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Tom Barkley has been writing about the global economy, financial markets and the environment for more than 20 years.
Updated November 30, 2022
The Servicemembers Civil Relief Act (SCRA) is a law aimed at protecting members of the U.S. military and their families during the time they’re serving their country. The law provides a range of financial protections and benefits to ease the transition for service members going into active duty, from limits on interest rates to protections from losing insurance coverage, getting evicted, and being subject to foreclosure.
The U.S. has a long history of providing support to the men and women who are willing to sacrifice their lives for the country. During the Civil War, Congress passed a law allowing the delay of any civil or criminal court proceedings for those who fought to keep the union intact. Later, during both World War I and World War II, lawmakers passed the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) to provide protections for U.S. soldiers while they fought overseas. The SSCRA was more targeted than the blanket legal moratorium imposed during the Civil War, giving courts more discretion in determining an equitable resolution to disputes.
In 2003, the SCRA was approved by Congress to replace and expand the SSCRA to make it more inclusive of all service members after members of the National Guard were called up in response to the terrorist attacks of Sept. 11, 2001. Since then, the SCRA has been amended nearly two dozen times.
Most recently, the law has been strengthened to assist service members with handling some of the strains caused by shutdowns and other changes during the economic crisis. For example, the Department of Defense in March 2020 ordered a temporary halt to domestic travel for military personnel and their families. In response, Congress amended the SCRA to give service members the power to end a housing or auto lease agreement without notice. Another amendment allows families of service members who die or are seriously injured to end phone, cable, and Internet contracts.
The SCRA offers protections to anyone currently in military service, including service members beyond the military branches of the Army, Navy, Air Force, Marines, and Coast Guard. It has been expanded to cover reservists who are on federal active duty, National Guard members on federal duty for more than 30 days, and service members who are sick or on leave. The children and other dependents of service members are also granted protections in some situations, such as when they cosign a loan.
Here are some of the key protections and benefits provided by the SCRA:
One of the most popular provisions of the law is a limit on the rate of interest that active-duty service members must pay. Any debts they were carrying before going into duty, including credit cards and home or auto loans, can’t charge more than 6% in interest.
In addition to empowering military families to terminate phone, cable, and Internet contracts in some situations, the law includes a number of other protections for renters, homeowners, and auto leaseholders. Renters and car leaseholders can terminate leases under certain conditions, while landlords and mortgage companies can’t foreclose or evict service members from their homes without a court order.
The law also includes protections for health and life insurance policies when service members get called to active duty. Any health insurance policy in effect when active duty begins must be reinstated when the service member returns, at the same premium rate. Meanwhile, service members are allowed to delay paying premiums on life insurance without losing coverage while on duty.
The SCRA isn’t meant to completely free service members of their financial responsibilities, but it is supposed to make the burden of active duty easier for military members and their families. Still, the act has come under scrutiny recently, with lawmakers questioning not only how effective the measures are at protecting the financial security of military families but also whether the service members even understand their rights under the law.
Congress recently tasked the Government Accountability Office (GAO), a watchdog agency, with examining whether service members understand their rights under the law, as well as what happens when they waive those rights. For example, some property rental associations provide standard waiver forms that could result in early termination fees or even repossession of property, according to the GAO.
Interviewing more than a dozen officials from relevant agencies—the Department of Defense, the Department of Justice, and the Consumer Financial Protection Bureau (CFPB)—as well as associations that represent service members, the GAO found that many service members don’t understand which rights they’re signing away with the waivers. Despite requirements under the SCRA aimed at making sure that waivers are easy to read and can only be signed during active duty, most respondents to the GAO study said these additional protections still weren’t enough to ensure that service members understood the rights they were giving up.
Similarly, in a separate study, the GAO found that clauses in leases, employment contracts, and other agreements that require any disputes to be settled through arbitration can hamper a service member’s ability to get relief under the SCRA. These mandatory arbitration clauses have prevented military personnel from resolving legal disputes in court, the study found.
If you’re a service member or a family member of one and believe that your rights under the SCRA may have been violated, you can get in touch with your local U.S. Armed Forces Legal Assistance program office to seek assistance. If a military legal assistant can’t resolve the issue, the Department of Justice can review the complaint. In addition, the CFPB’s Office of Servicemember Affairs provides educational material to military personnel about their SCRA rights. The agency CFPB also reviews service member complaints and may refer them to the Department of Justice if their rights under the SCRA are being violated.
Finally, the U.S. attorney general has the power to sue any individual or organization that violates the SCRA and can seek compensation for the affected service members. For example, the Department of Justice recently reached a settlement with San Antonio after an investigation found that the city had auctioned off more than 200 vehicles belonging to service members. Under the settlement, which is subject to court approval, the city agreed to adopt a policy adhering to the SCRA, obtain a court order to enforce any liens on service members, and create a $150,000 settlement fund.
You can find your nearest military legal assistance office online from U.S. Armed Forces Legal Assistance.
