Many lenders and business owners know the rules of the SCRA as they apply to civil matters. They know they have to get a military status verification before heading to civil court. But what about the SCRA and bankruptcy proceedings? What are these protections and when do they come into play?
The Servicemembers Civil Relief Act is an important law that provides protections to those with active military status. Because of the vulnerabilities that servicemembers face, Congress has protected their interests at home while they are serving their country.
Therefore, servicemembers are entitled to certain protections under the SCRA. These include protections against foreclosure, eviction, repossession and other court actions. The SCRA also guarantees servicemembers a 6% interest rate under certain circumstances. This interest rate can apply to mortgages, car loans, credit card debt, student debt and more.
While plaintiffs are not barred from taking civil action against active-duty servicemembers, they must follow certain protocols, including determining military status before proceeding with a court case.
Bankruptcy Protections Under the SCRA
Rules governing the SCRA and bankruptcy are the same as the rules governing the SCRA and civil matters. The ways in which the SCRA affects bankruptcy proceedings are identical to the ways in which it affects civil proceedings.
Before forcing a debtor with active military status into bankruptcy court involuntarily, creditors must first obtain an affidavit as to military service. This requires an SCRA verification.
If the results of the search show that the defendant is on active duty, then the SCRA entitles the servicemember to a 90-day stay of proceedings. Afterward, the court may choose to grant a further stay based on need.
Stay in Compliance with the SCRA
Attempting to bring an active military status servicemember to court without providing an affidavit as to military service or taking any civil action against them is a serious offense under the SCRA. Those who fail to comply with this important law may face harsh fines or even criminal penalties.
The best way to determine a client or customer’s military status is to rely on the Servicemembers Civil Relief Act Centralized Verification Service. We provide reliable military status verifications, usually within 24 hours. For a small extra fee ($20), we even provide an affidavit for you to bring to court with you, should that be required by the court.
Mistakes in determining active military status are expensive. Violating the SCRA can trigger fines and penalties. Not having the correct paperwork can delay your case, costing you more money as you must wait for the courts to help you collect the debt.
SCRACVS helps to make compliance quick, easy and affordable.