Servicemembers' Civil Relief Act Primer

[USMCRET6391]

1. On December 19, 2003, President Bush signed into law the Servicemembers' Civil Relief Act (50 U.S.C. App §§ 501-596) ("SCRA"). This law provides many new legal rights to you, the servicemember. The law replaces and expands the previous Soldiers' and Sailors' Civil Relief Act ("SSCRA").

2. The SSCRA was often considered as a "cure-all" for the legal ailments of servicemembers. This Advisory examines the new rights and benefits that the SCRA may provide you under certain circumstances. Please note that this primer is only a SUMMARY of the new law, and cannot replace a thorough legal review of your case with qualified counsel. If you have any questions regarding these matters, please contact your local legal assistance office for advice. This primer also examines issues including (a) who can receive the protections under the SCRA; and (b) when the protections may be claimed. Note that after each paragraph there is a number—that is the specific section of the SCRA that provides the referenced benefits. Hyperlinked section titles contain Marine Corps-approved forms for your use.

3. Basic SCRA facts:

a. Who does the SCRA protect? Members of the Navy, Marine Corps, Army, Air Force, and Coast Guard on active duty (including reserves ordered to duty), PHS and NOAA officers, and National Guard members called to Federal active service in excess of thirty (30) days. U.S. citizens serving in the prosecution of a war or military action with a U.S. ally are likewise protected. Several sections also extend protections to servicemembers' dependents (which generally includes spouse, children, and those you provide more than one-half of their support). §§ 511 – 516.

b. When does the SCRA apply? SCRA applies to all judicial and administrative proceedings in any Federal or state (or lower level) court or agency, but not to criminal proceedings. §§ 511(5) & 512. SCRA also applies to the many day-to-day situations listed below.

c. Can I waive my SCRA rights? Generally, any waiver of SCRA protections regarding a lease, contract, debt, obligation, or liability must be in writing and executed in a stand-alone document. Any waiver of such SCRA protections executed prior to your entry into the military service may be automatically invalid once you enter into the military service. § 517. What you should do: before you sign, bring any waiver for review to a military Legal Assistance Attorney (LAA) or other legal counsel.

d. Can I appoint somebody else to assert my SCRA rights? All of your rights under SCRA can also be pursued and acted on by your "legal representative". The SCRA defines "legal representative" as (i) an attorney acting on your behalf, or (ii) an individual possessing power of attorney to act on your behalf. Any actions you may take under SCRA may also be taken by your legal representative. § 519(b). What you can do: DoD Legal Assistance Offices (LAO) can provide or direct you to attorney referral lists, and also offer free Powers of Attorney (POA) and POA advice as basic services.

e. Am I protected from retaliation if I exercise my SCRA rights? Maybe. SCRA prohibits lenders, creditors, and insurers from retaliating against you for exercising your SCRA rights. You cannot be denied credit, terms of credit cannot be changed, your credit record cannot be amended to include mention of your status as a member of the military, you cannot be denied insurance and the terms or conditions of offered insurance cannot be changed, solely on the basis of your exercise of SCRA rights. § 518. What you should do: seek LAA / other counsel immediately if you foresee or experience the above.


4. How SCRA protects you:

a. Lease termination: In both of the below cases, you may terminate your lease by delivering written notice of termination, plus a copy of your military orders, by hand or by return-receipt mail (preferably certified) to the lessor. Prorated rents or lease amounts preceding effective termination must be paid by you. Advance rents or lease amounts prepaid by you must be refunded to you within thirty (30) days of the lease's effective termination. Wrongful withholding from you of rents or security deposits may result in criminal penalties. What you should do in both of the below cases: give timely notice and a copy of your orders per the above instructions. Ensure you are not overcharged and that you receive all proper refunds. Seek LAA / other counsel immediately.
i. Termination of leases for residential, professional, business, agricultural, or similar purposes, intended to be occupied by you or your dependents: Finally the state-by-state "military clause" protection is extended to all servicemembers. You may terminate your lease if you (a) enter a lease and thereafter enter the military service, or (b) execute a lease during military service and thereafter receive permanent change of station (PCS) or deployment orders for ninety (90) days or more. Termination of your lease will be effective thirty (30) days after the date the next rent payment is due. Security deposits must still be returned to you pursuant to applicable state laws. § 535.

ii. Termination of motor vehicle leases: A motor vehicle lease for you or your dependents may be terminated (a) if it is a pre-service lease and you later are called to duty or receive orders for a period of not less than 180 days, or (b) if it is a lease executed during military service, and you later receive PCS orders outside the continental United States, or deployment orders, for a period of not less than 180 days. You must return the vehicle to the lessor no later than fifteen (15) days after your delivery of written notice of termination to the lessor. No early termination charge may be imposed, but certain fees and taxes may be charged to you pursuant to your lease, including reasonable charges for excess wear, use and mileage. § 535(b).
b. Maximum 6% Interest Rate Cap on debts: Creditors must reduce the interest rate on your debts that you incurred before active duty to six percent (6%) per year during your period of service. All interest in excess of 6% is forgiven (it may not be postponed or deferred by the creditor. This cap does not apply to new debts you incur while on active duty. The creditor can defeat this provision by showing a court that your ability to pay a rate greater than 6% is not materially affected by your military service. What you should do: seek LAA / other counsel for help providing proper written notice, and a copy of your orders, to the creditor no later than 180 days after your release from service. § 527.

c. Delays / Stays in Legal Proceedings: If your military duty requirements "materially" affect your ability to appear at a judicial or administrative hearing, you are entitled to an automatic ninety (90) day stay, that is, delay, of the proceedings. If you so request of the court, the court must grant one automatic ninety day stay. Your request for a stay must include (i) a letter from you stating how your current military duties materially affect your ability to appear and stating a date when you can appear, AND (ii) a letter from your commanding officer stating how your current military duties prevent appearance and that military leave is not authorized for you at the time of the letter. Unlike the SSCRA, the SCRA permits you to write directly to a court to request a stay, and in so doing, you do not make an appearance, nor do you waive any defenses. Finally, fines or penalties for failure to comply with a contract cannot be assessed against you during a SCRA stay of an action to make you comply with the contract. Nota bene: since the SCRA includes administrative forums, you may request, and must be granted, a stay of administrative child support hearings. § 522. What you should do: request a "CO letter" requesting a stay, and see a LAA / other counsel immediately when you find out you must appear in court or before a proceeding, but know that your military duties will prevent your appearing.
i. If you request a second stay (after the automatic 90 day initial stay) and the court denies that stay, the court must then appoint an attorney to defend your interests in court or in the proceeding.
d. Preventing and reopening Default Judgments: Courts must ensure plaintiffs (who have filed civil legal or administrative actions against you) to file a written sworn statement in court stating whether you are in the military service, prior to any judgment being rendered in a case. If evidence suggests to the court you are in the military service, the court must appoint an attorney to represent your interests before entering judgment against you. If a default judgment is entered in a proceeding during your military service, or within sixty (60) days after you exit the military service, you may attempt to reopen the judgment. To do so, (i) your military service must have "materially" disadvantaged your ability to make a defense, (ii) you must have a meritorious defense in the case, and (iii) you must file to reopen the judgment within ninety (90) days after leaving military service. Of course, if you get actual notice of the default proceedings, you can request a stay from the court under the above section. § 521. What you should do: if you find out you have been ruled against in a court or proceeding, seek LAA / other counsel immediately. You may have a very short window of opportunity to protect your rights.

e. Rental housing eviction protection: You and your family cannot be evicted from housing for nonpayment of rent without a court order, no matter what your rental agreement or local laws say. This protection applies to rents $2,465 and below for 2004 and $2,400 in 2003 (up from $1200 in previous years). This $2,465 cap is automatically adjusted by the yearly increase in the November Consumer Price Index (CPI) for All Urban Consumers, Rent of Primary Residence, U.S. City Average. See http://www.bls.gov/cpi/ for the yearly statistic. If your or your family's ability to pay rent is materially affected by your military service, you may apply to the court and the court must either grant a 90 day stay in eviction proceedings (unless longer or shorter would be more fair to all parties), or adjust obligations under the lease in a way that preserves all parties' interests. § 531. What you should do: seek LAA / other counsel immediately if you foresee or experience eviction.

f. Pre-service Real/Personal property installment contracts and leases: If you have made a deposit or installment on a contract for the purchase or lease of real or personal property prior to active duty, your contract cannot be terminated or property repossessed for nonpayment or breach by you prior to or during your military service. Criminal penalties can result for knowing violation of this section. Termination and repossession can occur, however, pursuant to court order. § 532. What you should do: seek LAA / other counsel immediately if you foresee or experience the above.

g. Mortgage and Storage Lien protection: Actions filed to enforce storage liens or to enforce pre-service mortgages or deeds of trust, during or within 90 days after the end of your period of military service, must either be stayed or your obligations must be "equitably" adjusted, if you so request from the court or proceeding and show that your ability to pay was materially affected by
your military service. Sale, foreclosure, or seizure of your real property during the same period will be invalid unless by court order or pursuant to a valid SCRA waiver executed by you. § 537. What you should do: seek LAA / other counsel immediately if you foresee or experience the above.

h. Taxes:
i. State residency for tax purposes: If you are serving and currently living within a State pursuant to military orders: (a) your residence and domicile (for tax purposes) is unaffected by that service; (b) your military compensation is not "income" (for tax purposes) in that State if you are a non-resident; (c) your personal property is not located in the State (for tax purposes) if you are a non-resident; and, (d) a State cannot use your military compensation to increase your tax liability in states where you are a non-resident, or to increase your non-resident spouse's tax liability. § 571. What you should do: keep on the lookout for states (of which you are not a legal resident) attempting to tax you, or your spouse, on your military compensation or on your personal property. Use your base Tax Centers for free tax preparation, and seek LAA / other counsel for advice.

ii. Income tax deferrals: Upon your request, the IRS, State, and local taxing authorities may also grant a deferral of income taxes due before or during your military service, for not more than 180 days after your release from military service, if your ability to pay the tax is "materially affected" by your military service. No interest or penalty may be added as a result of such a deferral. § 570.

iii. Real and personal property taxes: Your property cannot be sold or foreclosed to satisfy your unpaid taxes, except by court order and if a court determines your military service did not "materially" affect your ability to pay the taxes. Courts can stay proceedings to enforce tax collection, assessment, or tax-related property sales, during your military service and for not more than 180 days after your release from military service. Penalties for non-payment are capped at 6% per year. § 561.
i. Professional liability insurance: Providers actively engaged in health care and legal services, or other professionals as determined by the Secretary of Defense, called to active duty, may suspend their professional liability insurance policies upon written request to the insurance carrier. You need not pay premiums for suspended insurance, and any premiums paid by you while on active duty must be refunded, or alternatively on your request applied to insurance premiums due once you leave active duty. If you transmit a request to the insurance carrier within thirty (30) days of release from active duty, you have the right to reinstatement of suspended insurance. Reinstated insurance must continue for a time period no shorter than it would have continued had you not been called to active duty. There are limitations on how and when your premiums may be increased while you are on active duty. Civil or administrative actions for damages filed before your coverage's suspension must in most cases be stayed (delayed) until the suspension ends, if based on alleged professional negligence or other professional liability. § 593.

j. Health insurance reinstatement: If you are ordered to active duty, you have the right to reinstatement of any health insurance that was in effect on the day before your service commenced, but was terminated during that period of active duty. Generally, if you have a condition that arose before or during the period of active duty and your condition is not defined by the Veterans' administration as "a disability incurred or aggravated in the line of duty", no exclusion or waiting period may be imposed on the reinstatement. You must apply for reinstatement within 120 days after your termination or release from military service. § 594.

k. Small business owner protection: If you are personally liable for obligations of your business or trade, your non-business assets and military pay are, in general, sheltered from being available to satisfy creditors with respect to such obligations. § 596.

l. Life Insurance: Insurers may not decrease your coverage or require additional premiums (except for age-based increases in term insurance) if you engage in military service, nor limit or restrict coverage for activities required by your military service. This applies only to policies in force 180 days or more before you begin a period of military service. Policies up to $250,000 (or the maximum SGLI limit, whichever is higher) may be protected from termination due to your nonpayments of premium, interest, or indebtedness, if you apply for protection in the correct format and the Secretary of Veterans Affairs grants your request. The period of protection lasts for your period of military service plus an additional two years. Note that the total death benefit proceeds may be reduced, however, by your unpaid premiums. Additionally, you may end up owing the United States for your unpaid premiums. §§ 541-547. What you should do: review your life nsurance policies and seek LAA / other counsel if the policy's terms change, or if you foresee an inability to pay premiums.

m. Powers of attorney: Powers of attorney executed because of military service that designate a spouse or relative as your attorney in fact are in most cases automatically extended during any period you are in a "missing" status. Nota bene: to receive this protection your POA must not indicate it will lapse despite your missing status. § 592.

n. Voting rights: Your residency for Federal, State, and local voting purposes is, like your tax residency, unaffected by your absence from your usual voting state due to military service. § 595.

o. Statutes of limitations: With the exclusion of Internal Revenue laws, your period of military service is excluded from calculating any time periods prescribed by law or regulation that define when actions or proceedings may be brought by or against you or your interests. Note that this "suspension" period can both be beneficial, and detrimental to you. § 526.

p. Other relief: You can apply for general relief on other matters including liabilities and obligations incurred before service, and taxes due before or during service, by filing for relief with a court during your military service or no later than within 180 days of release from military service. § 591. There are criminal penalties in many sections of the SCRA for violations of the Act. Additionally, many sections preserve your basic right to bring lawsuits to protect your other legal rights independent of the SCRA.

5. Marines or their dependents with questions regarding the SCRA should visit their local Legal Assistance Office. MOST, if not all, of the terms in the SCRA have very specific meanings and limitations that could not be fully explored here, so to fit your situation within the SCRA, you should seek legal advice. Legal Assistance Attorneys are trained in consumer, family, and tax law matters and can assist in interpreting the provisions and application of this law.

6. Please contact your local Legal Assistance Office with any questions regarding this advisory or for legal advice. CMC (Code JAL) may be reached at HQMCLegal@ HQMC.USMC.MIL or at (703) 614-1266. Note that CMC (Code JAL) does not provide legal advice by phone or e-mail.