Complying with SCRA Credit Card Regulations

Active duty members under military service in the United States government are well-protected by the Servicemembers civil relief act SCRA. Some protections extend after the servicemember has left active duty.

Under the SCRA, servicemembers can receive financial relief and protections. If you are an active duty servicemember or the immediate family member of someone in military service then you may be familiar about the SCRA and its helpful provisions.

However, if you are new to information on the SCRA, you may need some more background information about the certain protections, thanks to these benefits.

In this article we will discuss the background, benefits, and compliance with SCRA legalities.

What Is The Servicemembers Civil Relief Act (SCRA)?

The Servicemembers Civil Relief Act “SCRA” was enacted by the United States Department of Justice in 2003. It totally replaced the earlier Soldiers’ and Sailors’ Act and followed upon on the Civil Rights Act.

The Civil Rights Act is important because its main objective is “to uphold the civil and constitutional rights of all Americans” – especially the most vulnerable members of the American civil society. Therefore, it is the Civil Rights Division that is enforcing the Servicemembers civil relief act.

How Was The SCRA Legalized?

The United States government has a long and good history of providing benefits to their citizens who are willing to sacrifice their lives for their country.

The Servicemembers Civil Relief Act was enacted in 2003 but it has not stayed stagnant since then. It has actually been amended several (almost a dozen) times to keep up with the changing times and needs of active duty servicemembers.

In fact, the SCRA is the expansion of the Soldiers’ and Sailors’ Civil Relief Act of 1940 (“SSCRA”), this original law was written to ease the financial obligations and burdens of service members while they are participating in military service.

It was during the Civil War when the United States Congress first passed a law or memorandum which allows the delay of any proceedings, whether in civil or criminal courts, for the US citizens who fought for the country. It was later, during the period of the world wars, wherein the SCRA was written and passed because the US government was looking out to protect their soldiers who were fighting overseas. This was very beneficial at this point because the SCRA offered more specific legal protections and resolutions to civil or criminal disputes involving the US military members who were serving locally or abroad.

Since then, the US Congress approved the SCRA to make it more inclusive to a larger number of the service members. It is believed that this change was due to the participation of the National Guard, because they were called to help respond to the terrorist attack of Sept. 11, 2001. Either way, it has provided more legal protections and ease financial burdens on the military members of the United States.

Does The SCRA Offer Any Benefits and Protections?

Yes, and the SCRA has been amended many times in order to help with financial strains during US recessions and economic crises that affect active servicemembers.

The SCRA was very helpful during March 2020 when the United States government’s Department of Defense ordered the temporary ban on domestic travel for all, including military members and their families. This travel ban was put in place to address the COVID-19 pandemic and curb the rise of infections.

To assist the affected service members, the Congress then amended the SCRA so that servicemembers can end a housing or automobile lease agreement without prior notice under many circumstances. There was likewise another amendment which allowed families of servicemembers who die or are seriously injured that they may end their ongoing phone, cable, and/or internet contracts without notice.

Generally, the SCRA as a federal law covers several issues regarding financial protections, including, but not limited to, the following:

• rental agreements and contracts
• security deposits
• paying rent
• eviction regulations
• installment payments
• credit card interest rates
• mortgage interest rates and foreclosures
• civil judicial proceedings
• automobile leases
• life insurance
• health insurance
• income tax payments

Since the SCRA is a federal law meant to protect active duty servicemembers, the Attorney General is authorized by law to file federal lawsuits against persons or entities that violate the SCRA. In the case of lawsuits then the Attorney General can seek monetary damages, civil penalties, equitable or declaratory relief on behalf of the servicemembers involved in the case.

Servicemembers can seek legal assistance from the local military office, but in certain cases, the Department of Justice can review the violation and come up with the appropriate actions as needed.

Who Can Benefit From These SCRA Benefits?

The servicemembers civil relief act actually outlines the definition of military service. It includes:

1. Any full-time, active duty members of the six military branches namely the Army, Navy, Air Force, Marine Corps, Coast Guard, and Space Force
2. Reservists on federal active duty
3. Members of the National Guard on federal orders for a period that is longer than 30 days

In addition, SCRA also covers some personnel under the:

1. Public Health Service (PHS)
2. National Oceanic and Atmospheric Administration (NOAA)
3. U.S. Department of State

SCRA protections usually begin on the date that servicemembers enter active duty military service or upon receiving military orders (for the reservists).

The SCRA also offers benefits to the servicemembers who are absent from military duty due to a lawful cause, illness, wounds, or leave, so they are essentially protected and eligible for the SCRA benefits even if they are not in a period of active duty service.

Apart from the actual service members, the SCRA will provide benefits and protections to their dependents, even including individuals who co-signed a loan or took out a loan with the service member. Dependents can be the spouse, child/children, or any person who has been financially supported by the servicemember for the past 180 days.

With that, the SCRA benefits are numerous because it not only applies to servicemembers who are constantly on active duty service, but even those who are on the list as reservists, and their dependents who are equally affected by their military service activities, risks, and relocations.

What Are The Specific Benefits and Protections Under SCRA?

There are many protections under law within the SCRA. To have a general overview here as some of the protections that you may receive if you are eligible under the SCRA.

• 6% cap on interest rates incurred from financial obligations (prior to military service)
• ability to stay civil court proceedings
• protections in connection with default legal judgments
• protections in connection with residential lease terminations
• protections in connection with evictions, mortgage foreclosures, and installment contracts (including car loans)

Some benefits are more sought after than others, and we will list down some of these protections ranging from mortgages to life insurance.

Postponing Foreclosures

The sale, foreclosure, or seizure of property due to nonpayment of mortgage debt prior to military service will be valid if it is made during or within nine months after the servicemember’s period of active duty – unless it is to carry out a valid court order.

Deferring Income Taxes with The IRS

The Internal Revenue Service or the IRS, as well as local state taxing authorities, will defer the service member’s income taxes before or during periods of active duty if the servicemember’s ability to pay is materially affected by the military service. This deferral does not allow the addition of interest or penalties.

Prevention of Evictions

The servicemember and their dependents or families are not allowed to be evicted without a court order, this is regardless of their personal rental agreement or even local state laws. But this only applies to residences wherein the monthly rate is a certain amount.

Protection From Default Judgments

Servicemembers on active duty can be represented by a lawyer (appointed by the judge) in case there is a civil action, civil proceeding, or administrative proceeding that is filed against the servicemember.

Postponing Civil Court Proceedings

Servicemembers can request a 90-day delay for civil court action if they cannot attend due to active military service. These civil court cases include but are not limited to divorce, child support, and foreclosure proceedings. (It does not apply to criminal court or administrative proceedings.)

Protection of Businesses

Servicemembers are relieved of financial obligation from the creditor if they own a small business with non-business assets, military pay, business debts if they are on active duty.

Termination of Lease Agreements

A written notice of termination may be submitted to terminate a residential, agricultural, professional, or business lease if this lease was entered before starting the military service, upon receiving a permanent change of station orders or orders to deploy (with a unit or individually) to support a military operation that exceeds 90 days.

Termination of Phone Services

The termination of cellphone services or even phone exchange services are allowed if the contract was entered before receiving active military orders to relocate for over 90 days to a new location which is not supported within the phone contract.

Protection From Property Repossessions

Repossession of property is prohibited without a court order, whether it is due to nonpayment or contract termination for payment gaps before or during a period of active duty.

Professional Liability Insurance

Service members who also work as professionals in other fields such as healthcare or legal services are allowed to suspend their professional liability insurance contract by writing a request to their insurance carrier. Once the insurance is suspended, premium payments do not have to be paid, and any premium payments made while on active military service should be refunded by the carrier. But the servicemember is allowed to reinstate their suspended insurance by writing a request within 30 days of returning from their active military service.

Protection with Life Insurance Coverage

Military personnel are protected against terminations of required premium payments from life insurance companies if they are on active duty. However, the increase premium payments based on the age in an individual term insurance is not within the SCRA regulations. Insurance carriers may also restrict the coverage provided for certain activities that are required from military service.

Voting Rights

Similar to the tax residency benefit, the residency for voting purposes for state, federal, or local voting rights will be protected despite a servicemember’s absence due to periods of active duty. Protections may also apply to a servicemember’s spouse.

What Are Some SCRA Benefits For Active Service Credit Card Holders?

There are a couple of benefits for credit card holders, since the SCRA limits the amount of interest rate that is charged on some financial contracts to no more than 6% per year. These contracts can be for credit cards and mortgages. With the SCRA the interest rate will be capped at 6% per year which is certainly a great benefit.

To obtain this, the servicemember should provide his or her creditor with a written notice and a copy of their military orders. This copy can be any appropriate indicator of their military service. An official letter from their commanding office will suffice. The paperwork including the written notice and proof of military service should be handed to the creditor no later than 180 days since the end of the service member’s period of active duty.

Creditors are then required by law to forgive and not defer the interest that is greater than 6% per annum, retroactively. They are not allowed to accelerate the principal payment in response to the service member’s request for the 6% cap.

Can You Waive Your Rights Under The SCRA?

Interestingly enough, the SCRA makes it possible for servicemembers to waive their rights. A written agreement or waiver is valid if it is signed during or after the period of military service. Signing the waiver for SCRA rights before entering a period of military service will make it invalid. The format of the waiver is important. Generally, the waiver cannot be a clause in an agreement, but has to be in the form of a stand-alone document

Of course, before the waiver is signed, all documents and provisions should be carefully read and understood with the advice of a knowledgeable legal officer or qualified attorney.

The Bottom Line

It is beneficial to know the different protections you can have under the SCRA benefits, which can greatly help financial responsibilities by providing education and private student loans, home equity loans, vehicle loans, any ongoing periodic payments, interest rate reduction, existing credit, credit card debt, among many more.

If you are a servicemember or dependent of one and believe that your SCRA rights have been violated, you may seek assistance from a local US Armed Forces legal assistance program first.