Example:
- Rent is due on the first day of each month.
- The landlord notified on January 1st.
- Rental payment is due on February 1st.
- The effective date of termination would be March 1st, 30 days after the rental payment due date.
All other leases — Effective termination date is the last day of the month after notification is provided to the landlord.
Example:
- The landlord is notified on January 25th.
- The effective date of termination would be March 31st.
Auto Benefits
Military members may immediately terminate automobile leases under certain circumstances:
- If the servicemember enters an auto lease before the active-duty start date.
- Active-duty service must last for a duration of 180 days.
Additionally, a vehicle may not be seized for repossession for failure to make payments during active-duty orders if you made a deposit or at least one payment before activation. Lenders may collect if a court order is received.
Military Spouse Protection
MSRRA became law in November 2009, and changed some basic rules of taxation that could affect servicemembers and their spouses. Under the new law, a military spouse who is present with a service member (SM) on active-duty orders can choose to pay tax on wages earned in their domicile state (permanent residence) or their spouse’s state of residence.
Note: The spouse would have to pay taxes to the state of domicile if the laws of that State required such payments.