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By Erienne Andvik
MoneyMix Contributor

Say you're in the military and receive orders to report for active duty. What do you do with your car? Your apartment lease or mortgage? What about your family? What if you're in the middle of civil litigation?

If there were no protections for servicemembers, you quickly could become unable to meet these obligations.

Enter the Servicemembers Civil Relief Act (SCRA). It's an expansion of an act written in the 1940s called the Soldiers' and Sailors' Civil Relief Act. Many provisions under this act offer protection for servicemembers serving their country on active duty.

This act generally covers members of the Army, Navy, Air Force, Marines, and Coast Guard, including reservists and National Guard members. It also generally covers noncommissioned officers of the Public Health Service and the National Oceanic and Atmospheric Administration. Some protections begin when a member is called to active duty; others begin upon entry to active duty or arise during active duty. The protections end upon or at various times after release from active duty, depending on the SCRA protection involved. Some protections also extend to servicemembers' dependents.

Here are some SCRA provisions. There are too many to include them all here, but you can find a link to the full act in the resource box below. Keep in mind that the SCRA is complex; seek legal assistance to be sure you receive all the protections available.

mortgage protection

The Housing and Economic Recovery Act of 2008 amended the SCRA to provide nine months of protection (formerly 90 days) from mortgage foreclosure for servicemembers after they separate from active duty. Without a valid court order, no sale, foreclosure, or seizure of property for a breach of a preservice mortgage or mortgage type obligation would be valid if made during or within nine months after the servicemember's period of active duty.

This provision remains in effect until Dec. 31, 2010, and then reverts to 90 days unless it's extended. The law also permanently extends the SCRA's 6% interest rate cap for one year beyond the period of military service for mortgage-type debts.

Generally, lenders try to work with servicemembers to avoid foreclosure when possible. The Supreme Court has said the SCRA should be read with "an eye friendly to those who dropped their affairs to answer their country's call."

health and life insurance protection

Military health facilities cover servicemembers on active duty—and their families. If a servicemember chooses to suspend his or her current coverage during active duty, the insurance company must resume coverage postdischarge—meaning the servicemember cannot be denied coverage for a pre-existing condition. Similar benefits may be available to others covered by the servicemember's insurance.

The SCRA also protects servicemembers' life insurance policies against lapse. Upon approval from the Department of Veterans Affairs, individuals can defer premium payments while on active duty and have two years after discharge to repay all premiums and interest. Maximum policy coverage also is increased to $250,000 or the maximum under Servicemember's Group Life Insurance, whichever is greater.

termination of leases/cellular telephone contracts

A servicemember who leases a vehicle and thereafter enters active duty under a call or order for at least 180 days may terminate that lease. Servicemembers who receive orders for a permanent change of station from inside the continental U.S. to a location outside the continental U.S., or who deploy for not less than 180 days, also may terminate leases.

The servicemember must provide the lessor with written notice of the request for termination, along with a copy of the military orders, and deliver the vehicle to the lessor or its agent within 15 days after delivery of the notice to terminate.

A servicemember who leases premises for residential or business purposes, and then enters active duty, receives military orders for a permanent change of station, or to deploy in support of a military operation for at least 90 days, may terminate that lease by delivery of written notice and a copy of the servicemember's orders to the lessor.

A servicemember who contracts for cellular telephone service and then receives orders to deploy outside the continental U.S. for not less than 90 days, or for a permanent change of duty station within the U.S., may request termination or suspension of the contracts if the deployment or permanent change of station will affect the ability to satisfy the contract. The request must include a copy of the servicemember's orders.

eviction protection

Neither servicemembers, nor their spouses or dependents, can be evicted without a valid court order from premises that are occupied or intended to be occupied primarily as a residence during a period of military service. This provision does not apply to premises with monthly rent of more than $2,958.53 in 2010. This amount is adjusted annually for inflation. Check the Department of Defense Web site for current amounts.

reopening of default judgments

Default judgment, as defined by, is "a judgment rendered because of the defendant's failure to answer or appear." If servicemembers can prove that they were unable to appear in court because of active duty, and if they have a good legal defense, they can reopen a default judgment brought against them during active duty or within 60 days after discharge from active duty. The servicemember must apply to the same court that rendered the judgment and must file within 90 days after release from active duty.

6% loans

Servicemembers are entitled to pay no more than 6% interest on preservice debts if their military service affects their ability to pay the debt. This includes credit card debt, mortgages, vehicle loans, and business-related debt.  The lender is not permitted to recapture lost interest and must forgive any interest in excess of 6% that would have been incurred by the servicemember if no rate cap was in effect.

 Explore resources for military members and families; 800-342-9647.

 Read the SCRA Overview from

 Read "Mortgage Difficulties and the Servicemembers Civil Relief Act," by Col. Shumake.

 Read the full-text SCRA.

 Check out a quick reference to sections of the SCRA and SSCRA.

Once the servicemember is no longer on active duty, the lender may restore the original contract rate. There is an exception, however, for preservice mortgage obligations. For such obligations, the SCRA's 6% interest rate cap extends for one year after the period of active duty.

legal proceedings delayed

If servicemembers are involved in a civil lawsuit (such as divorce, bankruptcy, or an auto-accident suit) they can delay the suit for at least 90 days if they can prove that service prevents them from appearing in court. Servicemembers must submit this request for delay in writing and must include a date when they will be able to appear. The servicemember also must include written support from his or her commander stating that he or she is unable to appear because of military service.

income tax on pay while on active duty

If servicemembers on active duty are working in a different state than the one in which they maintain permanent legal residence, the military pay and allowances they earn are not subject to state income tax in that state. The servicemember may be subject to state income tax laws in the state of permanent legal residence.

legal assistance

Legal assistance is available to members on active duty, and to those members who have left active duty, usually up to twice as long as the servicemember's length of active duty. In certain circumstances, legal assistance also may be available to servicemembers not on active duty. This tool can help locate the closest available legal assistance office.

The provisions of the SCRA can be complicated and very fact-specific. This article is intended to familiarize servicemembers with potential benefits under the Act. Servicemembers should seek legal assistance to ensure they and their families receive all the benefits available under the law.

Published October 7, 2010

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