Does The SCRA Apply To Bankruptcy Proceedings?

Does The SCRA Apply To Bankruptcy Proceedings?
‘Does The SCRA Apply To Bankruptcy Proceedings?’

The Servicemembers Civil Relief Act is an important law that provides protections to those with active military status in regards to civil issues. Because of the specific vulnerabilities that servicemembers face, it is considered important to protect their interests at home while they are serving their country. Difficulties in returning home for court proceedings, relative financial illiteracy, a paycheck that is higher than they may have seen before and youth, all serve to make servicemembers easy targets for those who would take advantage of them.

One often overlooked area in which servicemembers have protections is in bankruptcy proceedings. So what are these protections and when do they come into play?

Bankruptcy protections under the SCRA

Essentially, the Servicemembers Civil Relief Act applies the same protections that active military status servicemembers are entitled to in civil court to bankruptcy court as well. In fact, the language in 50 U.S. Code app. §§ 521, 522 and 524 states that the SCRA is “generally applicable in any action or proceeding commenced in any court.” That means that, barring specific language to the contrary, the SCRA will hold up in bankruptcy proceedings. Further, in the advisory committee note to Federal Rule for default judgments, Fed. R. Civ. P. 55(b), there is language that states specifically that it is affected by this law.

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, he or she must first obtain an affidavit as to military service. This requires an SCRA search, which can be performed by the Servicemembers Civil Relief Act Centralized Verification Service.

At this point, the servicemember is entitled to a 90 day stay of proceedings. After this point, provided that the servicemember is on active military status, the court may choose to grant a further stay based on his or her need.

Attempting to bring an active military status servicemember to court without providing an affidavit as to military service or taking any civil action against him or her 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 Servicemembers Civil Relief Act Centralized Verification Service can help to make compliance quick, easy and affordable.

Attorney Roy Kaufmann serves as the Director of the Servicemembers Civil Relief Act Centralized Verification Service, located in Washington, D.C. As a recognized authority on the Servicemembers Civil Relief Act, Mr. Kaufmann has published hundreds of articles and hosted many webinars. His teachings help law firms and businesses to remain compliant with the SCRA rules and regulations so as to avoid costly fines.