In 2003, President Bush signed into law the Servicemembers Civil Relief Act (SCRA). The SCRA further clarified and solidified the Soldiers and Sailors Civil Relief Act (SSCRA) which benefits active duty military members and was signed into law in 1940.
There are many benefits that servicemembers can receive as under this law.
- 6% cap on interest rates for pre-service debt and obligations
- Delay of all legal civil actions during time of war
- Requiring court action before servicemember or family can be evicted from a rental property if the rent is less than $2400
- Termination of pre-service residential lease, or termination of lease in the event of a Permanent Change of Station (PCS) or deployment longer than 90 days.
- Termination of auto lease under certain circumstances
- Guard and Reserve benefits
Interest Rate Reduction: To cap interest rates on debts or obligations to 6% per year, the debt must have been incurred before the servicemember entered military service. This can include credit card debt, car loans, student loans, mortgage payments, etc. This is not a deferral of interest, but an actual reduction. This does not apply to any debt received after joining the military. To reduce your interest, you must contact the financial institution in writing and provide them with a copy of your orders. This reduced interest rate will only apply while the member is still in the service, so pay it off quickly!
Delay of Civil Actions: In a time of war, soldiers who deploy can delay legal civil actions against them until they return home from the war. These can include bankruptcy, foreclosure, and divorce proceedings. This was enacted to allow the soldier to concentrate on the war effort, and not have to focus on legal proceedings back home. (My guess is they still worry about it, they just won’t have to deal with the legal proceedings until they return home).
Court Action to Evict: During time of war, servicemembers’ families cannot be evicted from a rental property if the rent is less than $2400 monthly. This is to prevent the servicemember from dealing with an eviction while he is off doing his duty for his country. There is an escalator clause which will provide for increases to the rent ceiling in future years.
Termination of Residential Lease: Servicemembers can break a pre-service lease without penalty when they join the service. This is an obvious law which prevents new recruits from being penalized upon joining the military. The new law formally recognizes what was commonly written into lease agreements as a ‘military clause.’ The military clause allowed the servicemember to break his lease without penalty for PCS or deployments longer than 90 days. The military clause is no longer required in a lease agreement because it is now a law.
Termination of Auto Lease: The servicemember and his family can terminate auto leases if he receives PCS orders overseas, or deployment orders for 180 days or more.
Guard and Reserve Benefits: All of these laws apply to the Guard and Reserve, but there are a few small differences. The Guard must be activated for a minimum of 30 days to be eligible. Guard and Reserve members can also terminate auto leases if they are activated for 180 days or more. The law does not state they must be deployed.
Get out of Cell Phone Contracts. The SCRA doesn’t specifically allow service members to cancel their cell phone contracts at will, but there are several ways for military members to cancel cell phone contracts or to cancel your cell phone contract without any fees.
And More… There are many other benefits that can be found within the SCRA. Contact your base legal department for more information, or read here. If you are considering joining the military, talk to a recruiter. (But remember, recruiters are not legal aides. Request them to direct you to someone who knows the facts!).
Comments
what about military members who get orders for overseas for 3-4 years and have a car loan not a lease? None of the websites I have visited have addressed this problem.
Good question, Justin. It depends on the terms of your loan. Some lenders will not allow you to take your car overseas while there is still a loan on it. I recommend contacting your lender for more information about that aspect.
Can you lower the interest rate if you move overseas? Again, I am not sure. If you had the loan before you joined the military, then probably. If you got the loan after you joined, then maybe not.
I know this is not a concrete answer, but there are details I don’t know, and other circumstances that may come into play. Your best bet is to contact your lender, and possibly your base legal office.
Good luck, and thanks for serving!
someone told me that while i was deployed i could get my intrest rate redueced on my current car loan. is this true even if i purchased it ofter i joined the army?
Can you please tell me if the 2003 SCRA signed by Bush on section 533 for home foreclosure that is now 9 months after deployment is going to be 3 months again. (because it was due to expire on Dec 2010) Will it be revised again for 9 months or go back to 3 months.
Thank You
Hello Adrienne, based on the information I found on About.com, it appears as though it will revert back to the original 90 day period.
I will be deploying soon. I’m in the guard and just leased a brand new car. May I terminate my lease without getting penalized for it?
Melvin, these situations are often on a case by case basis. generally if you are deploying for a long term assignment or moving overseas, then you would be able to. But if you just want out of a lease because you don’t want to be in it any more and you aren’t physically leaving the area, then you may not be able to. My recommendation is to contact the dealership where you have your lease or contact your base legal department. Best of luck.
If I’m active duty and I receive orders to deploy to Iraq and Afghanistan I’m I eligible to receive the soldiers and sailors act while i’m deployed? I’m having a difficult time receiving an answer. Can you please respond to me in a timely manner since I will be leaving soon. Thank you for your time
Moses,
Thank you for contacting me. It depends on what we are talking about. If it is a legal proceeding, then yes, these protections would apply when you deploy. If we are talking about debt, then it depends. If the debts were incurred before you joined the service, then you can get all of those reduced. If the debts were incurred after you joined the service, then I’m not positive. However, some financial institutions will give service members a break while they are deployed, either by reducing interest rates while you are deployed, or reducing minimum payments. This is a case where it pays to give your lender a call and see what they can do for you. Additionally, if you are looking at credit cards, then I recommend looking at these 0% Balance Transfer Credit Cards, which allow you to transfer your balances to a 0% interest rate to help you pay them off more quickly.
Best of luck and thanks for your service!
Hey , I’m deploying to afhganistan in the fall but I finance a car in december last year, I have no body to look after or when I’m gone . Can I return my car to the dealer where I bought from without getting penalize …. It’s a finance not a lease so I’m worry cuz I havent find no answer yet
Ronny, I don’t believe you will be able to return the vehicle since it is a purchase and not a lease. I recommend looking into a long term storage arrangement, or you could try to sell it if you don’t want to put it in storage. Best of luck on your deployment and thanks for your service!
I leased a Honda two weeks ago and everything was fine until last night when the dealership called me and said that Honda has decided to not lease me the car since I am in the military. They are now giving me the option to buy the car instead of leasing. That is not something I am interested in doing. Have you ever dealt with anything like this? What options do I have?
Jonathan, I am not aware of any legal recourse a company has to cancel a lease simply because you are in the military. It’s possible it could even be against the law, but I don’t know for certain.
The first thing I would do is contact your base legal office and see if your judge advocates have any advice for you. Many times the base legal departments don’t get involved with these things, but in other cases they may be able to at least give you advice on what the law states.
Beyond that, my recommendation is to thoroughly read your lease agreement and look for any clauses which might relate to military service and/or the ability of the leasing company to cancel the lease.
And I certainly wouldn’t buy a car simply because they prefer to sell you a car versus lease you a car. If they insist on having your return the car, then offer to return it to them for a 100% credit of your money including all signing costs, down payments, taxes, etc. (make sure you aren’t out a single cent when it is all said and done).
Then take your business elsewhere – they don’t deserve your business if they insist on treating you that way.
I am about to deploy to aghanistan. Can I used the SCRA 2003 to lower my interest to 6&?
Hello Pablo, the 6% interest rate only applies to loans you took out before you joined the military; it does not apply to any loans you took out after you joined the military.
So the short answer is, if you had the loan before you signed up, then yes, it should apply, and the lower interest rate should be in effect until you separate from the military. If you took out the loan after you joined, then you may not be able to reduce your interest rate.
That said, I recommend contacting your lender to see if they can work with you. Some lenders will reduce interest rates while the borrower is deployed. It doesn’t hurt to ask.
I am supposed to deploy to afganistan in january, and from what i have read the only way to get out of my car lease is only if your orders are for 180 days or more. Is this a true statement because i know in some cases your orders will say 179 days for a 6 month deployment. Thank your for your help.
My husband went into basic training on the 31st of October. By the time he got the first half check we were two payments behind on our vehicle payment. Now we are four payments behind waiting on a bank loan and another full check to get caught up. They are threatening to have my vehicle repoed due to not being able to pay a full 200.00 payment. What can I do? Is there anything that protects us from this happening?
Candace,
My recommendation is to contact your lender and let them know the full situation – what is happening and why. Many lenders are understanding when they know they will get their money.
You can also talk to them about reducing your interest rate if it is above 6%.
The most important thing you can do right now to avoid a repo is to open the lines of communication.
to candace dec 8 2011 posting. …. contact lender, advise of situation, request assistance for a 2month deferment or even a 3month deferement.
or go to your local VFW american legion post and ask for assistance. online look for veterans assistance grant application …the grant is for $1000.00 dd 214 and military id will be needed. at least in the state of texas. not sure on your state. hope this helps others also.
Hey Ryan…I found this very informative. I know you said that even if the lease does not have a military clause, we are still protected under this act but what if our lease does have a military clause but it states that the active duty member can only break the lease on PCS or deployment order but not on ETS orders? Our landlord said that if our orders do not say PCS that we are responsible for the remainder of our lease but we don’t plan on staying here when my husband ETS’. Our we still covered by this act with ETS orders?
Marissa, to be honest, I don’t have a clear answer for you. I would think that the lease you signed is designed to protect both parties in the event you are required to move for a PCS or deployment, but an ETS doesn’t fall into that situation. Your best bet may be to contact your base legal department for clarification. You can also try contacting your landlord and asking him/her if you can come up with a solution that works for everyone. Some people are willing to work with you if you give them enough notice. Best of luck.
Yeah I talked to our landlord and she said unless it states PCS orders that we have to pay over 2 grand for the remainder of our lease. I asked her what she did with military members who were retiring and returning to her home of record but she said it didn’t matter. I didn’t think it was fair at all because a active duty member should not be confined to a state due to an apartment lease, especially if the active duty member completed the terms of his contract with the military. My husband and I are originally from Hawaii but our home of record is Alaska. There are no jobs here where we are at so we need to move where we can get steady income. Especially having three little ones to take care of. I talked to another tenant who was a JAG officer and she said that we can get our orders to state PCS/ETS but not sure who we talk to for that. I just hope we don’t get stuck here in this state…we need some place warm. lol
Hello Ryan,
My landlord is withholding our security depost because we terminated our rental agreement. We gave the proper written notice and supplied him with all of the PCS paperwork. However, he is saying that because on the PCS forms it states in section (b)”you are not authorized shipment of household goods and relocation of family members” that we are not covered by the SCRA. He also talked to my boss whose phone number was on the PCS paperwork who told him that we are choosing to move, and that terminating our lease is optional because I was relocated only 35 miles away. It seems like this is false and that I should be covered by the SCRA and allowed to terminate my lease due to PCS therefore getting my security deposit back. Our landlord isn’t charging us for unpaid rent but said that our rental agreement clearly states that termination of the lease before the term is us up will forfeit our security deposit. Do you know the answer to this?
Thank you,
Drew
Drew,
This is a tricky situation, and will likely boil down to how your PCS orders are interpreted. I recommend contacting your base legal office or JAG office to see if they can assist you with this matter. They will be able to review you lease contract and your PCS orders and give you the best course of action.
Best of luck, and thanks for your service!