Below are just a few protections provided under the Servicemembers Civil Relief Act (SCRA). Download and review the SCRA toolkit to learn more.
6% Rate Cap on Most Debt — If a servicemember enters active military service, most creditors are required to reduce the interest rate on their debt to no more than 6% per year during the time of active service. Mortgage lenders are required to cap the mortgage interest rate at 6% per year during a servicemember’s active service and for one year thereafter. The servicemember or his family must request this reduction. If a creditor can prove the servicemember's ability to repay the debt has not been “materially affected” by active duty, however, he may not have to lower the interest rate. Interest that would otherwise have been charged is forgiven and creditors may not attempt to assess or collect it after the servicemember's return from duty.
Auto Lease Termination — If a servicemember enters active duty, has a change in duty station outside the continental United States or is deployed for at least 180 days, that servicemember and his or her dependents have the right to terminate an auto lease that was signed prior to the servicemember's receiving orders. Servicemembers are required to give written notice of the termination to the lessor AND to deliver the vehicle to the lessor within fifteen (15) days after delivery of the written notice. No early termination fees may be charged, but any unpaid amounts (due prior to termination) and other miscellaneous charges may still be imposed.
Residential Lease Termination — If a servicemember enters active duty for 91 days or more, has a change in duty station outside the continental United States or is deployed for more than 180 days, that servicemember has the right to terminate a residential lease agreement. Servicemembers are required to provide a written notice of the termination of the lease and a copy of their orders. The termination date for residential leases depends on the length of the lease, generally within thirty (30) days of notice. However, an additional rental payment may be due, depending on the lease and the date of the notice.
Cell Phone Contract Termination — If a servicemember enters active duty for 90 days or more to a location that the cell phone provider does not service, the servicemember has the right to terminate the cell phone contract. The servicemember must provide written or electronic notice of termination and a copy of the military orders.
Payday Lending Protections — Under the Military Lending Act (MLA) payday lenders must cap the APR—which incorporates all fees and costs associated with the loan—at 36% when lending to servicemembers. In order for the MLA to apply, the payday loan must be closed-end credit with a term of 91 days or less in an amount of not more than $2,000. It is important for servicemembers to never allow payday lenders to extend the term of a loan past 91 days as this extension would remove the loan from the protections guaranteed under the MLA.
Protection from Eviction if Rent is $2,400 or Less — Courts are able to stop an eviction for up to three months or longer if requested by a servicemember whose ability to pay rent has been materially affected by the active duty service.
Protection from repossession or charges for property paid for under an installment contract or lease — If the servicemember's ability to pay for real or personal property, including motor vehicles under an installment contract or lease, has been materially affected because of active duty service, the court can terminate the contract and require repayment of all prior installments and deposits prior to repossession, stay the proceedings until the servicemember is available, or order other relief that is fair to protect the interests of all parties.
Delay of all civil court actions, such as bankruptcy, foreclosure, or divorce proceedings — If the servicemember's ability to participate in a civil action or proceeding is materially affected because of active duty or deployment the servicemember may ask the court to stay the proceedings until the servicemember's ability to participate is no longer affected. The court may also stay the proceedings on its own, without being asked to.
Reinstatement of Health Insurance — Active duty personnel are provided health coverage by the military and their families are eligible for coverage. After active duty, a servicemembers' prior health insurer must reinstate the coverage that was in effect before service commenced and that was terminated during the period of service with very limited exclusions for “preexisting conditions.”
Relief from Life Insurance Premiums — The Act guarantees that a servicemember's life insurance policy will not lapse due to non-payment of premiums during active service and for two years thereafter. The Act does not excuse payment of the premiums, however, which must be repaid within 2 years. If the policy becomes due during active duty due to the death of the servicemember, the government pays the premiums, the amount of which is deducted from the final settlement. Any amounts paid by the government to cover a servicemember's insurance premiums is a debt, which may be collected by the government.
Relief from Statutes of Limitations — If a servicemember has a legal claim, which may be filed in court, active duty status stops or “tolls” applicable statutes of limitations or legal deadlines for filing cases.