subject: Servicemembers Have Additional Debt Collection Protections [print this page] The Servicemembers Civil Relief Act (SCRA) gives active duty members of the Armed Forces some financial protection so that they do not have to suffer anxiety about their finances, belongings and/or debts while in active service to the nation. It is a way for our country to protect them while they protect us.
All servicemembers who are in active military service are entitled to protections offered in the SCRA, including National Guardsmen, Reservists who are called to active service for more than 30 consecutive days, Public Health Service (PHS) commissioned officers, and those in the National Oceanic and Atmospheric Administration (NOAA). SCRA protections begin on the day that the servicemember starts active duty, and they remain in effect up to 90 days after discharge from active service.
When seeking protection from debt collection, the SCRA requires that the servicemember prove that his ability to pay is "materially affected" by being on active duty. An example might be the Reservist in the civilian workforce who is called to active duty at less pay. In this case, his ability to pay might be "materially affected." Let's say this Reservist fell behind on his car payments almost immediately after going on active duty; this might be a good indication that his service affected his ability to pay. But if he was already delinquent on his payments before he entered active duty, the fact that he is in the service may not be seen as the cause of delinquency. In this case, the Reservist would need to provide prior and current financial information before an informed decision could be made on how his service affects his ability to make his car payments.
An SCRA provision allows a servicemember to request interest rate reduction on outstanding loans to six percent (6%) while he is on active duty. The loan must have been obtained before going on active duty; the interest rate must be higher than six percent per year; and the servicemember's ability to pay must be affected by his service. The servicemember must request interest rate reduction in writing to the lender and include a copy of his military orders. This protection applies to individual accounts in the servicemember's name or joint accounts with a spouse.
If a servicemember has paid a deposit or made a payment on a car or other personal property before being called to active duty, these belongings are protected under the SCRA. As long as a servicemember can prove that his ability to pay is "materially affected" by his service, the lender can't repossess his car or other property for nonpayment. The lender also can't terminate or breach terms of the contract unless allowed by a court.
Similar protection extends to the servicemember's home as long as he owned it before he was called to active duty. This protection extends for 90 days after active duty service ends. Provisions within the SCRA may help servicemembers facing foreclosure by allowing foreclosure proceedings to be delayed, payments to be reduced, the life of the mortgage to be extended, or the court judgment foreclosing on the home to be reopened or set aside.
The important protections against debt collection in the Servicemembers Civil Relief Act (SCRA) are just a small measure of relief for those who put their lives in jeopardy for the rest of us. Be sure to seek legal advice as soon as your inability to pay your bills becomes apparent. The SCRA is in place to protect you.
