Active-duty U.S. military members are eligible to receive financial relief and protections under the Servicemembers Civil Relief Act (SCRA).
The SCRA, formerly known as the Soldiers’ and Sailors’ Civil Relief Act, is a federal law enacted in 2003 that restricts or limits actions against military personnel currently serving on active duty. The act was designed to ease the financial burden for active-duty service members, active reservists, and active Guard — especially those who are deployed.
Military personnel become eligible for SCRA benefits on the date they receive their active-duty orders, and SCRA coverage typically terminates within 30 to 90 days after their date of discharge from active duty.
The Servicemembers Civil Relief Act includes protections and provisions which cover:
- Credit card interest rates (capped at 6%)
- Cellular service provider contracts
- Termination of:
- Rental agreements
- Automobile leases
- Phone service
- Suspension of professional liability insurance
- Right to continue to vote at state, federal and local levels
- Security deposits
- Evictions
- Installment contracts
- Mortgages
- Protection against default judgments
- Postponement of foreclosures and repossessions
- Postponement of civil judicial proceedings (including family law proceedings)
- Deferred income tax payments
- Protection for small-business owners
- Prevents storage facilities from selling your belongings for past-due rent (owners must provide a court order)
- Spousal Military Spouse Residency Relief Act (MSRRA) rights and the ability to end a lease if the service member dies while on active-duty orders
SCRA Eligibility
The SCRA covers all active-duty military members, including those in the Army, Air Force, Coast Guard, Marine Corps, Navy, Space Force, reserves and National Guard. SCRA only applies to reservists and members of the National Guard when they’re serving on active-duty orders. Commissioned officers in active service of the Public Health Service and the National Oceanic and Atmospheric Administration are also covered.
SCRA relief and protections can also apply to the spouses and children of the qualified service member, as well as to any individual who relied on the service member for at least 50% of their support for 180 days before using the act. If you’re unsure whether SCRA applies to you, your base Legal Assistance Office can help you determine eligibility.
SCRA Credit Card and Loan Benefits
Under the Servicemembers Civil Relief Act, most major banks and credit-card-issuing companies will offer a refund on interest and annual fees for certain financial obligations that a service member incurred before active-duty military service. Banks will also lower the interest rates on loans that existed before the service member joined the military.
For example, if you bought a car before serving on active duty and your current interest rate is 18%, you can invoke your SCRA benefits to lower the rate to 6%.
The interest-rate cap applies to all debts incurred before entry into active-duty service, including student loans, credit cards, mortgages and car loans, and it remains in effect for the duration of a service member’s active-duty service.
The lender must forgive, not merely postpone, interest above 6% and must reduce the amount of the monthly payment to reflect the lower interest rate.
To receive SCRA benefits, provide lenders with a written request and orders for active duty.
SCRA Lease and Rental Benefits
Additionally, SCRA allows individuals to break their leases when they go onto active duty if they entered into the lease before going on active duty. Also, if a service member enters into a residential lease while in the military and then receives orders to move to a new assignment or to deploy for at least 90 days, the act allows the service member to terminate the lease.
Service members and their families could become locked into untenable lease agreements because of a stop-movement order. For example, they might have entered a new lease agreement before a permanent-change-of-station move. When the stop-movement order canceled their move, they could be forced to pay two rents. Under SCRA, a service member caught in such a bind can terminate the second lease.
A service member may seek protection from eviction from a rented or leased property under SCRA. The service member or family member who has received a notice of eviction must submit a request to the court for protection under the SCRA. If the court finds that the service member’s military duties materially affected the family’s ability to pay rent on time, the judge may order a stay, or postponement, of the eviction proceeding for up to three months or make any other just and reasonable order.
Automobile Benefits
Military members may also terminate automobile leases in certain circumstances. Just as with residential leases, if a service member enters into an automobile lease before going on active duty, they may request termination of the lease upon entering active duty. However, for this to apply, the active duty must be for at least 180 continuous days.
Receive SCRA Benefits from Lenders
To receive benefits under the SCRA, you must affirmatively invoke or request relief through paperwork. The lender will verify your active-duty military status before you will receive benefits. A letter containing the following information is typically sufficient:
- Account number
- Start date of active-duty service
- A request for a reduction in interest rate under the SCRA
- A copy of active-duty orders
Note: On-base legal offices often have SCRA letter templates that can be used.
This process varies depending on the company. While some lenders require you to provide notification immediately, others may have a window of 30-180 days. We’ve also prepared a list of companies offering SCRA benefits so that you can easily apply SCRA protections and provisions to your eligible accounts and loans.
For more information on your SCRA benefits, please contact your base Legal Assistance Office, or visit the official website of Servicemembers Civil Relief Act.
SCRA Enforcement
The Justice Department’s Civil Rights Division was created in 1957 by the enactment of the Civil Rights Act of 1957. The act upholds the civil and constitutional rights of all Americans, particularly some of the most vulnerable members of society. As part of its work, the Civil Rights Division enforces the SCRA.
The SCRA authorizes the attorney general to file a federal lawsuit against any person or entity that violates this law. When a lawsuit is filed under the SCRA, the attorney general has the authority to seek monetary damages on behalf of individual service members and has the authority to seek civil penalties, as well as different types of remedies or reliefs.
Military Spouses Residency Relief Act (MSRRA)
MSRRA became law in November 2009 and changed some rules of taxation for service members and their spouses. Under the new law, a military spouse who is present with a service member on active-duty orders can choose to pay tax on wages earned in their domicile state (permanent residence), their spouse’s state of residence or their state of residence.
The spouse would have to pay taxes to the state of domicile if the laws of that state required such payments.
Read more about MSRRA.
