While members of the U.S. military are serving on active duty, they may have difficulty keeping up with their financial and legal obligations at home. As a result, the federal government has enacted the Servicemembers Civil Relief Act (SCRA) to protect all full-time active duty members of the army, the navy, the air force, the marines, and the coast guard. The law also covers members of the National Guard who are serving on federal orders for more than 30 days, reservists who are on active duty, and certain other officials, such as commissioned officers of the Public Health Service.
One of the most notable protections offered by the SCRA is the rule limiting a lender’s right to foreclosure. If a military servicemember obtained a mortgage before going on active duty, a lender cannot foreclose on their home while they remain on active duty and for one year afterward. There are exceptions if this protection is waived or if a court orders the foreclosure. For example, a court might allow a lender to foreclose on a property if the lender can show that serving on active duty was not the reason why the servicemember failed to keep up with payments or contest the foreclosure action in court.
Protections for Tenants
If you signed a residential or commercial lease or rental agreement before starting active military service, you can get out of the lease without a penalty. You must provide written notice of your intent to cancel the lease, as well as your military orders. If you have a lease, your tenancy will end on the last day of the month after the month when the notice is delivered. If you have a rental agreement on a monthly basis, the tenancy will terminate 30 days after the next day that rent is due, unless state law allows the tenancy to terminate sooner. The SCRA overrides any notice provisions in leases or rental agreements, or state laws that require longer notice periods.
If dependents such as your spouse and children are living in a rental unit while you are performing military service, the SCRA may provide for a 90-day stay of any eviction based on non-payment of rent. The rent must be below a certain monthly amount, which increases annually based on inflation and cost of living. You should make sure to tell your landlord when you go on active duty. The landlord still can serve a termination notice based on non-payment of rent, but they will be required to tell the court that you are on active duty. To decide whether the eviction should proceed, the judge will need to determine whether you were unable to pay the rent because of your military service.
Protections from Debt Collection
The interest rate on a debt can mount quickly if the debt goes unpaid. A servicemember on active duty will have their interest rate on any debt or loan capped at 6 percent while they remain on active duty. (There is an exception for federal student loans taken out before August 14, 2008.) If the debt is based on a mortgage, the interest cap will extend one year beyond this period. The loan must have been taken out before the period of active duty started.
Protections from Judgments and Repossessions
In general, you may be able to get a stay of a civil lawsuit in which you are a defendant. If you are considering bringing a lawsuit, the statute of limitations will be tolled during your active service, which means that it will not count toward the period in which you can file the lawsuit.
If you are a defendant in a lawsuit, you may fail to respond if you are on active duty. This could result in a default judgment against you, but the plaintiff must inform the court that you are on active duty. The court cannot enter a judgment until either the servicemember or their attorney appears in court, or until the court appoints an attorney to represent the servicemember. Actions by the court-appointed attorney are not binding on the servicemember if they are unable to find the servicemember. A servicemember can apply to reopen a case in which a default judgment was entered against them while they were on active duty, or within 60 days afterward. The court must grant this motion if it concludes that the servicemember has a legitimate defense and that they were prevented from making the defense because of their military service.
Finally, something that you purchased on an installment contract before going on active duty cannot be repossessed without a court order. A servicemember who is on active duty can ask for a stay of repossession proceedings if the matter goes to court. They can obtain a stay if the court concludes that their active service has prevented them from paying the debt.