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 that restricts or limits actions against military personnel serving on active duty. Congress enacted the law in 2003 to ease the financial burden for active-duty service members, active reservists, and active National Guard members — especially those who are deployed.
Military personnel are eligible for SCRA benefits starting on the date they receive active-duty orders. SCRA coverage continues until 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 MSRRA rights, and the ability to end a lease if the service member dies while on active duty orders.
SCRA Eligibility
All active-duty military members are covered by the SCRA act, 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. It also covers commissioned officers in active service with the Public Health Service or the National Oceanic and Atmospheric Administration.
SCRA relief and protections can also apply to the spouses and children of qualified service members, as well as any dependents who relied on the service member for at least 50% of their support for 180 days prior to using the act. If you’re unsure whether SCRA applies to you, visit your base’s legal assistance office.
SCRA Credit Card and Loan Benefits
In accordance with 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 incurred prior to active-duty military service. Banks will also lower the interest rates on any 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 and have your rate lowered to 6%.
The interest rate cap applies to all debts incurred prior to entering active duty service, including student loans, credit cards, mortgages and car loans. The cap remains in effect for the duration of a service member’s active duty service.
Interest in excess of 6% must be forgiven, not just merely postponed, and the amount of the monthly payment must be reduced 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 a lease when they go onto active duty if they signed the lease before receiving orders. The law allows service members to terminate residential leases they signed while in the military if they received orders to deploy or move to a new duty station for at least 90 days.
The law also provides a way out for service members and their families who become locked into an untenable lease agreement because of a stop-movement order. If you signed a new lease before your permanent change of station (PCS), but your move was canceled for a stop-movement order, you won’t have to pay rent on two homes. You can terminate your second lease under the SCRA.
Military service members and their families may also use the SCRA to seek eviction protection.
To do so, submit a request to the court for protection under the SCRA. If the court finds that the service member’s military duties have materially affected the family’s ability to pay rent in a timely manner, the judge may order a stay (postponement) of the eviction proceeding for up to three months.
Automobile Benefits
As with residential leases, you may also be able to terminate an automobile lease if you signed the lease before receiving active duty orders. If you entered into the lease before going on active duty orders of at least 180 continuous days, you can request termination.
SCRA Benefits from Lenders
In order to receive benefits under the SCRA, you must request relief on paper and verify your active-duty military status.
A letter containing the following information is usually sufficient:
- Account number
- Start date of active duty service
- A request for a reduction in interest rate pursuant to the SCRA
- A copy of active duty orders. On-base legal offices often have SCRA letter templates that can be used as well
The SCRA relief process varies by lender. While some companies require you to provide notification immediately, others may have a window of 30-180 days.
Here is 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 on Servicemembers Civil Relief Act.
SCRA Enforcement
The Justice Department’s Civil Rights Division upholds American citizens’ civil and constitutional rights. Part of this division’s work includes protecting military members by enforcing the SCRA.
The U.S. attorney general can file a federal lawsuit against any person or entity that violates the SCRA and seek monetary damages, penalties, remedies and relief on behalf of individual service members,
Military Spouses Residency Relief Act (MSRRA)
In November 2009, the Military Spouses Residency Relief Act (MSRRA) changed some tax rules for service members and their spouses. Under the law, military spouses who are present with a service member on active duty orders can choose to pay state taxes in their state of permanent residence, their spouse’s state of residence or their own state of residence. This option allows spouses to avoid or minimize their state income tax burden by claiming the state with the lowest state tax rate (or no state tax rate).
Read more about MSRRA.
