SERVICE MEMBERS CIVIL RELIEF ACT

SERVICE MEMBERS CIVIL RELIEF ACT 50TH SPACE WING LEGAL OFFICE 210 FALCON PARKWAY, SUITE 2104 SCHRIEVER AFB, CO 80912-2104 (719) 567-5050 DSN 560-5050 The information provided in this document is meant for the sole use of Active Duty service members, retirees, their families, and other personnel eligible for legal assistance from the Schriever AFB Legal Office. The information is general in nature and meant only to provide a brief overview of various legal matters. Rights and responsibility vary widely according to the particular set of circumstances in each case. Laws can vary across states, services, and civilian jurisdictions and laws are changed from time to time. Do not rely upon the general restatements of background information presented here without discussing your specific situation with a legal professional. 1

INTRODUCTION The Soldiers and Sailors Civil Relief Act of 1940 (SSCRA) provided civil protections and rights to individuals based on their service in the U.S. armed forces. On December 19, 2003, Congress enacted P.L. 108-189, the Servicemembers Civil Relief Act (SCRA), in response to the increased utilization of Reserve and National Guard military units in the Global War on Terrorism, and as a modernization and restatement of the protections and rights previously available to servicemembers under the SSCRA. Much like with the SSCRA, the SCRA has been amended since its initial passage and proposed changes continue to be introduced in Congress. The SCRA provides protections for servicemembers in the event that their military service impedes their ability to meet financial obligations incurred before entry into active military service. Forgiving of all debts or the extinguishment of contractual obligations on behalf of servicemembers who have been called up for active duty are not required, nor is absolute immunity from civil lawsuits provided. Instead, the act suspends civil claims against servicemembers and protects them from default judgments. The Act may now be found in Title 50 of the U.S. Code 3901-4043. WHO GETS THE PROTECTION? The SCRA covers all Active Duty servicemembers, Reservists and the members of the National Guard while on active duty, and, in certain instances, it extends to the servicemembers family. The protection begins on the date of entering active duty and generally terminates within 30 to 90 days after the date of discharge from active duty. BASIC SCRA PROTECTIONS: The SCRA includes provisions that 1) prohibit the eviction of military members and their dependents from rental or mortgaged property, 2) create a cap on interest at 6% on debts incurred prior to an individual entering active duty military service, 3) protect against the cancellation of life insurance or the non-reinstatement of health insurance policies, 4) allow some professionals to suspend malpractice or liability insurance while on active duty, and 5) proscribe taxation in multiple jurisdictions and forced property sales in order to pay overdue taxes. The key provisions of the SCRA are described in more detail below. I. STAY OF PROCEEDINGS AND DEFAULT JUDGMENTS. SCRA 3931 and 3932 are controlling on whether the court will grant a stay of proceedings for a servicemember. The determination of which section applies depends on whether the Servicemember has notice of the proceedings. Servicemembers without Notice, 3931. 3931 applies only if the Servicemember is not on notice of proceedings against him or her, and has not appeared as a result. As a rule, before a judgment is entered against any person not making an appearance, the plaintiff is required to submit an affidavit stating: 2

Whether or not defendant is in military (with necessary supporting facts); or that plaintiff is unable to determine whether or not defendant is in military. Satisfaction of Requirement for Affidavit: the requirement for an affidavit under paragraph (1) may be satisfied by a statement, declaration, verification, or certificate, in writing, subscribed and certified or declared to be true under penalty of perjury. Penalties for Knowingly False Affidavit include fines in accordance of Title 18, and/or imprisonment for not more than one year If the Court determines that the defendant is a servicemember, the court cannot enter a default judgment and the Court must appoint an ad litem attorney to represent the servicemember. The ad litem attorney would be responsible for locating the Defendant but may not waive any rights or defenses if Defendant is not located. Upon finding of military status, the court may not enter a default judgment and must abate proceedings for at least 90 days. If the Court cannot ascertain status from the affidavit then the Court may order that a bond be posted to ensure indemnification of the servicemember at a later date (but this is almost never done). The Court may then proceed on the default judgment except that the statute gives the court the right to enter any and all such orders for the protection of the servicemember under the act. Reopening Default Judgment. Upon application by servicemember, the court SHALL reopen any default judgment rendered while the servicemember was on active duty or within 60 days from release from active duty. Servicemember s application must be made while applicant is still on active military duty or not later 90 days thereafter, show a material effect, and assert a meritorious defense to all or part of the action. Servicemembers who received Notice of the action or proceeding, 3932. The SCRA permits active duty servicemembers, or individuals within 90 days after terminating military service, who are unable to appear in a court or administrative proceeding due to their military duties, to postpone (stay) the proceeding for a mandatory minimum of ninety days. This right applies to any civil proceeding, including child custody proceedings, but NOT CRIMINAL PROCEEDINGS. It is imperative to follow the steps required for a stay request! The request must include: A letter or communication by the servicemember stating facts that establish a material affect (must show that military service materially affects, or prejudices, the member s ability to participate in the court action) AND the date the servicemember will be able to appear; and A letter or other communication from the servicemember s commander stating no leave is authorized. 3

Note that an application for a stay does not constitute a waiver of defense or an appearance if submitted by the servicemember. Do not allow a legal assistance attorney to submit this information on your behalf; this may waive your rights. Once the servicemember has made a proper request for stay, the civilian court must grant a stay of not less than 90 days [ 3932(b)(1)]. The stay can be granted at any time prior to final judgment in a civil action or proceeding. Application for Additional Stay, 3932 (d)(1) If a servicemember was granted a stay, they may apply for an additional stay based on continuing material effect of military duty on the servicemember s ability to appear. It may be filed with the initial application, or at a later date when it becomes apparent they will be unable to be present at the action. The same requirements exist for both applications. Stay or vacation of execution of judgments, attachments, and garnishments, 3934 If the court finds that a servicemember is materially affected in complying with a court order or judgment because of their military service, the court may on its own motion and shall, on application by the servicemember, stay the execution of any judgment or order entered against the servicemember and vacate or stay an attachment or garnishment of property, money, or debts in the possession of the servicemember or a third party, whether before or after judgment. This applies to actions or proceedings that were commenced in a court against the servicemember before or during military service, or within 90 days after military service ends. Waiver of SCRA protections, 3918. The servicemember may voluntarily waive the SCRA protections, but the Waiver must be: In writing and at least in 12 point type; Executed separate from the original obligation to which it applies; and Executed during or after the period of active duty. The waiver of certain benefits does not mean a waiver to all rights and protections. The standard Waiver of Citation for a divorce has boilerplate language that waives any and all rights under the SCRA II. 6% INTEREST RATE CAP Another protection afforded by the SCRA is the ceiling it places on interest rates for preservice debts and liabilities. Typical obligations include such things as car loans, mortgage loans, credit cards, and lines of credit. Debts or financial liabilities incurred by a member, or the member and the member s spouse jointly, before the member enters military service, cannot bear interest at a rate in excess of 6% per year during active duty and for one (1) year after termination of a servicemember s period of military service 3937(a). 4

Interest in excess of 6% during the period of military service is forgiven for the term of service. As only pre-service debt is covered by the SCRA, any indebtedness incurred while on active duty is not subject to the 6% cap. In order to take advantage of SCRA protection, servicemembers should request in writing that their creditor reduce their interest rate below the 6% maximum. Members should also provide their creditor with a copy of their orders calling them to or further extending military service. Under the SCRA, the only way in which courts can allow a creditor to charge rates in excess of 6% on pre-service obligations is if the creditor can demonstrate that the ability of the member to pay an interest rate greater than 6% is not materially affected by reason of his or her military service. In early 2011, JP Morgan Chase was highlighted by the media and taken to task by the Hill for violations of these SCRA protections. In response, they instituted protections above and beyond SCRA. Other banks have also followed suit. Therefore, you may be able to get an interest rate LESS THAN 6% -- ask your bank. III. RESIDENTIAL AND VEHICLE LEASES Active duty members who receive PCS orders or are being deployed for at least 90 days may terminate residential leases with 30 days written notice. PCS orders include separation orders. The written notice must include a copy of the member s orders. Motor vehicle leases can be terminated with receipt of NONCONUS PCS orders or a deployment of at least 180 days. Additionally, a servicemember may not be charged any early termination fees in relation to terminating either a residential or vehicle lease under this section. IV. PHONE SERVICE CONTRACTS Cell phone contracts can be terminated, if a servicemember entered into the contract before receiving orders to relocate for a period of at least 90 days to a location that does not support the contract. A servicemember must submit a written or electronic notice of termination, specifying the date on which the service is to be terminated, and a copy of his/her orders to the telephone service provider. Under the SCRA, there is no waiting period required before the termination notification becomes effective. The telephone service provider may not impose any early termination charges, but any tax or any other obligation or liability the servicemember owes under the contract is due at the time of the termination of the contract. Additionally, if the servicemember resubscribes to the service, within 90 days of the end of his/her relocation period, the service provider may not impose a charge for reinstating service, other than any customary installation or acquisition of equipment imposed on any other subscriber. If the service member is part of a friends or family type of contract, the person who entered the contract may terminate the coverage of the servicemember without penalty. Similarly, if everyone is relocating with the servicemember, to an area without service, the entire contract can be terminated without penalty. 5

V. EVICTION PROTECTION The SCRA also strengthens protection against the eviction of servicemembers. Servicemembers whose residential lease is up to $3,329.84 per month (current for 2015 and adjusted annually for inflation) cannot be evicted without a court order. If a member s ability to pay rent is materially affected by military service, they may request a 90-day stay of any eviction proceedings started by their landlord. VI. MORTGAGE FORECLOSURE PROTECTION The SCRA allows the servicemember to request a stay from foreclosure proceedings, while on active duty, or within 90 days from release of active duty. The court may review the promissory notes that gave rise to the foreclosure and could change the mortgage payment and maturity date. However, the Court must find a material effect to grant relief. The mortgage foreclosure protection applies to both real and personal property acquired prior to going into military service. VII. INSTALLMENT CONTRACTS Motor vehicles purchased under an installment contract, along with real and personal property, are also covered by the SCRA. Once a servicemember enters military service, the property cannot be repossessed by the creditor for the member s failure to perform (e.g., to make car payments) unless the creditor obtains a court order. VIII. TAXES The SCRA addresses taxes in a couple of ways. First, state and local governments may not use the military income of a non-resident servicemember to increase the member s income tax bracket, or the tax bracket of the member s spouse who may be subject to the tax jurisdiction. Also, the Act defers collection of federal and state income tax obligations when members apply for deferment in cases where military service materially affects their ability to pay. Deferment cannot extend more than 180 days beyond the termination of or release from active service. Neither the IRS nor the state department of revenue can charge interest or other penalty during the deferment period. IX. VOTING RIGHTS The SCRA also seeks to ensure that servicemembers are able to vote in their home state elections. For this reason, a servicemember who is absent from their state due to military orders will not be deemed to have lost residence or domicile. A servicemember does not gain voting rights in host state during service, but rather must take steps to change voting registration. X. PRIVATE RIGHT OF ACTION In 2010, Congress amended the SCRA to include a private right of action for any person aggrieved by a SCRA violation. Therefore, if an individual servicemember s rights under the SCRA are violated they can sue. Previously the SCRA did not contain this provision, creating 6

confusion among the court systems and prompting Congress to clarify this in 2010. Therefore, a servicemember whose SCRA rights are violated may bring an action for equitable or declaratory relief, monetary damages, costs, and reasonable attorney fees. CONCLUSION This article has only discussed some of the highlights of the SCRA, which provides numerous protections for military members. If you have any specific questions about the SCRA, please contact the Legal Office to set up an appointment for legal assistance. 7