Military Services – Service Members
Civil Relief Act 2003

Since 2003, active duty military personnel have had a law on their side with regard to financial borrowing. The Service Members Civil Relief Act (SCRA) affords financial and legal protection to the borrower, whether it be for mortgage loans, credit card debt, or even auto loans. If the military member has been called up for active duty for more than 30 days, they must notify all lenders immediately. They must provide their active duty orders to the lender. At this time the lender is considered to be on notice. All interest payments must be reduced down to six percent and all pre-service debts that exceeded six percent must be forgiven.

The SRCA is a newer and better version of an old law: The Soldiers and Sailors Civil Relief Act of 1940. The new law states clearly, in Section 207, that “interest in excess of six percent per year … is forgiven”. The Act is a very powerful tool that assists active duty servicemen and women whose income is much less while on active duty. The law enables active duty personnel to devote all their energy to the defense needs of the Nation, while suspending judicial and administrative proceedings that would affect the civil rights of service members during their call to service.

A very important aspect of the law is that coupled with the reduction in interest rate is a reduction in the monthly payment. The service member is not required to keep the monthly payment the same, thereby paying more on the principal.

The SCRA provides other important relief measures to our service members:

  1. Tenants have the right to terminate their lease if they entered into the lease prior to beginning active service. If the lease was entered into during their active service, there are some protections as well. If the service member is deployed for a period of not less than 90 days, they retain the right to terminate the lease. They must give the landlord 30 days advance notice and rent must be paid up to date.
  2. Military personnel must continue to pay rent if the lease is not terminated. There is some protection from eviction; only the Court may order eviction. If the Court determines that the ability to pay rent has been affected, an eviction may be stopped for a period of at least three months. The agreed upon rent must not exceed $2,465 per month.
  3. Private life insurance policies cannot lapse, terminate, or be forfeited for nonpayment of premiums while the service member is on active duty, PLUS ONE YEAR.
  4. Wages or personal property may not be garnished or attached while the service member is on active duty. Any proceedings must be stayed or vacated, for the period of active duty PLUS UP TO 90 DAYS AFTER ACTIVE DUTY ENDS.
  5. Lenders should be put on notice: If your borrower is on active duty, your best option is to not file a lawsuit until his or her service has ended.

The Service Members Civil Relief Act is a welcome and much needed law that has expanded upon the rights and protections that Congress gave to the service men and woman during World War II. Our service members need to focus on their respective duties during deployment. The very last thing they should have to worry about is creditors at home.