U.S. Military? Know Your Rights
U.S. military personnel have special privileges under the Servicemembers Civil Relief Act (SCRA) concerning their debt. Basically the SCRA allows certain active military personnel and, in a few cases, nonservice members, to suspend or postpone certain civil obligations in order to focus attention on defending the United States without worrying about financial concerns at home. Below is a comprehensive explanation of the SCRA and its key provisions.
These military personnel qualify for SCRA protection:
- Army, Navy, Air Force, Marine Corps and Coast Guard personnel engaged in active duty.
- National Guard members engaged in active federal service.
- Commissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration engaged in active service.
- National Guard members called to active duty for more than 30 days to respond to a national emergency.
- Reservists ordered to report to active duty and people ordered to report for induction (limited protections of Titles I, II and III).
- Citizens of the United States serving with the forces of a nation with which the United States is allied in the prosecution of the war or military action.
Additional qualifiers for SCRA protection:
- Nonservice members who are primarily or secondarily liable with a service member on an obligation or a liability.
- Nonservice members who are dependents of military personnel, including a service member’s spouse, children and any individual for whom the service member provided more than one-half of the person’s support for 180 days immediately preceding an application for relief under the SCRA.
The length of the SCRA protection.
Most SCRA protections last from the day you enter active duty to the day you are released from active service; however, some provisions allow protections to last beyond the end of active duty.
The SCRA can only be exercised while you are engaged in active duty. Active duty includes full-time training; annual training duty; and attendance at a service school while in active military service.
Generally, the SCRA applies only to obligations and liabilities you incurred prior to entering active duty and does not apply to obligations or liabilities incurred while you are engaged in active duty. However, some sections of the SCRA may affect your obligations incurred during active duty.
The SCRA applies to the United States, the U.S. territories, and the District of Columbia. It also applies to all proceedings commenced in the United States, its territories and the District of Columbia. However, the SCRA does not apply to criminal proceedings.
Burden of proof is on you.
In order to gain full protection under the SCRA, you may be required to prove that your military service has had an effect on your ability to pay your outstanding debt. If you are earning less money than you were when employed as a civilian, then you might need to show how this change in circumstances has altered what you can afford to pay toward your debts.
Giving up your rights under SCRA.
You may waive the protections and/or rights under the SCRA by written agreement that is signed during or after your period of active military service. However, a creditor cannot force or require you to enter into such an agreement and these rights cannot be waived prior to entering active duty.
Important facts about the SCRA
Future financial transactions:
A lender, creditor or insurer is prohibited by law from taking any adverse actions against you because you exercised your rights under the SCRA.
A court cannot enter a default judgment against you unless the creditor notifies the court that you are engaged in military service. If you are actively serving, the court must appoint an attorney to represent you before the default judgment is entered.
Stay of proceedings:
You may apply for a stay – or delay – to any civil action in which you are involved while actively serving or within 90 days after your release from active duty.
Statutes of limitation:
The SCRA stops the running of statutes of limitation during the period you are actively serving until you are released from active duty. However, the statutes of limitation for criminal matters is not stalled during active military service.
Six percent cap on interest rates:
All of your obligations or liabilities incurred prior to entering active duty with interest rates higher than six percent must be reduced to an interest rate that doesn’t exceed six percent per year. This reduction in interest rates only lasts while you’re actively serving. But it does include interest on service charges, renewal charges and fees.
Neither you nor your dependents may be evicted from your residence while you are actively serving, unless a court orders your eviction. A landlord can apply to a court for your eviction while you are actively serving but you may request a stay – or delay – of the proceedings by showing that your active service affects your ability to pay your rent. The court is required to grant your stay.
Installment contract for property purchase:
Creditors are not allowed to terminate your contract or repossess your property on an installment contract for nonpayment or breach that takes place before or during your active military service. In order to apply this right, you must have made a payment prior to entering military service.
Unless a creditor has a court order, the creditor is not allowed to foreclose on your mortgage on real or personal property while you are an active military service member. The mortgage must have originated prior to entering active duty and must be still owned by you or your dependents at the time you seek relief under the SCRA. Real property includes your rights in land or real estate. Personal property includes all other property.
Terminating home or vehicle leases:
Under certain circumstances, you may terminate your auto or housing lease obligations that exist at the time you were called into active duty. However, the lease can only be terminated after the service member enters active duty.
This is a catch-all provision that allows you to apply to a court for relief from any obligation or liability incurred prior to entering active military service. The obligation does not need to be in default for you to apply for relief.
Important Resource for Vets: ARMing Heroes Helping Military Veterans on their Return Home
Military veterans and their families now have a new resource called ARMing Heroes to help navigate their financial challenges. ARMing Heroes (http://www.armingheroes.org ) is a 501 (c)(3) non-profit organization that serves the needs of U.S. military veterans, their spouse and children, by linking them with employment, training, mentoring, credit and financial counseling and other resources made possible by the ARM industry. For more information on ARMing Heroes, or to make a contribution, please visit www.ARMingheroes.org.