As a lender or auto dealership, you are likely — and rightly — concerned with the SCRA vehicle repossession rights. It’s important to follow the letter of the law in these matters in order to avoid fines and penalties.
Companies and individuals must obtain a court order before repossessing a servicemembers’ vehicle if they are protected by the Servicemembers Civil Relief Act (the “SCRA”). The Servicemembers Civil Relief Act is a law that protects active-duty servicemembers from civil and financial actions while they are in military service. The protections can extend beyond the end-date of active duty.
If you work for a lender or dealership, you must obtain military status verification before repossessing a vehicle. The easiest way to get a military status verification, thereby protecting active duty vehicle repossession rights, is through the Servicemembers Civil Relief Act Centralized Verification Service.
If the military verification shows active duty, you must go to court before you repossess. In court, a servicemember may be entitled to a stay of proceedings for a minimum of 90 days.
When the 90 days are up, the court reconvenes to decide what to do. The court has a variety of options. The decision is generally based on the needs and responsibilities of the servicemember.
Possible Scenarios in Vehicle Repossession Cases
According to NOLO, courts sometimes allow the repossession to proceed, but may also mandate one of the following:
- Return of payments – The court may opt to require that the creditor pay back some or all of the payments previously made on the vehicle before it can be repossessed.
- Further stay of proceedings – The court may also decide to further stay the repossession proceedings. Courts usually do this when a servicemember’s duty prevents them from making the payments or appearing in court.
- Equity payment – Finally, the court may order an equity payment. This means that the creditor must compensate the servicemember for the difference between the value of the car and the balance of the debt before repossessing the car.
Active Duty Vehicle Repossession Rights: A Case Study
A woman wrote to Credit.com about her experiences with a repossession company that failed to comply with the SCRA. Her brother was serving in Afghanistan; thus, SCRA protections applied.
“Around 3 a.m., I heard the truck in the driveway, and when I looked out the window, I thought someone was stealing his car,” the woman told the credit information source. “I woke my mother and my sister and started to the door. That’s when we heard pounding on the front door. It was so incredibly scary.”
She described two men with badges on chains who presented themselves as law enforcement. The two failed to identify themselves or the repossession company that they worked for. They had no paperwork and a nondescript truck. They also declined to give out any relevant information, even a phone number.
The servicemember subsequently went through the Judge Advocate General’s office, and the repossession firm returned with the truck. However, it was late at night and the drivers demanded the servicemember’s mother pay for the towing. She refused, and had to contact police before the man would unhook the car.
“We still don’t know the name of the repo company or the men we dealt with,” the sister said.
Stay Compliant with the SCRA
This incident serves to illustrate how important SCRA rights are for servicemembers and their dependants. Repossession workers may fail to identify themselves because they knew about the financial liability that comes along with non-compliance in such cases or for other reasons, but this can seriously hurt the credibility of the repossession workers and the industry.
Lenders that work with servicemembers need to understand how important and how easy it is to follow proper procedures – including obtaining an affidavit as to military service — in order to adhere to this important law.