Servicemembers Civil Relief Act (SCRA)

Transcription

1 ******************************************************** V. Servicemembers Civil Relief Act (SCRA) Michael S. Archer - Jacksonville **********************************************************

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3 Date YOUR NAME HERE YOUR ADDRESS HERE CREDITOR NAME HERE CREDITOR ADDRESS HERE Subject: INTEREST RATE REDUCTION UNDER SERVICE MEMBER CIVIL RELIEF ACT: To Whom It May Concern: Debtor name: Account # Pursuant to the interest rate reduction provisions of the Service Member Civil Relief Act, Title 50, U.S. Code, section 3937 (hereinafter referred to as the SCRA) I hereby request that the interest on the above mentioned debt be reduced to 6% as of the date that I entered active military service. I incurred this civil debt prior to the date that I entered active duty military service. I began active duty on, and have remained on active duty to the present time as reflected in the following documents [IDENTIFY THE DOCUMENT(S) YOU ARE ATTACHING THAT PROVES ACTIVE DUTY MILITARY SERVICE INCEPTION DATE AND ANY EXTENTIONS OR REENLISTMENTS]. As indicated on (identify here the enlistment contract, orders, or other document that indicates the term of service) I am currently on active duty and my obligated military service extends through. However, I may choose to reenlist at that time. I will notify you of any release or extension of active duty service. You may also confirm my military service dates on line at the website of the Defense Manpower Data Center (DMDC) I am currently assigned to [UNIT NAME], located at Camp Lejeune, North Carolina. [If applicable, add the following: I anticipate deployment to Iraq in the near future My entry into the military service has materially affected my ability to meet this obligation at the original interest rate. [If desired and appropriate, state here the manner in which military service affects ability to pay; e.g., by noting the specific decrease in pay resulting from military service] The SCRA sets a 6% per annum ceiling on interest charges (including service charges, renewal charges and fees) during the period of military service for obligations made prior to the date of entry onto active duty. Interest above 6% must be forgiven and not accrued. Please ensure that your records reflect this statutory ceiling and that any excess charge is withdrawn. V-2

4 Please note that the Higher Education Act Opportunity Act of 2008 (PL ) makes the interest rate reduction provisions of the SCRA applicable to federally guaranteed student loans as well as other student loans. Note also that, in addition to civil remedies, the 2008 amendment to the SCRA makes the knowing violation of section 3937 a crime punishable by a fine and up to one year in prison. I.M. MARINE Corporal U.S. Marine Corps 2 V-3

5 UNITED STATES MARINE CORPS COMMAND LETTERHEAD IN REPLY REFER TO: The Superior Court of Where Ever ADDRESS OF COURT Your Honor: RE: NAME OF CLIENT Case: Case #, if known It has come to my attention that, an active duty service member assigned to my command, has a civil court hearing scheduled for. s military duties prevent his appearance at such hearing. [Provide explanation of important duties and why they interfere with the member s ability to appear and defend] His presence with his unit is imperative and, at this time, I cannot grant him leave to attend to these civil matters. The length of the deployment is indeterminate; however, I anticipate that military duties will no longer preclude the service member s ability to appear approximately.. D.D. EISENHOWER COMMANDING V-4

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7 UNITED STATES MARINE CORPS MILITARY UNIT LETTERHEAD HERE IN REPLY REFER TO: 5800 LSSS/msa Clerk of Court State of County of Any additional details re court here, Eg Family Court Sixteenth Judicial Circuit ADDRESS OF COURT HERE RE: Smith v Jones, Case # 2013-DR Sir or Ma am, In accordance with section 3932 of the Servicemember Civil Relief Act, (50 USC 3932), I hereby request a stay of the proceedings in the above captioned case. I am an active duty service member with the United States Marine Corps, currently assigned to located at Marine Corps Base, Camp Lejeune, North Carolina. My military duties materially interfere with my ability to appear and defend the above captioned case. Add relevant details of billet and current duties, if any, suggesting that absence to attend court hearing will be particularly difficult or onerous for individual and / or unit. For example, cite any deployment, or special exercises, or attendance of special school to qualify for duty or to maintain proficiency, or any other special circumstances (e.g. I am the only physician assigned to a large unit in a war zone). Pursuant to the Service Member Civil Relief Act (SCRA), I request a stay of proceedings. The SCRA makes a ninety-day stay mandatory, with an additional, or lengthier stay discretionary with the court upon a finding that military duties continue to materially affect the service member s ability to appear. Pursuant to SCRA section 3932(c), this request for a stay does not constitute an appearance nor waive any rights or defenses to which I may otherwise be entitled. The precise length of time that my military duties materially interfere with my ability to appear and defend is indeterminate; however, it is anticipated that I will be able to appear and defend the action on or after approximately. I request that proceedings be delayed at least until as my military duties prevent my appearance at the civil hearing and I have not been authorized leave for such attendance. A letter to this effect from my Commanding Officer is enclosed. Encl: Ltr of CO, ALEXANDER HAMILTON Corporal, U.S. Marine Corps Cc: PLAINTIFF S Attorney Address V-6

8 S ervicemember C ivil R elief A ct 1 Unique and powerful statute Alters contracts Alters remedies Changes civil procedure Tolls statute of limitations Enforcement Private lawsuit US DoJ Criminal prosecution 2 V-7 1

9 SCRA: Why? protect those who have been obligated to drop their own affairs to take up the burdens of the nation. Boone v Lightner 319 U.S. 561 (1943) 3 Where does it apply? The United States Every U.S State and all of their political subdivisions All U.S. Territories District of Columbia 4 V-8 2

10 What Proceedings are Covered? any judicial or administrative proceeding commenced in any court or agency (50 U.S.C. 3912) Does NOT apply to criminal proceedings. 5 What about arbitration? Probably NOT covered SB th Congress SCRA Rights Protection Act of 2014 (Lindsey Graham/Jack Reed) would have addressed this issue. Not enacted. But see prohibition against forced arbitration in contracts covered by the Military Lending Act (10 U.S.C. 987) 6 V-9 3

11 Waiver 50 USC 3918 In writing Signed by SM during or after military service Instrument separate from the obligation to which it applies Specify the legal instrument to which it applies At least 12 point type 7 Procedural Rights Overview Advise court of military status Appointment of Counsel Delay Proceedings Reopen defaults Statute of limitations 8 V-10 4

12 Military Status: Plaintiff Affidavit 50 USC 3931(b)(1) Required when D does not make an appearance Contents: D s military affiliation or lack thereof SCRA does not prescribe required format NC AOC: Form G Military Status: Defense Manpower Data Center Provides current military status Provides past military status (to 1985) Free, Fast, & Open to the Public Queries require full name and SSN or DOB tml Or enter SCRA Look up in search engine 10 V-11 5

13 Appointment of Counsel 50 USC 3931(b)(2) If it appears that D is SM, no default w/o appt of counsel Counsel will NOT waive defense w/o client permission SCRA is silent on: Duties of counsel Payment of counsel Source of counsel 11 SCRA Bond 3931(b)(3) Where D status can t be determined Court may require P to post bond Amount set by court In effect until expiration of all appeals, set aside opportunities 12 V-12 6

14 Stay of Proceedings No appearance by D 50 USC 3931(d) Stay of at least 90 days shall be on application of counsel or court s own motion if court determines: There may be a defense that can t be presented w/o presence of D, or After due diligence, counsel unable to contact D to determine if meritorious defense exists 13 Stay of Proceedings When defendant has notice 50 USC 3932 Court may stay on its own motion NLT 90 days Court shall stay NLT 90 days w/ proper request Court may delay over 90 days as needed 14 V-13 7

15 Stay Request Contents When D Has Notice 50 USC 3932(b)(2) Letter or other communication Stating how duties materially affect ability to appear Stating date when SM can appear, AND Letter or other communication From the CO Stating that SMs duties materially affect ability to appear, and That leave is not authorized to attend the proceeding 15 Stay Request Use of forms Ensure basic elements covered Tailored as needed Fit factual circumstances Increase persuasiveness Discretionary stay over 90 days 16 V-14 8

16 Stay Request is NOT an Appearance 50 USC 3932(c) 17 Default Judgment 50 USC 3931(g) No default against absent SM unless appt counsel If service affiliation unknown, may require P to post a bond Court shall reopen default if: Entered during actdu service or 60 days thereafter, and Military duties materially affected ability to present defense in original action, and SM has meritorious defense to action or some part of it 18 V-15 9

17 In Re Branch NC Supreme Court 367 NC 733; 767 S.E. 2d 47 (Jan 23, 2015) Dist Judge Publically Reprimanded for conduct prejudicial to admin of justice and of a nature to bring judiciary in disrepute; to wit SCRA violations Failure to appoint counsel Default judgement w/o 1 st appointing counsel Imprudently relying on opposing counsel Inadequate SCRA inquiry 19 Statute of Limitations 50 USC 3936 Don t include military service period in determining: Time to bring action for or against SM Time to redeem property sold or forfeited to enforce obligation Inapplicable to limitations by or under the Internal Revenue Code 20 V-16 10

18 Stay of Execution of Judgements 50 USC USC 3934 Court may on its motion and shall on SM motion stay garnishment, attachment, or execution of judgement if: Military duties materially affect SM s ability to comply Applicable to proceedings commenced before, during, or w/in 90 days of termination of active duty service 21 Eviction Protection 50 USC 3951 No non judicial evictions Of SM or dependents from primary residence if Rent is less than $2,400 Adjusted annually by CPI since 2003 Redundant state laws 22 V-17 11

19 Reduction of Interest 50 USC 3937 Reduction of interest on pre service obligations To 6% APR Effective date: inception of actdu service Interest is forgiven, not accrued Includes student loans (Higher Ed act 2008) Includes joint debts incurred by SM and spouse 23 Reduction of interest Procedure Written request required Include orders initiating/ extending military service Submit w/in 180 days of leaving actdu service Creditor Protection No reduction required, IF creditor persuades court that military service has no material affect on ability to pay and gets judgement to that effect Knowing violation is a criminal offense (Fine / 1 yr imprisonment) 24 V-18 12

20 Reduction of Interest Creditor Responses Lawful options Reduce interest to 6% Prove to court that mil service has no material effect Delay, denial, refusal 25 Reduction of Interest U.S. v Sallie Mae Consent order May 13, 2014 (U.S. Dist. Delaware) Allegations: Illegal defaults (no due diligence prior to filing aff) Failure to reduce interest $60 million compensation Compliance plan Employee Training $55K civil penalty 26 V-19 13

21 Reduction of Interest In re Bank of America Office of Comptroller of Currency v /B of A Consent order 29 May 2015 $30 million penalty Violation of SCRA re default protections, interest reduction, repossession Inaccurate affidavits in collections cases At least 73,000 service member accounts 27 Reduction of Interest Class Action: Rowles v Chace Bank Capt Jonathan Rowles USMC & approx 6,000 others Settlement April 2011 Allegations Refusal to decrease interest Illegal debt collection $27M compensation 28 V-20 14

22 Residential Lease Termination 50 USC 3955 Applicability Pre service lease Deployment orders after lease executed PCSO after lease executed 29 Residential Lease Termination Permanent Change of Station Includes more than you might think Joint Travel Regulation (Section 5000.B) US v Empirian Property Management, Inc. (D. Neb. 8:12 CV 87 Consent Decree March 8, 2012) 30 V-21 15

23 Residential Lease termination Procedure Written notice & Orders / Verification from the CO Effective date Criminal penalty for knowing violation 31 Residential Lease Termination Relationship to State Law State may add, but not detract from SM rights SM chooses which law to use 32 V-22 16

24 Motor Vehicle Lease Termination 50 USC 3955 Covered leases Executed as civilian & thereafter ordered to actdu NLT 180 days Executed on actdu & thereafter receives PCSO from CONUS to OCONUS PCSO fm state OCONUS to any other state [ state includes US territories per 50 US 3911(6)] 33 Motor Vehicle Lease Termination Procedure Written notice Delivery of vehicle NLT 15 days after notice Termination effective immediately upon compliance No early termination charges May charge Prorated rent to effective date of termination Other contractual charges including reasonable charge for excess wear & mileage 34 V-23 17

25 Foreclosure 50 USC 3953 Non judicial foreclosure on pre service mortgages prohibited! Protections lasts thru military service + 1 year* Knowing violation is a crime *On 1 Jan 2018 protection period reverts to actdu + 9 months 35 US v BAC Home Loans (B of A Subsidiary) Settlement May 26, 2011 Allegation: 160 foreclosures by BAC (Formerly Countrywide) in violation of SCRA $20M compensation US v Saxon (Subsidiary of Morgan Stanley) Settlement May 26, 2011 $2.35 M compensation 36 V-24 18

26 National Mortgage Settlement Compensation to SM for SCRA violations rises to $311 million US DoJ Press Release 30 September Repossession 50 USC 3952 Covered: Pre service contract for purchase, lease, bailment of personal or real property Non judicial repo to enforce is prohibited! Contract termination w/o court order prohibited Protection ends when actdu ends Knowing violation is a criminal offense. 38 V-25 19

27 US v Aristocrat Towing Consent Decree April 30, 2012 (Eastern Dist VA) $75K compensation Fix credit reports 39 US v Santander Consumer USA Consent order: Feb 25, 2015 (N Dist Tx) Detailed compliance plan Employee training Reports to US DoJ $55K civil penalty $9,360,000 compensation 40 V-26 20

28 Cellular Phone Service 50 USC 3956 Right to terminate if ordered to relocate for at least 90 days to a place that does not support the contract Obligations of dependents traveling w/ SM also terminate No early termination fee May retain # if request w/in 3 years Request Written / electronic notice Copy of orders 41 Storage Liens 50 USC 3958 Non judicial enforcement of storage lien prohibited! Coverage: during active duty and for 90 days thereafter Includes pre service and active duty obligations 42 V-27 21

29 Child Custody Protection 50 USC 3938 (Dec 19, 2014) Temp custody order based solely on deployment must end NLT the period justified by the deployment In determining best interest of child, court can not use deployment as sole factor Does not create federal right of action or right to remove to federal court State laws providing greater protection to SM take precedence 43 Health Insurance Reinstatement 50 USC 4024 SM right to reinstatement of health insurance in effect the day before actdu service & terminated during military service Must reapply w/in 120 days after end of military service Inapplicable if SM is eligible to participate in employer provided health insurance under 38 USC 4301 et seq (USERRA). 44 V-28 22

30 Tax: Residency 50 USC 4001(a) & (c) Move pursuant to military orders does not cause SM (or spouse) to gain or lose residency for tax purposes Military compensation to be construed as income only in tax jurisdiction in which SM is domiciliary. Spouse income also construed to be sourced from jurisdiction in which spouse is domiciliary. 45 Tax: Personal Property 50 USC 4001(d) Personal property (including motor vehicles) of SM / spouse not deemed to be in jurisdiction of military duty station Exceptions Jurisdiction is SM/ spouse otherwise domicile Property used in trade or business 46 V-29 23

31 Residency Guarantee: Voting 50 USC 4025 Execution of travel pursuant to military orders does not cause SM (or accompanying spouse) to lose or gain residence or domicile for purpose of voting 47 Anticipatory Relief 50 USC 4021 Relief from Preservice obligations Tax assessment before or during military service Real estate/ mortgage Max stay: Remaining term of contract + period of time = to military service SM must make installment payments beginning release from actdu or date of application whichever is later 48 V-30 24

32 Anticipatory Relief May stay other obligation for period equal to military service Must show material effect Must apply to court during mil service or 180 days thereafter 49 Enforcement Criminal liability (specific provisions) US Attorney General action authorized (50 USC 4041) Equitable / declaratory relief all appropriate relief including money damages to aggrieved persons $55K penalty (1 st violation); $110K penalty subsequent violations 50 V-31 25

33 Private Right of Action 50 USC 4042 Equitable and declaratory relief Money damages Costs and attorney fees Doesn t limit other remedies available under any law 51 V-32 26