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Servicemembers’ Civil Relief Act - What You Need to Know
October 20, 2020
Between the Civil War and 1940, the United States periodically had legislation that prevented lawsuits against soldiers and sailors during times of conflict. Then, the Soldiers’ and Sailors’ Civil Relief Act of 1940 was enacted to protect the millions of soldiers that were fighting in World War II. Since that time, the United States has consistently maintained laws that protect servicemembers. The Soldiers’ and Sailors’ Civil Relief Act of 1940 has been amended more than 19 times between 1940 and 2015 and is currently known as the Servicemembers’ Civil Relief Act, 50 U.S.C. §§ 3901-4043 (2015) (the “SCRA”) (previously located at 50 U.S.C. App. §§ 501-597b). The SCRA provides a myriad of protections for those fighting for their country in times of war and national emergency. Among other items, its provisions ease financial burden during those times so that servicemembers do not worry about issues at home while serving their country.
The SCRA’s protections cover:
  1. Full-time, “active duty” members of the five military branches - Army, Navy, Air Force, Marine Corps and Coast Guard;
  2. Reservist on federal active duty;
  3. Members of the Army National Guard or the Air National Guard on federal orders for more than 30 days (this does not include state emergencies); and
  4. Commissioned officers in active service of the Public Health Service or the National Oceanic and Atmospheric Administration.
In addition, some provisions of the SCRA also cover dependents of a servicemember: spouse, child, and any individual that the servicemember provides more than half of the person’s support in the preceding 180 days.
From a banking perspective, one of the most important features of the SCRA is its interest rate limitations. The SCRA limits the interest rate that can be charged on debt during active duty to 6 percent for debts incurred before military service. Any interest above the 6 percent threshold must be forgiven (not deferred). The 6 percent rate extends for one year after active duty for mortgages or deeds of trust. To obtain the 6 percent interest rate, however, the servicemember must actively make a request within 180 days after service ends to request the interest rate be reduced under the SCRA and provide appropriate paperwork to prove active duty, which is subject to being verified by the creditor.
The SCRA provides protection against defaults and provides for staying certain actions, including civil actions and child custody proceedings. Indeed, a plaintiff seeking default must file an affidavit with the court averring either that the individual is not on active service or that active duty service cannot be determined. To determine or confirm whether an individual is on active duty, there is a website maintained by the Defense Manpower Data Center that can be searched.
Under the SCRA, if a default is entered, a servicemember has up to 60 days after active duty ends to seek to set aside the default. Further, the SCRA provides for a stay of judgments, garnishments, attachments, etc. for 90 days after active duty terminates.  The stay may be entered by a court sua sponte or upon the request of a servicemember.
In addition, the SCRA prohibits evictions absent a court order; prevents deployment as the basis to decide or modify child custody issues; prohibits repossessions absent a court order; and places restrictions on foreclosures filed during, or within a year after, military service, as a foreclosure or sale “shall not be valid” unless there was a court order before the foreclosure or sale. The SCRA also contains provisions regarding assignments, leases, telephone service contracts, life insurance, taxes, health insurance, and even professional liability insurance.
The SCRA does not relieve servicemembers of their financial obligations; rather, it protects them from the potential problems that arise from their military service, including delayed communications, limited access to legal counsel, and an inability to travel for court appearances.
In addition to the SCRA on the federal level, most states have enacted a state version of the SCRA. Typically, those statutes provide additional protections and cover state national guard members and state emergencies.
Knowledge and awareness of the applicable SCRA provisions are important to ensure compliance and to prevent any future issues with judgments, garnishments, or other legal process.
Please contact us if you have any questions.
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