Consumer F
inancial
Protection Bureau
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The Servicemembers Civil
Relief Act (SCRA)
The Servicemembers Civil Relief Act
(SCRA) provides legal and nancial
protections to those who have
answered the Nation’s call to serve.
Introduction
The SCRA is a law created to provide extra
protections for servicemembers in the event that
legal or nancial transactions adversely affect their
rights during military or uniformed service. These
protections enable servicemembers to devote their
entire energy to the defense needs of the Nation.
The SCRA applies to the following servicemembers:
§ Active duty members of the Army, Marine Corps,
Navy, Air Force, and Coast Guard;
§ Members of the Reserve component when
serving on active duty;
§ Members of the National Guard component
mobilized under federal orders for more than 30
consecutive days; or
§ Active duty commissioned ofcers of the Public
Health Service or the National Oceanic and
Atmospheric Administration.
SCRA rights may be exercised by anyone holding
a valid power of attorney for the servicemember.
Some SCRA protections also apply to dependents.
According to the U.S. Department of Justice, these are
ve protections that servicemembers often ask about.
Protection #1
Servicemembers can reduce the
interest rate on any pre-service
loans to a maximum of 6 percent
If you took out an automobile, home, or student
loan or incurred credit card debt prior to becoming
a servicemember (also known as a “pre-service
obligation”), or if you took out such a loan jointly
with your spouse, then you are entitled to have your
interest rate reduced to a maximum of 6 percent
per year. To receive this benet you must notify
your lender in writing and include a copy of your
orders to active duty service or a letter from your
commanding ofcer that shows the date you began
active duty service.
The rate reduction for pre-service obligations
applies during the period of active duty service for
most loans and, for mortgages, for an additional
year after the end of active duty service. When
you make a proper request for an interest rate
reduction under the SCRA, your lender must
reduce your interest rate on pre-service obligations
to 6 percent for the entire time you are serving on
active duty. Your lender can’t add the amount of
interest above 6 percent back into the loan later
on after you leave active duty. You can request an
interest rate reduction from your lender at any time
while you are serving on active duty and up to 180
days after release from active duty.
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WHAT YOU NEED TO KNOW
A lender can’t revoke your loan or credit account,
change the terms of your credit, or refuse to grant
you credit just because you exercised your SCRA
rights. In addition, a lender can’t furnish negative
information to a credit reporting company just for
invoking your SCRA rights. Remember, the SCRA
requires your lender to reduce your interest rate
in certain circumstances – but you still have to pay
back your debts.
Protection #2
Servicemembers have some
protections against default
judgments in civil cases
If you are sued while a servicemember on active
duty, you have certain legal protections under
the SCRA. These include some protections from
a default judgment in a civil action. A default
judgment is a court order in favor of the party or
“plaintiff” suing you when you did not appear or
defend yourself against the lawsuit.
Some of your rights under the SCRA include:
§ Before the court can enter a default judgment,
the party suing you must le an afdavit with the
court stating whether or not you are in active
duty service, and provide facts in support of that
statement. If the party suing you is unable to
determine whether you are in active duty service,
the afdavit must state that fact.
§ If you are in active duty service and have not
appeared in a case against you, the court
may not enter a default judgment until after it
appoints an attorney to represent you.
§ The court also has to permit a delay of
proceedings for at least 90 days if certain
conditions are met.
Protection #3
Servicemembers have special
protections against foreclosure on
their home
If you took out a mortgage before entering active
duty service, you can’t be foreclosed on without
a court order, unless you have waived your rights.
This protection applies while you are on active duty
and for an additional one year after leaving active
duty. This protection also applies in states that do
not require a court order to foreclose and whether
or not you told your lender or servicer about your
servicemember status.
Under this SCRA protection, a court may also on its
own – and must upon request by a servicemember
– pause or stay a foreclosure proceeding or adjust
the loan, provided that the servicemember’s ability
to pay the loan is materially affected by his or her
active duty service.
As noted in protection #2, the SCRA also provides
servicemembers with protections against default
judgments, which are rulings against a party to a
lawsuit because he or she didn’t appear in court.
This protection applies to foreclosure cases before
a judge.
Protection #4
Servicemembers have special
protections against repossession of
their property
In some circumstances, the SCRA prohibits
creditors from repossessing your personal property,
including your vehicle, without a court order. That
means that even if you violate a contract by, for
example, failing to make your monthly payments,
the creditor must rst le a lawsuit and get an
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order from a judge before your vehicle or personal
property can be repossessed. This protection
applies only if you:
§ purchased or leased a vehicle, or other personal
property, before entering active duty service;
and
§ made a deposit or installment payment on a
vehicle, or other personal property, before
entering active duty service.
These federal protections under the SCRA are in
addition to any other protections you might have
under your state law.
Even if you’re protected by the SCRA from
repossession without a court order, failing to pay
your bills could result in violating your contract. As
a result, you may be charged fees associated with
your failure to pay, such as a late fee. Your missed
payments can also be reported to credit reporting
companies, and the creditor can try to collect the
debt, including by ling a lawsuit against you.
Protection #5
Servicemembers may be able to
terminate residential housing and
automobile leases without penalty
The SCRA provides servicemembers with the
right to terminate residential leases of property
that is occupied or intended to be occupied by a
servicemember or his or her dependents. If you
signed a lease for housing prior to active duty
service, or if you’re already serving on active duty
and receive Permanent Change of Station (PCS) or
deployment orders for a period of at least 90 days,
then you should be able to terminate your housing
lease without penalty.
To terminate your housing lease, you or someone
exercising a power of attorney on your behalf
must submit to your landlord a written notice of
termination and a copy of your orders – or a letter
from your commanding ofcer – by hand delivery,
or by private carrier, or by regular postal mail with
return receipt requested.
If your lease requires monthly rent payments,
termination of a housing lease is effective 30 days
after the rst date on which the next rental payment
is due and payable after the date on which the
termination notice is delivered.
In addition to this right for residential leases, under
certain circumstances, the SCRA also allows
servicemembers to cancel or terminate an auto
lease without paying early termination charges
or penalties. In order to terminate an auto lease
without penalty under the SCRA, you must have
entered into the lease:
§ Prior to entering active duty, and then been
called onto active duty for 180 days or longer; or
§ During active duty, and then received orders for:
a PCS from a location inside the continental
United States (CONUS) to a location outside
the continental United States (OCONUS), or
a PCS from a location OCONUS to any new
location, or
deployment with a military or uniformed
unit or in support of a military or uniformed
operation for 180 days or longer.
Carefully read your lease terms and consider your
situation before signing a contract. The SCRA does
not allow you to terminate your contract if you
receive PCS orders from one CONUS location to
another CONUS location, so if you know you may
receive those type of PCS orders, make sure your
lessor will allow the vehicle you intend to lease to
be taken out of state.
THE SERVICEMEMBERS CIVIL RELIEF ACT
Consumer F
inancial
Protection Bureau
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Conclusion
The SCRA provides many legal and nancial
protections to enable servicemembers to focus
on their mission with less worry about what is
happening back home.
If you have any questions about your rights under
the SCRA, contact your closest military legal ofce
for more information. You can nd the closest
military legal ofce at: legalassistance.law.af.mil.
If you have nancial challenges or questions before,
during and after military or uniformed service,
please visit our web site at: consumernance.gov/
military-nancial-lifecycle.
About the CFPB
The Consumer Financial Protection Bureau
is an independent federal agency built to
protect consumers. We write and enforce
rules that keep banks and other nancial
companies operating fairly. We also educate
and empower consumers, helping them
make more informed choices to achieve
their nancial goals.
Learn more at consumernance.gov
Submit a complaint
Have an issue with a nancial product or
service? We’ll forward your complaint to the
company and work to get you a response –
generally within 15 days.
Online
consumernance.gov/complaint
By phone (180+ languages)
M-F, 8 a.m. - 8 p.m. ET
(855) 411-CFPB (2372)
(855) 729-CFPB (2372) TTY/TDD
By mail
Consumer Financial Protection Bureau
P.O. Box 2900
Clinton, IA 52733-2900
By fax
(855) 237-2392
3/2018
