Paycheck Chronicles

Servicemembers Civil Relief Act

Throughout the conversations on a possible government shutdown, I've heard several people mention the protections afforded under the Servicemembers Civil Relief Act (SCRA.)  The SCRA provides military members with a wide variety of legal protections, some of which might be helpful if the military pay is delayed.

The SCRA was signed into law in 2003 and replaces the previous Soldiers and Sailors Civil Relief Act.  Certain provisions were updated, rewritten and renamed.  The SCRA covers active duty military members and activated reservists and members of the National Guard who are serving on federal orders or Title 32 state orders that last for more than 30 days.

The SCRA is a long and sometimes complicated document, but I've summarized the key points below.

The major protections of the SCRA include:

  1. Termination of Residential Leases
  2. Automobile leases
  3. Evictions from Leased Housing
  4. Installment Contracts
  5. Six Percent Interest Rate
  6. Court Proceedings
Termination of Residential Leases:

Under the SCRA, a servicemember may terminate a residential lease for three reasons:  entering active duty, permanent change of station (PCS) orders, or orders to deploy for a period of not less than 90 days.  The service member's name must be on the lease for the protections of the SCRA to apply.

The service member must put their request to break the lease in writing and must include a copy of their orders.  The earliest termination date for a lease is 30 days after the date on which the next regularly scheduled payment is due.  If you submit your request in March, and the next rent is due on 1 April, then you will be responsible for the lease for 30 days from 1 April.  Please keep in mind that these are the minimum protections that are guaranteed if there is no military clause in your lease.  If the military clause written into your lease gives you more protections, such as 30 days from date of notice, then that is the important part for you.

Automobile Leases

The automobile lease portions are very similar to the residential lease portions.  A service member is able to terminate a lease if they begin active duty, receive PCS orders, or deploy for 180 days or longer.  The primary differences are that the active duty service or deployment must extend beyond 180 continuous days.  For example, a reservist who attends basic training and a technical school for 120 days would not be able to use the SCRA to terminate his/her automobile lease.

To terminate the lease, the service member must make the request in writing with a copy of the orders attached.  The service member must then return the vehicle to the lessor within 15 days of delivering the notification.

The leasing company is prohibited from charging an early termination fee.  However, the lessee is still responsible for any taxes, title and registration fees, reasonable excess wear, and excess mileage fees.

Evictions

Service members may seek protection from eviction under the SCRA.  The leased property must be occupied by the service member and/or dependents as a residential dwelling.  The servicemember or dependent who has received an eviction notice must submit a request to the court to be protected under the SCRA.  If the court determines that the service member or dependents are unable to pay their rent on time as a direct result of the service member's military duties, they may order that the eviction be postponed for up to three months.

Installment Contracts

If a service member has entered into an installment contract before entering active duty, and has made at least one on-time payment prior to entering active duty, a creditor may not repossess the property while the service member is on active duty without seeking a court order.

Six Percent Interest Rate

If a service member has debts that were incurred prior to entering military service, and if the service member's military service has directly affected their ability to pay those debts, the service member can have the interest rate capped at six percent (6%) for the duration of the service member's military service.

While this portion of the act requires that the service member's ability to pay be directly affected by their military service, it is vastly easier for a creditor to just lower the interest rate than to go to court and establish that the military service has not affected the service member's ability to pay. The service member should provide to the creditor written notice and a copy of their military orders.

Upon receipt of the notice, the creditor should reduce the interest rate effective the first day of active duty.  This is true even if the service member makes the request at a later time.

The creditor may not tack the extra interest back on when the service member leaves the military.  In addition, the amount of the monthly payment must be reduced by the amount of the saved interest.

In addition, you will find many creditors who will voluntarily lower the interest rate on all debt, as a courtesy to the service member.  This is not a direct result of the SCRA protections, but rather a generous gesture on the part of those creditors.

Court Proceedings

If a service member is a defendant in a civil proceeding, the service member may ask for a postponement if the service member submits a statement explaining how their current duty requirements prevent them from appearing, and submits a statement from their commanding officer explaining how their current duty requirements prevent them from appearing.

If a default judgment is entered against a service member during the service member's period of military service, the court must agree to reopen the judgement for the purpose of allowing the service member to defend themselves if it is clear that the service member was unable to defend themselves due to their military service and they have a legal defense to the action.

As far as I can tell, the only portion of the SCRA that could have any bearing on a military pay delay is the protections against eviction.  None of the other provisions seem to apply to this situation.

UPDATE:  I am getting a lot of feedback that there are other provisions in the SCRA that apply to this situation.  I can't find them, and I would love to get guidance on where it is located.  My favorite SCRA document is this one published by the Judge Advocate General's School.  Please, please, read and help us all learn.

More UPDATE:  Aha, I've found it!  It is in section 523, which you can see here in Title II.  It states

If a servicemember fails to perform an obligation arising under a contract and a penalty is incurred arising from that nonperformance, a court may reduce or waive the fine or penalty if-- (1) the servicemember was in military service at the time the fine or penalty was incurred; and (2) the ability of the servicemember to perform the obligation was materially affected by such military service.
I guess that maybe there is something to it.  I wonder if the creditors will be reasonable, or if they will make the service members petition the court to get such relief. You learn something new every day, and I've learned a ton this week. Show Full Article

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