SCRA Notice Requirements: A Comprehensive Guide

Being part of the US military is an honor and privilege. That’s why there are laws in place that protect the welfare of active duty service members. Among the laws that protect service members to ensure they perform their duties well is the Servicemembers Civil Relief Act (SCRA).

The Servicemembers Civil Relief Act is a federal law that protects a service member’s legal and financial affairs while on active duty. Unfortunately, no universal document proves a servicemember’s military service and serves as sufficient evidence for businesses to honor their mortgage and foreclosure rights. So, how can military members and businesses remain compliant with this law?

federal law to protect servicemembers

What Are the SCRA Notice Requirements?

Remaining in compliance with the SCRA demands vigilance. To ensure you’re following the SCRA to the letter, you need to follow these requirements:

  • Determine active duty status. All active duty members, including those from the Navy, Air Force, Army, Coast Guard, Marine Corps, National Guard, Public Health Service, and NOAA members, are provided SCRA protections. Service members should provide official military orders to the business or lender, while the company should check that person’s active duty status through various resources, like SCRACVS.
  • Written notice of certain legal protections or financial perks. Military personnel should submit a written notice to the company or person that needs to comply with the Servicemembers Civil Relief Act. Lenders or businesses should proactively request the required notice to remain in compliance with the SCRA. This notice should stipulate which protections are to be honored.
  • Routine checking of active duty status. It’s not enough to check when a person began active duty service. SCRA protections are only honored for particular time frames. Service members should present evidence that they’re still on active duty. Businesses should check if the service member who requested SCRA rights to be honored is still on active duty.

Regardless of whether you’re a business owner, lender, or service member, you should familiarize yourself with the SCRA to avoid possible complications in the future. The Servicemembers Civil Relief Act (SCRA) was enacted in 2003 and was a reformed version of the Soldiers’ and Sailors’ Civil Relief Act of 1940. This law was designed to alleviate the burdens of American service members.

The SCRA applies for the duration of an individual’s term of service. Certain benefits also extend to service members’ spouses and dependents. Dependents refer to individuals financially relying on the service member’s support for at least 50% of their needs for at least 180 days before the service member’s active duty.

The most popular SCRA protection granted to Armed Forces members is the interest rate cap. According to the SCRA, financial institutions or other lenders aren’t allowed to charge more than 6% interest to service members on active duty for the duration of their service.

Other SCRA perks include protections against default judgments in civil court cases, protections against lease agreement terminations, protections against evictions, mortgage foreclosures, obligations paid in installments like car loans, and protections against vehicle repossession.

How SCRA Notices Protect Servicemembers’ Rights

The SCRA grants active duty service members several protections. The presentation of SCRA notices helps service members ensure their SCRA rights are respected. But what kind of protections do they grant service members?

Reduced interest rates. According to Section 527 of the SCRA, debts of military personnel and their spouses jointly entered before the personnel entered military service must not exceed 6 percent. This is during the military service period and a year after for mortgage payments, and 6 percent for the military service period for nonmortgage debt. This interest is inclusive of all fees.

Interest forgiveness. SCRA protections aren’t limited to the period wherein the benefits are requested. Coverage includes the period that the service member was entering military service. Lenders must forgive, not defer, any interest above the 6% cap, and recalculate monthly payments based on the adjustments.

Foreclosure rights. According to §533 of the SCRA, private property owned by the military member before entering active duty is forbidden from being foreclosed upon, sold, or seized during their military service period or up to nine months after service. A court order or written notice is required for foreclosure.

Affidavits for default judgments. SCRA protections have their limits, and there may be occasions wherein a lender or other entity might pursue legal action against the service member. Fortunately, the SCRA provides limitations on what legal recourse is possible. The service member is protected against default judgments in civil cases. The service member may also request the court grant a delay of proceedings for 90 days.

Vehicle repossession delays. Lenders are prohibited from repossessing a vehicle a service member owns during their military service period without a court order. This protection applies if the member made at least one deposit payment on their car before entering active duty.

Lease termination. Active duty members must relocate where they are needed when duty calls. According to §535(a)(1) of the SCRA, service members can prematurely break their lease agreements whenever they receive deployment orders.

Steps Businesses Should Take Upon Receiving an SCRA Notice

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As mentioned, no universal pass or document would suffice as evidence for their SCRA rights to be honored. That’s why businesses should be vigilant in ensuring they follow proper protocol upon receipt of an SCRA notice. Here are the steps to ensure companies remain compliant:

Step #1: Determine the service member’s eligibility. SCRA coverage starts when the military member enters active duty and continues until 30 to 90 days after discharge. SCRA protections only extend to members on active duty. Companies should determine if the person requesting SCRA perks is entitled to those perks. Fortunately, the Department of Justice (DOJ) has a database to help them decide if that person is qualified. Alternatively, services like SCRACVS can make this process easier and faster.

Step #2: Confirm the SCRA benefits. Not all businesses are familiar with SCRA protections. Fortunately, it’s easy for them to access legitimate information to understand their duties. Upon receiving the written notice, they should confirm if the person’s requests align with what the SCRA states.

Step #3: Grant the request. The business should follow the provisions as stated by the SCRA. This step depends on the nature of that business and what kind of benefit the military member is entitled to.

Step #4. Routinely check for eligibility. As a business, verifying active duty once and forgetting about it is insufficient. They should check from time to time if the military member is eligible for SCRA benefits. It would be ideal to check a person’s active duty status throughout an enlistment at different intervals.

What Are the Consequences of Non-Compliance?

Companies or people deemed unfair to military personnel or noncompliant to the SCRA are subject to penalties. The Department of Justice (DOJ) enforces the Servicemembers Civil Relief Act and can take action against the offender who attempts to violate the SCRA.

The first violation of the SCRA can cost a company or person a fine of $55,000. Repeat violations may cost the offender $110,000.

How to Stay Updated with SCRA Changes

Given the severe consequences of SCRA non-compliance, businesses and people in business with active duty service members need to stay updated on SCRA changes. Service members may refer to the dedicated page on the DOJ website for updates on the SCRA. This page also covers veterans. Alternatively, the SCRACVS website is a good source for SCRA news and updates.

Conclusion

The Servicemembers Civil Relief Act grants eligible soldiers impressive benefits that can lighten their financial and legal burdens. That’s why it’s vital to understand the proper requirements and steps for SCRA notices.

Like any other law, the SCRA provisions aren’t permanent. That’s why service members and businesses dealing with military members should keep themselves updated with the latest changes to this law. Fortunately, resources like SCRACVS are always available to help. Explore our website to learn more.

FAQs

What are SCRA notice requirements?

SCRA notice requirements include the military orders that stipulate the service duration of the military personnel, written notice of the SCRA benefit request, and routine checking of SCRA protection eligibility status. The benefit granted depends on the nature of the business.

What are SCRA requirements? 

For the SCRA to be honored, military members must present evidence that they’re on active duty. They must also submit a written notice stating which benefit they’re requesting.

What are the consequences of noncompliance with SCRA notices?

Noncompliance with SCRA notices may result in steep penalties. The amount would depend on the offense frequency and the discretion of the DOJ.

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.