April 12th, 2011

Do You Know About the Soldiers’ and Sailors’ Civil Relief Act (SSCRA)?

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If you are actively serving in the U.S. Military or Navy , or know someone who is, Uncle Sam provides special protectionsto help ease your personal finance burdens. It’s called the Soldiers’ and Sailors’ Civil Relief Act, or Servicemembers Civil Relief Act, and it can assist in issues from credit card debt to evictions.

While this bill was updated all the way back in 2003, a Credit Karma Facebook community member considers it an important yet little known issue. So in the spirit of knowing your consumer rights and protections, we wanted to share a quick factsheet of the SSCRA and how it can help.

An Umbrella of Protection

The Soldiers’ and Sailors’ Civil Relief Act dates back to 1940 and assisted in money-related issues plaguing servicemembers called to active duty. Under this umbrella of protection, servicemembers could get reduced interest rates on mortgages and credit card debt, be protected from eviction, and delay civil court actions such as bankruptcy, foreclosure, and divorce.

Many of the SSCRA’s provisions are familiar to most active duty service members, such as the right to vote in their home state and protection from paying taxes in two different states.

Fast forward to 2003; the 60-year-old bill was rewritten to clarify and better assist a whole new generation of Americans serving the country.

How it Helps

The official purpose of the updated SSCRA, renamed the Service Members’ Civil Relief Act, was to “provide protections to servicemembers who have difficulty meeting their personal financial and legal obligations because of their military service.”

It’s also a way to keep service members focused on the defense of the country, rather than preoccupied by financial matters back home. Those on active duty or on long-term deployment could worry less about the financial stability of their families, such as their families being evicted or missing civil legal proceedings while abroad.

The new version updated some of the old provisions:

  • Servicemembers can apply for an automatic 90-day stay of civil proceedings, rather than stays being discretionary with the court.
  • There is a 6% limitation on interest rates for pre-service debts, such as credit card debt and mortgages. The provision now also requires a reduction in monthly payments and any interest in excess of the 6% to be forgiven, not deferred.
  • Servicemembers and their families cannot be evicted without a court order if their rent is under $2,400, adjusted to inflation. Originally, the rent amount was $1,200.
  • Servicemembers who receive permanent change-of-station orders or to be deployed for 90 days or more has the right to terminate a housing lease with 30 days written notice.
  • Servicemembers who receive orders to report abroad or to be deployed for 180 days or more can terminate a motor-vehicle lease.

Many of these benefits are meant to relieve servicemembers of financial obligations, such as a home or car, they would have to pay even though they are in active duty and cannot use it. The revival of this legislation was well-timed to the massive deployments of military personnel connected to Operation Iraqi Freedom.

Find out more information if you or someone you know can qualify for these financial protections. Always empower yourself with the knowledge of your consumer rights.

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