The Servicemembers Civil Relief Act (SCRA) was established in 2003 to alleviate financial stress on service members during periods of military service. This federal law provides protection and benefits related to various financial obligations, such as rental agreements, mortgages, automobile leases, life and health insurance, and even tax payments. Here’s a closer look at how the SCRA works and how it might help service members facing financial challenges.

What is the SCRA?

If you’re a service member with loans or financial obligations—such as mortgages, car loans, or student loans—with interest rates above 6%, or if you’ve faced repossession or foreclosure while on active duty, the SCRA may offer relief. This law is specifically designed to ease the financial burden on military personnel during their service.

Who Qualifies for SCRA Benefits?

The SCRA applies to the following service members:

• Full-time active duty members of the Army, Navy, Air Force, Marine Corps, and Coast Guard.
• Reservists on federal active duty.
• National Guard members on federal orders for more than 30 days.
• Servicemembers absent from duty due to lawful causes, sickness, or leave.
• Commissioned officers in active service with the Public Health Service (PHS) or National Oceanic and Atmospheric Administration (NOAA).

Key Benefits Under the SCRA

1. 6% Cap on Interest Rates

One of the primary benefits of the SCRA is the cap it places on interest rates. If a service member took on loans before joining the military, the interest rate is legally capped at 6%. This reduction includes not only loan interest but also fees or service charges. In some cases, this rate reduction can be applied retroactively, meaning service members may receive credit for interest already paid above the 6% threshold.

To take advantage of this benefit, service members must provide written notice to their creditors within 180 days of their release from active duty.

2. Protection Against Foreclosure, Default Judgments, and Repossessions

The SCRA offers significant protection if a creditor seeks a default judgment. Courts are required to appoint an attorney for the service member if they are unable to respond due to active duty. In foreclosure cases involving mortgages that originated before military service, creditors must obtain a court order to proceed. Similarly, repossessions of vehicles tied to loans taken out before service require a court order if the service member made a down payment or initial installment before joining.

3. Ability to Terminate Rental Leases

Service members who receive permanent change of station (PCS) or deployment orders for at least 90 days can terminate residential rental leases. Written notice, along with a copy of the military orders, is required. The lease termination takes effect 30 days after the next rent payment is due. Additionally, in the event of a service member’s death while on active duty, the spouse has the right to terminate the lease within one year.

4. Protection from Property Liens

The SCRA protects service members from property liens without court approval. For example, if a service member falls behind on rent for a storage unit, the facility owner cannot legally sell the contents of the unit without a court order. This protection extends during the period of military service and for 90 days after.

Next Steps

If you’re a service member or know someone facing financial challenges due to military obligations, it’s essential to understand the protections offered by the SCRA. From interest rate reductions to safeguarding against foreclosures and repossessions, this law is designed to ensure that service members can focus on their duties without the added strain of financial concerns. Be proactive in reviewing your rights under the SCRA to secure the financial relief you may be entitled to.