Service Members Civil Relief Act
The Soldiers' and Sailor' Civil Relief Act (SSCRA) has recently changed and is now the Servicemember's Civil Relief Act (SCRA). The SCRA is a federal law that updates and expands all military members important financial and legal rights as they enter active duty or are deployed to new duty stations.
What happens if you are on Active Duty, or you're a Reservist/Guard member called to Active Duty, but you still have matters to attend to back home? What if you're overseas and can't make your credit card or mortgage payments? What if you have issues outstanding in a civil court?
The recently enacted Servicemember's Civil Relief Act (SCRA) expands and improves the former Soldiers' and Sailors' Civil Relief Act (SSCRA). The SCRA provides a wide range of protections for individuals entering, called to active duty in the military, or deployed servicemembers. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers. A few examples of such obligations you may be protected against are:
outstanding credit card debt
mortgage payments
pending trials
taxes
terminations of lease.
In addition the new law:
Expands current law that protects servicemembers and their families from eviction from housing while on active duty due to nonpayment of rents that are $1,200 per month or less. Under the new provisions this protection would be significantly updated to meet today's higher cost of living - covering housing leases up to $2,400 per month - and then be adjusted annually to account for inflation.
Provides a servicemember who receives permanent change of station orders or who is deployed to a new location for 90 days or more the right to terminate a housing lease.
Clarifies and restates existing law that limits to 6 percent interest on credit obligations incurred prior to military service or activation, including credit card debt, for active duty servicemembers. The SCRA unambiguously states that no interest above 6 percent can accrue for credit obligations (that were established prior to active duty or activation) while on active duty, nor can that excess interest become due once the servicemember leaves active duty - instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.
Updates life insurance protections provided to activated Guard and reserve members by increasing from $10,000 to $250,000 the maximum policy coverage that the federal government will protect from default for nonpayment while on active duty.
Prevents servicemembers from a form of double taxation that can occur when they have a spouse who works and is taxed in a state other than the state in which they maintain their permanent legal residence. SCRA will prevent states from using the income earned by a servicemember in determining the spouse's tax rate when they do not maintain their permanent legal residence in that state.
Eligibilty:
The SCRA covers all Active Duty servicemembers, Reservists and the members of the National Guard while on active duty. The protection begins on the date of entering active duty and generally terminates within 30 to 90 days after the date of discharge from active duty.
Here are frequently asked questions and answers on some rights and benefits available under the Servicemember's Civil Relief Act (SCRA). This information is for personnel in the Active Duty and Reserves or National Guard who are activated to serve on active duty.
Most SCRA protection begins the day you receive your orders to active duty or deployment. As a practical matter, you should be ready, and expect to present a copy of those orders to whomever you ask for some right or benefit under the Act.
You may be entitled to have the interest rate on some of your loans reduced to 6% for the time you are on active duty. There are a number of special requirements. You need to talk to a Legal Assistance Attorney to ensure you are eligible. You may be eligible if you and your loan meet the following conditions:
- You took out the loan during a time when you were not on any form of active duty in any branch of the military.The interest rate is currently above 6% per year.
- Your military service affects your ability to pay the loan at the regular (preservice) interest rate. Generally this requirement means that you make less money in the military than you made as a civilian. There are some special legal issues here - you should be ready to talk to your Legal Assistance Attorney about your entire financial situation.
- You notified the lender.
If you have a lease for a house, apartment, or even a business location, you may be able to get out of the lease when you come on active duty. Here are the requirements:
- You originally signed your lease when you were not on any form of active duty.
- You have received your orders to active duty:
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You gave written notice to your landlord that you want to terminate yourlease.You will still have to pay rent for a short while. Your landlord can charge you rent for 30 days after the date your next rent is due, after the date you give your written notice. Example: You give notice on 15 December. Your next rent is normally due 1 January. The landlord can make you pay rent until 31 January. The key is to get the written notice in the landlord's hands just as soon as possible.
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If you are a party (one of the people suing or being sued) in a civil case (not a criminal case), your commander can ask the judge to stay or temporarily delay the proceedings until you can appear. Generally, your commander will have to show that military duty is keeping you from going to court. This is a tricky legal area - it is recommended that you have your civilian lawyer contact a Military Legal Assistance Attorney to discuss the best way to proceed in your case.
If you are a party (one of the people suing or being sued) in a civil case (not a criminal case), your commander can ask the judge to stay or temporarily delay the proceedings until you can appear. Generally, your commander will have to show that military duty is keeping you from going to court. This is a tricky legal area - it is recommended that you have your civilian lawyer contact a Military Legal Assistance Attorney to discuss the best way to proceed in your case.
As long as you are on active duty, your health care needs are covered by the Military's medical facilities. In addition, your family members will become eligible for coverage. You may want to suspend your civilian coverage. If you do this, the SCRA will require your civilian insurance company to reinstate your coverage when you get off of active duty. They have to write you a policy. They cannot refuse to cover most "pre-existing conditions".
If your home state taxes military pay, you will have to pay those taxes. If you get assigned to another state, you will still legally be a "domiciliary" of your home state. The state to which the military assigns you cannot tax your military pay. If you moonlight, they can tax that pay - just your military pay is exempt.
Servicemembers Civil Relief Act (PL 108-189 (H.R. 100), signed by President on 19 Dec 03)Automobile Leases: Auto lessee who enters 180+ days AD or already on AD and receives OCONUS PCS orders or 180+ day deployment orders may terminate automobile leases without early termination penalties.
Repossession Protection: Prevents personal property (such as automobiles) from being repossessed without a court order.
Automatic Stay Of Court Proceedings: Automatic 90-day stay in civil proceedings (including tax collection proceedings) to 90 days after discharge/release from AD, upon member's (or commander's) written request. Further, if additional stay is subsequently requested but denied, court must appoint counsel to protect member while on active duty.
Re-Opening Of Default Judgments: Provides possibility of members reopening default judgments rendered against them when the failure to appear was caused by military service. Protections now apply to administrative proceedings, such as licensing and zoning matters, which are much more common today.
Guard & Reserve: For Guard and Reserve members called to AD, redefines "military service" to include active service by members of the National Guard for more than 30 consecutive days; and, Reserves are specifically covered upon receipt of AD orders until AD report date, thereafter covered just as RegAF on AD.
Eviction Protection: Protects members on AD and families from eviction by requiring a court order to evict for nonpayment of rent up to $2400 per month (with annual upward adjustment of $2400 figure for inflation to meet today's higher cost of living.) Court must grant 90-day stay upon member's request if military service materially affects member's ability to pay rent.
Lease Termination: Provides person who enters AD or, while on AD and receives PCS orders or is deployed to a new location for 90+ days the right to terminate a housing lease.
6% Interest Cap Strengthened: Unambiguously bars interest above 6% for pre-AD credit obligations (including credit cards) while on AD, nor can excess interest become due when member leaves active duty - portion above 6 percent is permanently forgiven. Monthly payment must be reduced by the amount of interest saved during the covered period. Letter to creditor
Life Insurance Default Protection: Updates life insurance "lapse" protections provided to activated Guard and reserve members by increasing from $10,000 to $250,000 the maximum policy coverage that the federal government will protect from default for nonpayment of premiums while on active duty, requires an application to the insurer & copy to the VA.
State Income Tax Protection: Prevents a state from taxing the non-resident servicemember's military income earned while in the state OR counting that military income in any fashion when determining the working spouse's tax liability on income earned in that state, when member and spouse do not claim legal residence in that state.
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