Benefits and Protections

In addition to rights that apply to legal proceedings, the SCRA also provides a number of other rights and protections for servicemembers and their dependents. These apply to certain legal and financial obligations, such as leases, contracts, mortgages, and liens, that are affected by military service.

The SCRA can protect you and your dependents from eviction by your landlord without a court order. If your landlord files an eviction with a court, you (or your spouse) immediately should notify the court of your servicemember’s active duty status and request a stay of the proceeding for 90 days. A stay of the proceeding temporarily puts the case on hold. The court has a number of powers in this situation, including the extension of the stay to more than 90 days (or shortening the stay) or changing the amount of rent you pay. The SCRA protection applies only if your monthly rent is less than a certain amount — otherwise, you are not protected. Talk to a military legal assistance attorney if you are worried about eviction and want to know whether the SCRA helps you.

The SCRA applies to any new owner who takes over your rented home or apartment, just as it would to your former landlord. All of the protections against eviction described above apply to the new owner, but you would be wise to notify the bank and the judge presiding over the foreclosure you as a tenant in possession have SCRA rights that should be protected in the foreclosure order. There might be other laws that protect you as well. For example, the Protecting Tenants at Foreclosure Act of 2009 prohibits a landlord from evicting tenants when he or she has been foreclosed upon. The act also requires the bank to honor the terms of your lease with the landlord. A military legal assistance attorney can explain the terms of the law and advise you on your best course of action.

The SCRA requires your creditors to lower the interest rate to 6 percent on most debts you incurred prior to joining the military, so long as you can show military service had a material impact on your ability to pay. For those who qualify, creditors must recalculate their monthly loan payments based on the lowered interest rate. This rate will be retroactive to the date the servicemember was called to active military service and will extend throughout active military service. For home loans such as mortgages and deeds of trust, the reduced rate will continue for one year after your servicemember separates from the military.

Know these three very important things about this interest-rate reduction:

  • It is not automatic. You must request the rate reduction from the creditor and provide copies of your servicemember’s military orders. You also must explain why the lowered interest rate is necessary to prevent financial hardship on you; the creditor is obligated to lower the interest rate only if you can show military service affects your ability to pay your debt at the higher rate of interest.
  • The rate reduction applies only to debts incurred prior to military service. Frequently, you can get a sample letter requesting interest relief and asserting you’ve been materially affected by entering into active military service.
  • You can apply for this interest-rate reduction at any time during active duty service, as well as up to 180 days after release from active duty. As a veteran, or as a veteran’s caregiver with a power of attorney, if you didn’t obtain an interest-rate reduction during active duty service, you still can obtain the reduction within 180 days of release from active duty. The reduction then must be applied retroactively to the date of entry into service.

Talk to your military legal assistance attorney about the best ways to request interest-rate reductions from your creditors.

If your spouse was not on active duty when you took out the mortgage, it is considered a pre-service debt that can have its interest rate adjusted down to no more than 6 percent during your servicemeber’s period of active duty service overseas. This right to a reduced interest rate will extend for one year after release from active duty service.

It can be a federal crime for a creditor to fail to observe your SCRA rights with respect to an interest-rate-reduction request. Talk with your military legal assistance attorney about the steps to take next. Frequently, it’s just necessary to go up the chain of command in the bank or contact the bank’s legal counsel to resolve the issue.

If a servicemember entered a contract to buy or lease real or personal property — such as an auto loan or lease — prior to going on active duty, a creditor cannot repossess the property without first obtaining a court order. If, however, you’re in default of the loan and are unable to bring the payments current, you might wish to negotiate surrender of the vehicle with the creditor in exchange for not putting a repossession on your credit report.

If you’re in default and can’t negotiate surrender of the vehicle, a creditor wanting to repossess the car in compliance with the SCRA must serve you with notice of a court proceeding to collect the debt and repossess the car. If your creditor does not follow the law and repossesses the property without a court order, remedies are available under the SCRA. Talk with your legal assistance attorney if you believe a creditor wrongfully has repossessed your property without a court order.

Note: The requirement for a court order pertains only to pre-service contracts. Any property you bought subject to a contract or loan after going on active duty may lawfully be repossessed by the creditor without a court order.

If your creditor goes to court to foreclose on your home, all of your rights in the court case that are described in the section “What SCRA protections are available in legal proceedings?” will apply. If you are concerned about foreclosure, you should meet with a military legal assistance attorney right away. Other protections might be available, and many states have free or low-cost legal programs that provide additional legal help.

If you have stayed a creditor’s action to repossess any personal property described in “What SCRA protections are available in legal proceedings?”, the court may seek an appraisal of the property at issue and, if it grants the creditor’s request to repossess, may order the creditor pay you the value of your equity in the property. If the property is sold at auction, ask the court to ensure the auction is widely advertised so the property has a better chance of selling at close to its market value. That will maximize your equity and minimize any deficiency judgment against you.

Note: This only applies to personal property (such as a vehicle) and not real estate. If you can demonstrate repossession of the property will impose undue hardship on the family, ask the court to halt the repossession and not order any kind of payment to the creditor until you are in a better position to pay.

If you are concerned that a creditor might soon repossess your property, talk to a military legal assistance attorney right away.

Leases

Military service can sometimes require you to move to a new location on short notice. The SCRA permits servicemembers to easily terminate existing leases for rental property and vehicles so they fulfill their military duties without undue financial hardships. For example, a servicemember with a one-year lease on an apartment is protected by the SCRA from being bound to the full one-year term of the lease if he or she is given PCS orders before the end of the lease term.

For a servicemember to receive the protections available under the SCRA, he or she will need to follow specific rules for terminating leases. Meet with a military legal assistance attorney for guidance prior to terminating a lease.

A servicemember may cancel a premises lease that was signed prior to entering military service. If he or she is currently in the military and receives PCS orders or orders to deploy for 90 days or more, he or she may cancel his or her premises lease.

To cancel a lease, provide your landlord a written notice of your intention to terminate, along with copies of the military orders that give cause to terminate the lease.

If you pay your rent monthly, your termination will be effective 30 days after the next due date for your rent. So if you give written notice to terminate April 15 and your next rent payment is due May 1, your termination will be effective May 31 (so you will have to pay your May rent). If you have prepaid any rent beyond your effective termination date, it must be refunded to you within thirty days of the termination date, and you should not be obligated to pay any early termination fees. While doing so might conflict with your lease, it might be to your advantage to apply your security deposit to the last month’s rent.

An auto lease taken out prior to joining the military can be canceled once entering military service with orders to serve for more than 180 days.
If took out an auto lease while in military service, you may cancel the lease if you receive military orders for

  • a PCS from a continental U.S. location to a location outside the continental U.S., or
  • a PCS to any location outside of your state if you are currently in Alaska or Hawaii, or
  • a deployment lasting at least 180 days.

To cancel your lease, provide your creditor with written notice of your intent to terminate the lease, along with copies of the military orders giving you cause to terminate the lease. You also must surrender the vehicle within 15 days of giving notice, and the termination is effective upon vehicle surrender. You are responsible for all lease payments on a prorated basis up to the point of surrender. Any prepaid lease payments beyond the date of surrender must be refunded within 30 days, and you are not responsible for early termination fees.

Telephone Contracts and Storage Liens

If you and your servicemember have received military orders to relocate to a place where your cell phone service provider does not provide the coverage purchased under your contract and you will be in that location for 90 days or more, you may terminate your contract under the SCRA. You must provide written notice to your cell phone company of your intention to terminate, the reason for termination, and the military orders giving rise to the need for termination. You do not need to wait for a period of time before the termination is effective; it will be effective on the date you give notice to your phone service carrier. The cell phone company should not charge early termination fees, and it should refund fees you prepaid beyond the date of termination.

If your relocation will be for three years or less and you resubscribe to your phone service within 90 days of your return, you may keep your phone number and you will not be charged reconnection fees.

Speak with a military legal assistance attorney for guidance before terminating your cell phone contract.

Under the SCRA, anyone with a lien against you cannot foreclose on that lien without first going to court and getting a court order. This applies to all kinds of liens for payment: storage liens, mechanics’ liens (for auto repairs), charges for dry cleaning not picked up, and more.

In short, if you owe someone money and that person is holding your property and wants to collect on the debt by selling or disposing of your property, the SCRA requires that person first to go to court and get an order allowing the sale or disposal.

If you find yourself in this situation, talk with your military legal assistance attorney about your options. Tell the creditor you have SCRA rights and expect them to be observed.

Depdendents

A dependent can take advantage of the SCRA protections described in this section, such as protection from eviction, foreclosures, and termination of leases and contracts, if the dependent’s own obligations are materially affected by the servicemember’s military service. For example, a servicemember and nonmilitary spouse rent an apartment and the servicemember is deployed overseas. The deployment causes financial hardship and the spouse falls behind in paying rent. The spouse can assert the SCRA right to terminate the lease, or if the landlord files an eviction, the spouse can go to court and seek to stay the eviction.

Dependents of servicemembers are entitled to receive the services provided by military legal assistance attorneys. If you are a dependent of a servicemember and you need advice on whether you can receive the protections of the SCRA, make an appointment with a military legal assistance attorney.

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