If you are an active duty member of the United States Armed Forces or know someone, who is, you would be doing them a tremendous service is you passed along this article to them. As a former member of the military, I had no idea that this law, or the previous one, (SSCRA) even existed. In addition, had I known about it, I would have saved a lot of money and a lot of hassle.
I think everyone can agree that entering active duty in our nation’s armed forces is a tall order, however it does not have to carry with it either heavy financial or legal burdens. To help, the Servicemembers Civil Relief Act (SCRA) offers military professionals a variety of financial and other protections.
The new Servicemember’s Civil Relief Act (SCRA) is an expanded version of the former Soldiers’ and Sailors’ Civil Relief Act (SSCRA). The SCRA provides a wide range of protections for debt help for service members, individuals entering called to active duty in the military, or deployed servicemembers. The purpose of the SCRA is to postpone or suspend certain civil obligations to enable service members to devote full attention to duty and relieve stress on the family members of those deployed servicemembers. A few examples of such obligations servicemembers may be protected against include:
• Tax relief. If a member’s ability to pay federal or state income taxes has been affected by entering the service, that member can apply for a deferral of those taxes that may last as long as 180 days from the date a member separates from service.
• Life insurance. Certain life insurance policies qualify for protection from lapse or termination for nonpayment during active duty and for two years thereafter.
• The right to request a delay of legal proceedings. If a member receives notice of an upcoming legal proceeding while they are on active duty, (or within 90 days of release from active duty), a member may qualify for a delay of those proceedings if their military duty substantially affects their ability to appear.
• Protection from eviction. Landlords are generally prohibited from evicting active duty service members and/or their families without a court order, provided the monthly rent is less than $3,047.45, adjusted for inflation.
• The right to terminate leases. When a member enters active duty service, and receives orders to be deployed, the SCRA generally lets the member terminate any existing lease agreements for both real estate and vehicles.
• Safeguards for homeowners. Servicemembers are largely protected from being foreclosed upon while on active duty and for twelve months after separation.
• Credit protection. Ratings agencies cannot issue a bad credit report simply because a member claimed SCRA rights. Likewise, lenders cannot use it as a reason for denying credit or changing the terms of an existing account.
• Interest rates. No interest above 6 percent can accrue for credit obligations (that were established prior to active duty or activation) while on active duty, nor can that excess interest become due once the servicemember leaves active duty.
• Life insurance protections were introduced to include any activated Guard and reserve members, and increased the maximum amount of coverage from $10,000 to $250,000 that the federal government will protect from default for nonpayment while on active duty.
• Double Taxation. Prevents servicemembers from a form of double taxation that can occur when they have a spouse who works and is taxed in a state other than the state in which they maintain their permanent legal residence. SCRA will prevent states from using the income earned by a servicemember in determining the spouse’s tax rate when they do not maintain their permanent legal residence in that state.
The SCRA covers all Active Duty servicemembers, Reservists and the members of the National Guard while on active duty. 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. Therefore, it is extremely important that all servicemembers are aware of this law and its protections. Again, if you know a servicemember, please feel free to pass along this article to them. I can assure you they will be grateful.