Navigating Financial Burdens with the Servicemembers Civil Relief Act (SCRA)
And the California Military and Veterans Code

Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act provides various forms of relief to active duty servicemembers, including National Guard and reserve members, and their families, when their military duties “materially affect” their ability to fulfill a legal obligation.

Who qualifies for SCRA Relief?

Active duty members of all branches (Army, Navy, Air Force, Marine Corps, Coast Guard)

• Reservists on federal active duty for over 30 days
• National Guard members on federal orders for over 30 days
• Servicemembers on authorized leave due to illness, injury, or other reasons
• Public Health Service (PHS) and National Oceanic and Atmospheric Administration (NOAA) commissioned officers

What protections does the SCRA offer?

• Reduced interest rates: Cap interest rates on certain pre-service debts (loans, credit cards) at 6% while on active duty and for one year after discharge.
• Foreclosure and repossession protection: Creditors need court orders before foreclosing on mortgages or repossessing vehicles obtained before service.
• Lease termination: End residential leases early without penalty upon deployment or permanent change of station orders (lasting at least 90 days).
• Eviction protection: Evictions require court orders and consideration of your military service.
• Tax relief: Defer tax payments or penalties incurred during active duty.
• Civil court protection: Get appointed attorneys if sued and courts may delay proceedings while on active duty.

California Military And Veterans Code (CMVA)

The California Military and Veterans Code is similar to the SCRA but it provides an added layer of protection to California National Guard members and other California militias in addition to the protections under the SCRA.  

Under both the SCRA and CMVC, any relief provided to the servicemember is based upon the idea that servicemember’s military service may “materially affect” their ability to comply with a pre-existing legal obligation. 

In most situations, the relief available to servicemembers and their family is not automatic and require the servicemember to provide certain information to the party they are seeking relief from and relief is determined on a case-by-case basis.  

Additionally, it should be noted that any relief that may be granted is limited to a certain period of time.  For example, if a National Guardsman is activated for a period of one year, and the Guardsman meets the qualifications for a deferment of their mortgage payment, that period of deferment for the mortgage payments is the lessor of 180 days or the period of active duty plus 60 days.  Under this example, the deferment would only be for 180 days out of the one year activation period.  

Protections under the CMVC

Reduction of Interest Rate on Pre-Service Debt:  interest rates on credit cards, installment contracts, mortgages, or other obligations incurred before you were called to active duty (except federally insured student loans) are limited to six percent (6%) during your period of active service. Any interest above the 6% amount is forgiven.

Termination of Residential or Automobile Leases:  you must provide written notice of termination and a copy of your military orders. If you are terminating a motor vehicle lease, you must return the vehicle within 15 days of the notice.

Termination of Landline or Cell Phone Contracts: To take advantage of these laws, you must deliver notice of termination and a copy of your military orders, and tell the service provider the date you want the service to terminate. This notice must be sent via certified mail, return receipt requested. Any mobile devices must be returned to the service provider.

Deferral of Payments for Deployments:  In addition to any other benefits provided by law (such as reduction of interest rates to 6%), the law allows you to “defer” (delay without interest or penalty) payment on certain debts and obligations for as long as 180 days. The law applies only to obligations you incurred before you were called to active duty. (You cannot defer or delay obligations you enter into while on active duty. For example, you will not be allowed to “defer” auto loan payments on a car you purchased while on active duty)

1. Deferrable Obligations

• • Credit card payments.
  • Retail installment contracts (for example, furniture or appliances contracts)
  • Revolving charge accounts (credit cards)
  • Mortgages or deed of trust payments
  • Up to two automobile loans
  • Auto leases (the company will extend the term of the lease by the period of the deferral)
  • Property taxes and assessments on your primary residence
  • Obligations owed to a utility company

1. Required Notice

To take advantage of this benefit, you must send each company that you want to defer payments to:

(1) A letter signed by you, under penalty of perjury, requesting a deferral of the financial obligation you have. Note that deferral is only of amounts due after this notice. 

(2) If asked by the lender you must provide proof that your regular employer does not provide you continuing income, which, together with your military pay, exceeds 90 percent of the amount you earned before the call to active duty. (Note: If your regular employer does provide you with such continuing income, you will not be eligible for the delay or deferral).

Defining “Materially Affected” under the SCRA and CMVC

While “materially affected” is not strictly defined by a dollar amount or formula, it is a legal standard interpreted on a case-by-case basis, wherein the servicemember’s military duty has caused a significant, adverse change in their financial position or ability to appear in court. 

A significant adverse financial impact means the servicemember and their family have less overall income based upon the servicemember’s change in military duty or that they are facing higher expenses due to the change in military duty (e.g. maintaining two households).

A servicemember’s inability to appear or defend themselves in a legal proceeding because of their military duties (e.g. due to deployment) may also be determined to “materially affect” their ability to comply with a legal obligation.  

If you believe your military orders will “materially affect” your ability to perform legal obligations, then you should seek legal assistance under the SCRA or CMVC to determine what relief may be available to you and your family.  Such legal assistance is often available to you through the command’s legal assistance office.