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The SCRA: separating fact, fiction

  • Published
  • By Air Force Capt. Jeremy Martin
  • Joint Base McGuire-Dix-Lakehurst Legal Office
JOINT BASE MCGUIRE-DIX-LAKEHURST, N.J. --  The Servicemembers Civil Relief Act is a powerful federal law that you, as a service member, or your dependents can rely upon when dealing with issues relating to loans, leases, court proceedings, taxes and certain installment contracts. Most service members are aware of its usefulness in ending a residential lease when it comes time to make a permanent change of station, but there are many lesser-known provisions as well as some myths that every service member needs to know.

Loans - You are entitled to a six percent interest rate cap for all of your loans (except federal-guaranteed student loans) that existed before you entered active duty if your military service "materially affects" your ability to pay the higher interest rate. The provision covers credit cards, mortgages and other types of student loans and it lasts as long as you stay on active duty. It even applies retroactively to the first date of your active duty service. This portion of SCRA is a great money saver, especially for guard and reserve members who are put on active duty orders. For new service members, this will not apply to any loans you take out now. For those who are already on active duty, pay attention to the interest rates on your loans, as many companies are aware of the SCRA limitations and may charge excessive interest rates for no prior credit history.
 
Court Proceedings - SCRA gives services members the power to request a continuance for court proceedings, to set aside or delay judgments against them, and to delay foreclosure proceedings. If you are sued, have had a default judgment entered against you, or have been given notice of eviction or foreclosure, SCRA may provide some relief for your situation. The specific protections, however, can be complicated and should be discussed with a legal assistance attorney. Nevertheless, there are some common cases that affect service members and have different SCRA protections. Divorce proceedings may be delayed under SCRA, but generally not for a long period of time, even if the member is deployed. Unlike a lawsuit over a contract, courts usually will not support a substantial delay for a divorce case because it infringes on the spouse's right to terminate the marriage. Similarly, courts generally do not support delays of child custody or child support cases. Service members may be able to reopen the cases when they return, but SCRA does not prohibit a court from ordering child support during an extended deployment.

Installment Contracts - The term "installment contracts" covers a host of normal expenses of military members such as automobile payments, mortgage or rent payments, cable bills, cell phone bills and similar expenses. SCRA protections vary depending on the type of contract, but members may be able to invoke the six percent cap or court proceedings protections on any installment contract if it meets the criteria. In addition, residential leases, mortgages, automobile leases, life or health insurance and cell phone contracts get additional protection.

Under SCRA, you can break your residential lease if you receive orders to enter active duty, PCS, or deploy for 90 days or more. You will only owe the rest of the month of notice and the next month's rent to your landlord. A commonly held belief is that members can break their lease if their commander orders them to return to the dorms. While many landlords are willing to accommodate, you must be ordered to a new duty station for 90 days or more to actually have a legal right to break your lease. Finally, SCRA also provides limited eviction and repossession protection for members who have trouble making their payments.

For automobiles, you have the right to terminate an automobile lease if you are ordered to active duty for 180 days or longer, or for those already on active duty, if you PCS to an Outside Continental United States location or deploy for 180 days or longer. The provision only covers automobile leases and will not terminate your obligation to pay for cars purchased under an installment loan. However, for vehicles purchased prior to entering active duty, your vehicle cannot be repossessed without a court order and you have the right to reduce the interest rate.

SCRA also provides a means for service members to suspend or cancel their cell phone contracts if the PCS or deploy to an area where their cell phone carrier cannot provide service. This type of protection only applies to cell phones and no such provision exists for satellite or cable providers. For health and life insurance, SCRA protects members who are called to active duty from losing their coverage.

State Taxes - You have the right to be exempt from the taxes of the state where you are stationed in order to continue paying taxes to your state of legal residence. Your spouse may be able to take advantage of this right as well through a separate law, but in order to do so, both spouses must be residents of the same state. Generally, your home of record may be your state of legal residence, but simply changing your home of record will not give the right to avoid income tax unless you have actually established residency in that state. Residency can be defined as the place to intend to permanently reside, so there must be some connection to the state in order to change your legal residency (voting registration, driver's license, property, etc.). In short, if you've never set foot in Texas, Florida or Alaska outside of Basic Military Training or a temporary duty assignment, you're probably going to get a huge tax bill later on.

This is just a basic overview of some of the protections that SCRA has for service members. The Joint Base McGuire-Dix-Lakehurst Legal Office is here to assist you in navigating this complex law and to help you whenever you are confronted with a legal issue. The JB MDL Legal Office has walk-in legal assistance every Tuesday from 9-11 a.m. or you can make an appointment by calling 754-2010 or DSN 650-2010.