The federal government has implemented certain programs and protections that help active-duty military members and veterans secure housing. One law is the Servicemembers Civil Relief Act or SCRA, which is a source of both legal and financial protection for active-duty members.
The law is in place to protect servicemembers if there are financial or legal situations that adversely impact their rights during their uniformed or military service. The protections can help servicemembers focus on their job duties.
The SCRA applies to:
• Active-duty Army, Marine Corps, Air Force, Coast Guard, and Navy members
• Reserve component members when they’re serving on active duty
• National Guard component members mobilized under federal orders for over 30 consecutive days
• Active duty commissioned officers in the Public Health Service or National Oceanic and Atmospheric Administration The law was established in 2003. It was passed by Congress to both replace and expand the Soldiers and Sailors’ Civil Relief Act (SSCRA), which was passed during World Wars I and II.
The 2003 version of the SCRA was passed to be more inclusive of service members because National Guard members were called in response to the September 11, 2001, terrorist attacks.
Since originally being passed, the SCRA has been amended almost 24 times.
Most recently, the law was strengthened to help assist servicemembers dealing with the impacts of shutdowns and other changes during the economic crisis stemming from the pandemic. For example, the Department of Defense ordered a temporary halt to domestic travel for military members and their families in March 2020. In response, Congress amended the SCRA to give military members the power to end car or housing lease agreements without notice.
Another amendment lets family members of servicemembers who are seriously injured or killed end cable, phone, and Internet contracts.
How Does It Work?
The SCRA protects anyone currently serving in the military, including reservists on federal active duty. The children and dependents of service members also have protections in certain situations, such as when they cosign a loan.
The protections and benefits of the Servicemembers Civil Relief Act include:
• Caps on interest rates: One of the provisions of the SCRA limits the interest rate an active duty service member has to pay. Any debts held before going into duty, including car, home loans, and credit cards, can’t charge over 6% interest. Student loans fall under this category, and it's also included if you took out a loan jointly with a spouse. You have to notify a lender in writing and put a copy of your active duty orders or a letter from your commanding officer showing your start date for active duty service. A lender can’t revoke a loan or credit account, nor can they refuse to grant you credit or change your credit terms because you use your SCRA rights. The lender cannot provide negative information to a credit reporting agency because you use your SCRA rights. You do still have to pay your debts back, though. You can request an interest rate reduction from a lender any time you’re on active duty and up to 180 days after you’re released.
• Home and car protections: The law protects renters, homeowners, and holders of auto leases. Renters and car leaseholders can end their leases under certain conditions. A mortgage company or landlord can’t evict a servicemember or foreclose on their home without a court order. The mortgage protection is in place while on active duty and for a year after leaving it. Without a court order, the SCRA might prohibit a creditor from repossessing personal property, including vehicles. If you signed a home lease, you or someone exercising power of attorney for you should submit your landlord notice that you want to terminate your lease and a copy of your orders. You shouldn’t have any penalty for properly informing your landlord you want to terminate your lease.
• Insurance: There are life and health insurance protections when a military member is called to active duty. Any health insurance policy that was in effect when active duty started must be reinstated at the same premium rate when the servicemember returns. Servicemembers can put off paying life insurance premiums while they’re on duty without losing coverage.
Finally, the SCRA protects civil cases. If you’re sued while on active duty, you may have some protections from a default judgment in a civil case. A default judgment is court-ordered in favor of the person suing you if you didn’t appear to defend yourself against a lawsuit brought against you.
There are a lot of financial and legal protections available under SCRA, but servicemembers need to be aware of their rights to exercise them. There are often steps they have to reasonably take in letting a lender or creditor know their situation.
