Disclaimer: The information contained herein is strictly provided as information

only. If you think that you have rights under the SCRA that may have been

violated, or that you are entitled to be shielded from a legal proceeding or

financial obligation by the SCRA protections, you should discuss the matter with a

legal assistance attorney or a civilian lawyer as soon as possible.

SERVICEMEMBERS CIVIL RELIEF ACT (SCRA)

SYNOPSIS OF ACT

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SUMMARY

SCRA is a federal law that gives specific rights and legal protections to people in military

service—active-duty military personnel and reservists and guardsmen while in active-duty

service (Title 10 status). The act also applies to guardsmen called to active service for more than

30 consecutive days under Title 32 to respond to a national emergency declared by the

President and supported by federal funds. In limited situations, it also applies to dependents of

eligible personnel.

The act’s objectives are to (1) enable servicemembers to focus on their military duties without

the distractions of certain civil obligations and (2) allow temporary suspension of judicial and

administrative proceedings and transactions that may adversely affect their civil rights during

their military service.

SCRA protections are not automatic. Ordinarily, servicemembers must request them and, in

most cases, show that their military service has materially impaired their ability to meet their

civil obligations. Adversely affected parties, such as landlords and lenders, may seek relief in

court by proving otherwise.

SCRA covers such issues as interest rates, rental and lease agreements, eviction, mortgage

foreclosure, civil judicial proceedings, and income tax payments. Among other things, SCRA:

1. Allows servicemembers who are parties in civil lawsuits (such as paternity and child

custody suits) to request a stay if their military service precludes their attendance in

court;

2. Protects servicemembers on active-duty from default judgments if they fail to appear at

trial or respond to a lawsuit because of their military service;

3. Caps interest rates on “pre-service” debts at 6% for the duration of the servicemember’s

period of military service;

4. Prevents landlords from evicting servicemembers on active duty for nonpayment of

rents below a certain threshold, except by court order;

5. Allows servicemembers to unilaterally terminate pre-service lease contracts following

specified procedures;

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6. Prohibits sale of goods placed in storage either before a military service call or during a

period of active service for unpaid charges, except by court order;

7. Prohibits sellers from repossessing, reclaiming, or foreclosing on property that a

servicemember contracted to buy under a pre-service contract, except by court order;

8. Authorizes the court to stay proceedings or adjust obligations in the case of claims filed

to enforce mortgage or trust deed payments;

9. Protects a servicemember’s life insurance from lapse because of nonpayment of

premiums;

10. Provides for reinstatement of any health insurance in effect on the day before active

military service commenced, without waiting period and physical restrictions;

11. Allows servicemembers who have pre-service professional liability insurance policies to

suspend premiums and coverage during the period of military service;

12. Allows servicemembers on active duty to defer income tax payments for up to six

months after discharge if ability to pay is impaired by military service and clarifies other

tax issues;

13. Prohibits the use of personal assets to satisfy business obligations even though the

servicemember may be personally liable (50 USC App. § 596); and

14. Prohibits both creditors and insurers from pursuing adverse actions (e.g., notifying

credit agencies, denying credit, changing terms) against servicemembers solely because

they exercise SCRA rights (50 USC App. § 518).

The law includes criminal sanctions of up to one-year imprisonment for violations of certain

provisions, including those pertaining to eviction, lease termination, storage liens, installment

contracts, and mortgage foreclosures.

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SCRA’S PURPOSE AND SCOPE OF WORK (50 USC APP. §§ 501-596)

Congress enacted SCRA to (1), “provide for, strengthen, and expedite the national defense” by

extending certain protections to servicemembers to enable them to focus on their military

duties and (2) allow temporary suspension of judicial and administrative proceedings and

transactions that may adversely affect the civil rights of servicemembers during their military

service (50 USC App. § 502).

The law applies to (1) members of all branches of the Armed Forces on active duty under 10

USC § 101(d)(1) (including guardsmen and reservists) and (2) commissioned officers of the

Public Health Service or the National Oceanic and Atmospheric Administration in active service.

In the case of guardsmen, the law also includes calls to active service authorized by the

President or the defense secretary under 32 USC § 502(f) for more than 30 consecutive days to

respond to a national emergency declared by the President and supported by federal funds

(e.g., airport security provided by guardsmen in the wake of the September 11, 2001 terrorist

attacks) (50 USC App. § 511).

In limited cases (e.g., certain eviction actions), dependents are entitled to SCRA protections

available to servicemembers. A dependent is a spouse, child, or anyone for whom the

servicemember provided more than one-half of the person’s support for 180 days preceding an

SCRA application for relief (50 USC App. § 511). Dependents may also apply for

certain SCRA protections if their ability to comply is affected by the servicemember’s military

service. These include protections pertaining to evictions, installment contract terminations,

mortgage foreclosures, and lease terminations.

For full-time servicemembers, SCRA protections begin when they enter the service; for

reservists and guardsmen, they begin on the date the members are called to active duty.

Generally, protections end when the servicemember dies in or is released from active duty. But

in some cases, they may extend for up to 180 days after these events.

SCRA primarily addresses legal rights and financial obligations. It applies to both judicial and

administrative proceedings involving civil actions in any federal, state, or municipal court or

agency. It does not apply to criminal actions (50 USC App. §§ 511 & 512). A servicemember’s

legal representative may assert all of the servicemeber’s SCRA rights. A legal representative is

an attorney acting on a servicemember’s behalf or an individual possessing a power of attorney

(50 USC App. § 519).

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SCRA’S MAJOR PROVISIONS

General Relief

Stay of Proceedings. A party to a civil lawsuit (e.g., paternity or divorce suit) who cannot appear

at a judicial or administrative proceeding because of his military service may make a written

request for a stay or postponement at any stage before final judgment, if (1) he received notice

of the action or proceeding and (2) the action or proceeding was filed while he was in, or within

90 days after discharge from, military service. He must give a date when he can appear and

include a letter from his commander stating that his military duties preclude his appearance

and he is not entitled to military leave.

The court may, on its own motion, and must, if the servicemember asks, stay the action or

proceeding for at least 90 days unless, in its opinion, the servicemember’s ability to prosecute

or defend the action is not materially affected by his military service. A servicemember may

follow the same procedures outlined above to request additional stays based on continued

inability to attend because of material effect on military service. If the court denies an

additional stay, it must appoint an attorney to represent the servicemember. A servicemember

denied a stay may not seek protection against a default judgment resulting from not being

granted a stay.

The waiver applications do not constitute an appearance for jurisdictional purposes and do not

constitute a waiver of any substantive or procedural rights (50 USC App. § 522).

Stay of Execution of Judgments and Attachments. If a court determines that a

servicemember’s military service materially affects his ability to comply with a court order or

judgment, it may, on its own motion, and must, if the servicemember asks, (1) stay the

execution of any judgment or order entered against the member and (2) vacate or stay any

attachment or garnishment of property, money, or debts in the possession of the

servicemember or other third party, whether before or after judgment. The provision applies to

actions or proceedings filed before or while the servicemember is in military service or within

90 days after discharge from service (50 USC App. § 524).

Default Judgments. SCRA establishes requirements that courts must meet before entering a

default judgment. The plaintiff must give the court an affidavit stating either that (1) he cannot

determine if the defendant is in military service or (2) the defendant is not in military service. If

the defendant is in military service, the court must grant a stay for at least 90 days if it

determines that (1) there may be a defense to the action and it cannot be presented in the

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defendant’s absence or (2) after due diligence, the attorney could not contact the defendant or

otherwise determine if a meritorious defense exists.

If it appears that the defendant is in military service, the court must appoint an attorney to

represent him. If the court cannot determine if the defendant is in military service, it may

require the plaintiff to secure a bond to protect the defendant against harm, and it may issue

orders necessary to protect the defendant’s interest.

If a default judgment is entered against a servicemember in active-duty service, or within 60

days thereafter, SCRA allows him to reopen the judgment and set it aside. In order to set aside

the judgment, he must apply for relief within 90 days of termination or discharge from military

service and show that he was prejudiced by his absence and that he has good and legal

defenses to the claims against him (50 USC App. § 521).

Interest Rate Cap on Pre-Service Debts. When a servicemember’s military service materially

affects his ability to pay pre-service financial obligations, he may request an interest rate

reduction to six percent. Financial obligations include loan, mortgage, and credit card bills

incurred by the servicemember or the servicemember and spouse jointly. Interest includes

service and renewal charges, fees, and other charges (except bona fide insurance).

To get relief, the servicemember must give the creditor a written notice and copy of his military

orders not later than 180 days after discharge. Once notified, the lender must grant the relief

effective on the date the servicemember was called to military service. He must forgive any

interest above six percent and decrease the amount of periodic payment that the

servicemember must make.

The court may grant lenders relief if it finds that the servicemember’s ability to pay is not

materially affected by his military service (50 USC App. § 527).

Rent, Leases, Liens, Installment Contracts, Mortgages, Assignments

Rent and Evictions. The act prohibits evictions for nonpayment of rent, except by court order,

from premises rented by a serviceperson, if (1) the premises are occupied primarily as a

residence by the servicemember, his spouse or children, or other dependents; (2) the landlord

is attempting eviction when the serviceperson is in or has received a call to active duty service;

and (3) the monthly rent is below $2,465, as of 2004. (The act increases the rental limit annually

based on housing price adjustments.)

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Upon application for eviction or distress, the court may stay the proceedings for 90 days and

must do so, if a request is made on behalf of a servicemember whose ability to pay the agreed

rent is materially affected by military service. Otherwise, the court may, in the interest of

justice and equity, grant a longer or shorter stay or readjust the lease obligations to preserve

the interest of all the parties (50 USC App. § 531).

Property Lease Termination. The act allows servicemembers to unilaterally terminate pre-

service leases of premises occupied by them or their dependents for residential, professional,

business, agricultural, or similar uses. It also allows termination of leases by active-duty

servicemembers who subsequently receive orders for a permanent change of station or

deployment for a period of 90 days or more. The servicemember may break the lease by giving

notice at least 30 days before the next payment (50 USC App. § 535).

Motor Vehicle Lease Termination. The act allows servicemembers to unilaterally terminate

leases on motor vehicles used for personal or business transportation for themselves or their

dependents. They may terminate pre-service leases early if they receive active-duty orders for a

period of 180 days or more. They may terminate leases they enter into while in active-duty

service if they receive (1) permanent change of station orders to a location outside the

continental United States or (2) deployment orders for a period of 180 days or more. The lease

termination takes effect on the date the servicemember notifies the lessor in writing and

returns the vehicle (50 USC App. § 535).

Storage Liens. The act prohibits anyone from exercising any right to foreclosure or enforcing

any lien for storage of household goods, furniture, or personal effects of a person in military

service and for 90 days after, except by court order.

In any foreclosure proceeding, the court may, on its own motion, and must, if requested by a

servicemember whose ability to comply with the obligation is materially affected by military

service, stay the proceeding for as long as justice and equity require or adjust the obligation to

preserve the interests of all parties (50 USC App. § 537).

Installment Contracts. A servicemember may request SCRA protection for pre-service debts

incurred under installment contracts for purchase or lease of real property (including motor

vehicles) if he made at least one deposit or installment payment before entering military

service. The contract may not be rescinded or terminated for a breach of terms occurring

before or during the person’s military service, and the property cannot be repossessed without

a court order.

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To get the protection, the servicemember must prove that the military obligations have

materially affected his ability to pay the debts. The court may order repayment to the

servicemember of all or part of prior deposits as a condition of terminating the contract, stay

the proceedings for a period of time as, in the opinion of the court, justice and equity require,

or make any disposition equitable to preserve the interest of the parties (50 USC. App. § 532).

Mortgages. The act authorizes the court to stay proceedings or adjust obligations in the case of

claims filed to enforce mortgage or trust deed payments for up to 90 days after a

servicemember’s period of military service if military service has materially affected the

servicemember’s ability to comply with the obligation. It applies only to obligations on real or

personal property owned by a servicemember that originated before the period of the

servicemember’s military service and for which the

servicemember is still obligated when the property is secured by a mortgage, trust, deed, or

other security. The court may stay the proceedings for as long as justice and equity require or

adjust the obligations to preserve the interest of all parties (50 USC App. § 533).

Insurance

Life Insurance. SCRA protects a servicemember’s private life insurance policy from termination

or lapse for nonpayment of premiums for policies that were in force for 180 days or more

before the period of military service. Insurers may not decrease coverage or require additional

premiums (except for age-based premiums) because of the insured’s military service. Also, they

cannot limit coverage for activities that the servicemember must perform while in service.

Servicemembers may request deferment of premiums and other payments for the period of

military service and two years thereafter. If the Department of Veterans’ Affairs (VA) approves

the request, (1) the United States guarantees the payments, (2) the policy remains in effect,

and (3) the servicemember has two years after the period of military service to repay all

premiums and interest. SCRA will cover the greater of $250,000 or the maximum limit of the

Servicemembers Group Life Insurance, which is currently $250,000 (50 USC App. §§ 541).

Health Insurance. SCRA provides for the reinstatement of a servicemember’s health insurance

that was in effect on the day before military service commenced but was terminated during the

period of service. The servicemember must apply for reinstatement within 120 days after

termination or discharge from service.

Reinstatement is not subject to exclusions or a waiting period if the person has a medical

condition that arose before or during the period of service and (1) the exclusion or waiting

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period did not apply during coverage, and (2) the VA secretary has not determined that the

medical condition is a disability incurred or aggravated by military service. Reinstatement does

not apply to servicemembers entitled to participate in employer-offered insurance (50 USC

App. § 594).

Professional Liability Insurance. The act allows a servicemember with a pre-service

professional liability insurance policy to suspend premiums and coverage during military

service. It requires suspension of all claims brought during the period of military service against

a servicemember who has availed himself of this protection. The act also

mandates (1) refunds of any premium paid by the servicemember while he is active duty and

(2) reinstatement of the insurance at the conclusion of military service at the premium rate that

would have existed had the member not entered military service (50 USC App. § 593).

Taxes

Deferral. The act allows servicemembers to defer income tax payments, without interest or

penalty, on the income that is due before or during military service for up to 180 days after

termination of or release from military service. Servicemembers who want this relief must

contact the Internal Revenue Service or their state tax authority (50 USC App. § 570).

Tax Clarification. SCRA provides that a nonresident servicemember's military income and

personal property are not subject to state taxation if the servicemember is present in the state

solely because of military orders. It also prohibits states from using the military pay of these

nonresident servicemembers to increase the state income tax of the spouse or servicemember

(50 USC App. § 571).

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