Active Duty service members enjoy various benefits. One law that provides people in military service protection is the Servicemembers Civil Relief Act (SCRA). This legislation provides protection and assistance to service members on Active Duty status.
Formerly known as the Soldiers’ and Sailors’ Civil Relief Act, the SCRA relieves Active Duty military members from select civil obligations regarding interest rates, loans, rental agreements, and civil cases. Adopted in 2003, this law enables Active Duty service members to devote their time and energy to their jobs, mainly when stationed overseas. There are multiple benefits and protections granted through the SCRA.
6 SCRA Benefits You Should Know
SCRA protections extend to all Army, Air Force, Coast Guard, Marine Corps, and Navy members. It may also apply to Reservists who are called to action, members of the National Guard mobilized for at least 30 consecutive days, and active-duty commissioned officers of the Public Health Service and National Oceanic and Atmospheric Administration.
Interest Rate Cap
Active Duty military members are entitled to have their interest rate reduced to 6% annually. This interest rate reduction applies to automobile leases, student loans, home loans, and incurred credit card debt. This interest rate reduction applies even if you took out that loan with your spouse.
When a service member requests this particular benefit under the SCRA, the lender must reduce the military personnel’s interest rate to a maximum of 6% annually. This applies to pre-service obligations and an additional year after your term of active duty.
Lenders cannot revoke your housing lease, change the terms of your credit, or refuse to grant you credit because you invoked your SCRA rights. Additionally, a lender cannot give negative information to a credit report company to invoke your SCRA protections.
For example, these legal protections apply to Active Duty military members who take out auto loans before their service tenure. The lender is not allowed to increase the interest rate for the lease while that person is on Active Duty. It should be noted that this protection on interest rates does not apply if you obtained loans while on Active Duty.
Lease Termination While On Active Duty
The SCRA provides service members with the right to terminate their lease intended to be occupied by military personnel and their family members. If you signed a housing lease before Active Duty service, or if you’re already serving on Active Duty and received Permanent Change of Station orders for at least ninety days, you should be able to terminate the lease without penalty.
If your lease requires monthly payments, a housing lease is terminated 30 days after the first date on which the following rental amount is due. It is also payable after the date the termination notice is delivered.
To invoke the lease termination benefit, you should go to a legal assistance office and submit a written notice of termination and a copy of your orders. These documents must be submitted by hand delivery, post mail, or electronic mail.
Protection From Eviction
You cannot be foreclosed without a court order if you took out a mortgage before entering Active Duty. This is unless you’ve waived your SCRA rights upon signing the contract. This protection applies when you are on Active Duty and an additional year after your term is finished. This SCRA protection applies to states that do not require a court order to foreclose and whether or not your lender is aware of your military service status.
Due to this SCRA protection, a court may pause or stay foreclosure proceedings or adjust the loans. This is provided that the military member’s ability is materially affected by their Active Duty military service.
In addition, the SCRA also grants protection against default judgments. These are rulings against a party to a lawsuit because they didn’t appear in court. This applies to foreclosing cases in front of a judge.
Servicemembers Civil Relief Act Foreclosure Protection
The Servicemembers Civil Relief Act (SCRA) sometimes prohibits creditors from repossessing a military personnel’s personal property without a court order. If you fail to make payments due to Active Duty orders, the creditor must file a lawsuit and get an order from a judge before the property can be foreclosed or repossessed.
This protection applies only if you purchased or leased that property before entering Active Duty service. It also applies if you made a deposit or installment payment before entering Active Duty service.
Even if you’re granted certain protections by the SCRA, failing to pay for the bills may violate the contract. You may also be charged with penalties, such as late fees, as a result.
Automobile Lease Termination
Under certain circumstances, the SCRA grants service members the right to terminate or cancel automobile leases without paying early termination penalties or charges. To invoke this particular SCRA right, your automobile lease should have been active:
- Before entering Active Duty service, and then have been given orders to be in service for at least 180 days
- During Active Duty service, but then received orders for Permanent Change of Station (PCS) inside the continental United States to a location abroad or a location abroad to any new station
- During Active Duty service, and then received deployment orders with a military or uniformed unit or in support of a military or uniformed unit for at least 180 days
To invoke this particular SCRA protection, you or someone exercising a Special Power of Attorney must submit a written notice of termination to your leasing agent and a copy of your deployment orders. These documents should be delivered via hand delivery, private carrier, regular postal mail, or electronic mail.
Tax Benefits
If you receive military orders that require you to move from your home state to another state, your domicile state or state of legal residence for tax purposes won’t have to change because of the SCRA. The SCRA prevents military service members from having to pay taxes on their military pay or personal property, like a car, to any other state other than their home state of legal residency.
For example, if your state of legal residence is Virginia and the military sends you to Nebraska, you won’t be obligated to pay Nebraska’s state income tax on your military service earnings. At the same time, you won’t be required to pay property taxes to Nebraska.
However, if you or your spouse earns non-military service income, you may have to pay taxes to the state where you’re stationed. This applies if that state has income tax regulations, although the state cannot use your military earnings to increase your tax liability.
Conclusion
The SCRA can grant military members robust protections if certain obligations are affected by their military orders. Thus, military personnel must understand and exercise their rights, if necessary and applicable.
Knowledge is power, and understanding your legal protections as a military member can spare you and your loved ones from many troubles. Thus, it would help if you maximized the protections given to you as a military member.
To know more about the SCRA and its benefits, explore the Servicemembers Civil Relief Act Centralized Verification Service further.
FAQs
What are SCRA benefits for banks?
The Servicemembers Civil Relief Act (SCRA) provides several benefits for banks when servicing active-duty military personnel. These benefits include capping interest rates at 6% for pre-service debts, protection from foreclosure or eviction, and restrictions on repossessing assets without a court order. These provisions help ensure fair treatment and financial stability for military members while also providing legal safeguards for banks.
What are SCRA benefits while deployed?
Under the SCRA, individuals who are deployed are entitled to certain benefits, including protection from eviction, termination of residential leases, and suspension of certain civil proceedings, such as bankruptcy and foreclosure.
SCRA also provides relief from certain financial obligations, such as reducing the interest rates on pre-service debts to 6% and allowing service members to terminate certain contracts without penalty. These benefits aim to alleviate financial and legal burdens for deployed servicemembers and ensure their focus remains on their military duties.
How long does it take to get SCRA benefits?
The process and timeframe for obtaining SCRA benefits may vary depending on the specific circumstances and the entity involved. Generally, individuals who believe they are eligible for SCRA benefits should contact the appropriate institution or agency, such as their bank or landlord, and provide the necessary documentation to initiate the process.
The time it takes to receive the benefits can depend on factors such as the responsiveness of the institution, the complexity of the case, and any applicable legal procedures. It is advisable to initiate the request for SCRA benefits as early as possible to allow for sufficient time for processing and implementation.