By: Robert E. Gerber
Joseph Hage Aaronson LLC
New York, New York
The SCRA extends relief to all Army, Air Force, Coast Guard, Marine Corps, and Navy servicemembers on active duty; members of the Reserve components when serving on active duty; members of the National Guard mobilized under federal orders for more than 30 consecutive days; and active-duty commissioned officers of the Public Health Service and National Oceanic and Atmospheric Administration .
A number of SCRA provisions also extend to spouses and other dependents, such as when they are faced with eviction or need relief related to the termination of residential and motor vehicle leases.
Reservists and National Guard personnel are protected under the SCRA when—but only when—they’ve been called to active duty. Retired Servicemembers (whether those who served on active duty, as Reservists, or as National Guard personnel) lose their SCRA protection when they leave active duty or within a few months thereafter. (Exactly when that protection comes to an end varies with the particular protection.)
Portions of the SCRA also apply to reservists and inductees who have received orders but haven’t yet reported to active duty or induction into military service.
A. What kinds of protection does the SCRA provide?
Some of your rights under the SCRA come automatically—without the need for you to notify anyone. But relief under the SCRA isn’t always automatic, and most of the time, you’ll have to request relief.
And more than a few SCRA entitlements (though much less than all of them) require a judicial finding that the military service “materially impairs”—affects in a significant way—the Servicemember’s ability to comply with the legal obligation in question.
As you read through the discussion that follows, note (1) which of your protections are automatic, (2) which require action on your part, or on your behalf and (3) which, once you ask, you can assume you’ll be entitled to, and (4) which will still be subject to judicial discretion.
Important—Some of these protections are straightforward, but many are technical. You might want to familiarize yourself generally with these, by reading this and the web links at the end of this discussion. But whether or not you do, your interests would best be served by your working with your nearest Armed Forces Legal Assistance Office to identify and properly invoke any SCRA protections that would be of importance to you and your dependents.
Also—Please note that this isn’t a complete discussion of all of Servicemembers’ rights and protections under the SCRA. But the most important of them, as applicable to Servicemembers’ dealings with their creditors, follow.
1. Court and Administrative Proceedings
Military service can sometimes make it difficult for Servicemembers to defend their legal rights—especially when they’re far from home or wherever their obligations originated. Sometimes Servicemembers know of proceedings that were brought against them, but can’t get leave, or their duties make it difficult or impossible to defend. Sometimes they do not even know that proceedings were brought against them—leading to a failure to defend and, as a result, a “default judgment”—a judgment entered without considering whether there might be a valid defense.
The SCRA provides protections to Servicemembers in four principal ways with respect to court and administrative proceedings:
a) Protection Against Default Judgments Before They Happen
In any civil court proceeding (including any child custody proceeding) in which the defendant Servicemember doesn’t make an appearance , a plaintiff creditor must file an affidavit with court stating one of three things: (1) that the defendant is in military service; (2) that the defendant is not in military service; or (3) that the creditor isn’t able to determine whether or not the defendant is in military service, after making a good faith effort to determine the defendant’s military service status .
When any defendant—whether a Servicemember or not—doesn’t make an appearance to defend a lawsuit—the plaintiff will typically ask the court to give the plaintiff a win by default, and to enter a default judgment granting the plaintiff the relief sought in the complaint. But where a defendant Servicemember hasn’t made an appearance and it seems that he or she is in military service, a court may not enter a default judgment against that defendant until after it appoints an attorney to represent the interests of that defendant Servicemember . The court must stay a civil court proceeding for at least 90 days if that appointed attorney has been unable to contact the defendant Servicemember, or if there may be a defense to the action that requires that the defendant be present .
If, based on the filed affidavit, the court can’t determine whether or not the defendant is in the military, it may condition entry of judgment against the defendant upon the plaintiff’s filing of a bond. If the defendant is later found to be in military service, the bond is available to indemnify the defendant against any loss or damage the defendant may suffer by reason of any judgment for the plaintiff against the defendant should the judgment later be set aside in whole or in part .
(b) Protection Against Default Judgments If They Happen Anyway
If a judgment is entered against the defendant while he or she is in military service or within 60 days of discharge from military service, and the defendant was prejudiced in making his or her defense because of his or her military service, the judgment may, upon application by the defendant, be opened by the court and the defendant may then provide a defense .
But before the judgment may be opened, the defendant must show that he or she was materially affected by reason of that military service in making a defense to the action, AND has a meritorious or legal defense to some or all of the action .
The Servicemember must timely request such relief (i.e., within 90 days from release from active duty).
If a default judgment was entered against you when you were in military service or within 60 days thereafter, you should consult with a legal assistance attorney to obtain information on possible relief available to you.
(c) Stay of Action When Servicemember Defendant’s Ability to Defend is Impaired
Sometimes the Servicemember will have heard about the lawsuit, or appointed counsel will have gone to bat for the Servicemember. Under the SCRA, if requested by counsel for a Servicemember defendant, or upon the court’s “own motion”( i.e., on the court’s own initiative) , the court must grant a stay of proceedings for no less than 90 days if it determines that (1) there may be a defense and the defense can’t be presented without the defendant’s presence; or (2) after due diligence, the defendant’s attorney hasn’t been able to contact the defendant Servicemember or otherwise determine if a meritorious defense exists .
Backup for the request is necessary. The court will grant the Servicemember’s stay application and will stay the proceeding for at least 90 days if the application includes: (1) a letter or other communication setting forth facts demonstrating that the individual’s current military duty requirements materially affect the Servicemember’s ability to appear along with a date when the Servicemember will be able to appear; and (2) a letter or other communication from the Servicemember’s commanding officer stating that the Servicemember’s current military duty prevents his or her appearance and that military leave is not authorized for the Servicemember at the time of the letter.
This letter or request to the court for the stay doesn’t constitute an “appearance for jurisdictional purposes” (i.e., constitute an acknowledgment that the court has jurisdiction over the Servicemember), and doesn’t constitute a waiver of any substantive or legal defenses the Servicemember might have .
After receiving the written request, the judge, magistrate or hearing officer must grant a minimum 90-day delay if the Servicemember includes the necessary information . So that stay is automatic if requested with the necessary backup—but the Servicemember still needs to ask for it.
The court or administrative agency may make further orders to protect the rights of the defendant under the SCRA , but any additional delay beyond the mandatory 90-day period is within the discretion of the judge, magistrate or hearing officer. (Normally it will turn on whether the military duty has a continuing effect on the ability to appear and defend.)
(d) Stay or Vacation of Execution of Judgments, Attachments and Garnishments
In addition to the court’s ability to regulate default judgments and stay proceedings, the court may on its own motion and must upon application: (1) stay the execution of any judgment or court order entered against a Servicemember; and (2) vacate or stay any attachment or garnishment of the Servicemember’s property or assets, whether before or after judgment if it finds that the Servicemember’s ability to comply with the judgment or garnishment is materially affected by military service. The stay of execution may be ordered for any part of the Servicemember’s military service plus 90 days after discharge from the service. The court may also order the Servicemember to make installment payments during any stay ordered .
2. Evictions, Foreclosures, Repossessions and Forced Sales
Some states require a court proceeding and related court order to evict tenants and others from real property, and some states permit eviction without one. Likewise, some states require a court proceeding and related court order to take and sell one’s property after the default on a secured debt (the process we call “foreclosure”), and some states—such as those in which “deeds of trust” or “trust deeds” are utilized—permit such a sale without approval of a court. In the absence of relief under the SCRA, Servicemembers and their dependents could lose their homes, vehicles, or other personal property at a time when military duties impair the ability to defend. The SCRA gives Servicemembers protections in each of these situations.
(a) Protection against Evictions
Although the SCRA doesn’t excuse Servicemembers from paying rent, it does afford some relief if military service makes payment difficult. Military members and their dependents (in their own right) have some protection from eviction.
As just noted, some states require a court order for a landlord to evict and other states don’t. But if you rent your home or apartment and the rent does not exceed a certain amount (which in 2019 is $3,851.03 per month), then your landlord can’t evict you or your dependents while you’re serving on active duty without first obtaining a court order . That court order is required even if the state generally doesn’t require a court order to evict a tenant. And the court order is required whether or not the lease was entered into before entry on active duty.
And then, to issue the court order authorizing eviction, the court must find the member’s failure to pay is not materially affected by his/her military service .
That “material” effect is present where the Servicemember doesn’t earn sufficient income to pay the rent. Where the member is materially affected by military service, the court may stay the eviction (for 90 days, unless the court decides on a shorter or longer period in the interest of justice) when the military member or dependents request it.
In addition, you can request that the court delay the execution of an order to evict you or your dependents for 90 days. But unlike the stay of other judicial proceedings, the court will have the ability to decide whether to postpone eviction and, if so, for how long—which can be longer or shorter than 90 days, as “justice and equity require.”  The court also can adjust the rental obligation under the lease “to preserve the interests of all parties.”  Also, if a stay is granted, the court may grant to the landlord such relief “as equity may require.” 
The rent threshold typically changes each year to reflect inflation and any rise in housing costs.
(b) Protection against Foreclosures and Forced Sales
If you are on active-duty and it results in your inability to pay your mortgage or meet the terms of a purchase or installment contract, the SCRA may be able to help you. While the SCRA doesn’t erase that debt, it provides that a creditor must get a court order prior to foreclosing on a mortgage—or proceeding with a sale under a trust deed, even though trust deeds ordinarily don’t require court orders before sales .
No sale, foreclosure or seizure of property for nonpayment of a pre-service mortgage debt—whether secured by a mortgage or trust deed—is valid if made during or within one year after your service on active duty, unless carrying out a valid court order .
Mortgages generally, if not always, require court orders to achieve foreclosure in any event. But for trust deeds—which normally don’t require a court order to complete a foreclosure sale—the SCRA is particularly important. It’s been observed that this can provide tremendous protections from foreclosure in the many states permitting foreclosures to proceed without involving the courts .
But note that unlike the protection relating to eviction, in order for a Servicemember to receive the protection relating to foreclosures and forced sales, the obligation needs to have been taken out before the Servicemember entered military service .
(c) Protection from Vehicle Repossessions and Forced Sales
Servicemembers’ rights with respect to vehicle repossessions are similar to those that they have with respect to real estate. So long as the loan originated before the period of military service, and the Servicemember remains liable on the obligation,  a creditor may not repossess a vehicle during a borrower’s period of military service without a court order .
Also, if a creditor has a security interest on a loan secured by the motor vehicle (as most auto loans are), SCRA prohibits a foreclosure or sale of the vehicle without a court order .
Once again, though (and again unlike the protection relating to eviction), in order for a Servicemember to receive protection relating to repossession, foreclosures and forced sales, the vehicle obligation needs to have been taken out before the Servicemember entered military service .
(d) Protections from Other Kinds of Forced Sales
The protections against repossession and forced sales go beyond liens on real estate and vehicles. They require a court order before a foreclosure or sale on other kinds of liens as well. Liens for storage, repair, or cleaning of the Servicemember’s property are specifically mentioned in SCRA as liens requiring a court order to enforce.
So, for example, if you have household goods stored in a warehouse or ministorage, a car in the possession of a company that towed it, or a car stored at a garage or left there after the completion of repairs, your property can’t be sold to satisfy a debt for unpaid storage or towing charges without first obtaining a court order.
SCRA provides that the liens covered also include “a lien on such property or effects for any other reason.” 
If a court order to foreclose or enforce that lien is sought, the court may on its own motion, and must if requested by a Servicemember whose ability to comply with the obligation resulting in the proceeding is materially affected by military service (1) stay the proceeding for a period of time as justice and equity require; or (2) adjust the obligation to preserve the interests of all parties.
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The provisions that relate Servicemembers’ protection in the face of evictions, foreclosures and other lien enforcement actions can be especially complicated. So be sure to consult with legal counsel at your nearest Armed Forces Legal Assistance Office regarding any civil court actions against you or you and your dependents.
3. Contracts and Leases
Servicemembers, far more than others, need to move, resulting in the need to terminate real property and auto leases, contracts for cell phones, and sometimes other contracts for services that might not work or be needed in the new locale. Also, military duty sometimes requires the Servicemember to bear additional costs (such as for housing in both the old and new locale), so relief on interest rates payable on obligations that will be ongoing can be very helpful. The SCRA provides Servicemembers with several protections in this area.
(a) Ability to Terminate Real Estate Leases.
Servicemembers generally can terminate without penalty any residential and business property leases that began before their active-duty assignments.  They also can terminate a lease they signed during active duty in the event of a change in their permanent duty station or if a new deployment will last more than 90 days .
Terminating the lease requires written notice of cancellation to the landlord—by hand, a private business carrier (like Federal Express, DHL, or UPS), or by mail with adequate postage and a return receipt—with a copy of military orders . Verbal notice is not enough.
Such terminations also terminate any obligation of the Servicemember’s dependents under the lease .
(b) Ability to Terminate Vehicle Leases
The SCRA also allows the termination of leases of vehicles leased for personal or business by servicemembers and their dependents . The pre-service vehicle lease may be cancelled if the servicemember receives active duty orders for a period of one hundred and eighty (180) days or more. The automobile lease entered into while the servicemember is on active duty may be terminated if the servicemember receives permanent change of station (PCS) orders to a (1) location outside the continental United States, or (2) deployment orders for a period of 180 days or more.
Generally, a reserve or guard Servicemember must, after entering the lease, be called to active duty service for at least 180 days or more. An active duty Servicemember must, after entering the lease, EITHER (a) receive military orders for a permanent change of station either (i) from the continental United States (CONUS) to outside CONUS or (ii) from a state outside CONUS to any location outside that state OR (b) deploy for 180 days or more.
Terminating the lease requires written notice to the lessor with a copy of military orders.
(c) Ability to Terminate Phone, Internet, Cable, and Cell Phone Contracts
The right to terminate contracts for phone, internet, cable and cell phone installment contracts are also protected . These contracts may be cancelled or suspended if the Servicemember is deployed overseas for 90 days or longer or if he makes a permanent change-of-station (PCS) move. The Servicemember may cancel or suspend the cell phone contract without penalties or extra fees as long as the deployment or PCS materially affects the Servicemember’s ability to satisfy the contract or utilize the service.
Under the SCRA, the service provider can’t impose an early termination charge, but any tax or other obligation that is due and unpaid at the time of termination remains payable .
If the services were provided under a “family plan,” the Servicemember may also terminate the contract with respect to the other beneficiaries of the contract if all of them accompany the Servicemember during the Servicemember’s period of relocation .
(d) 6% Cap on Interest Rate on Debt Incurred Before Entry on to Active Duty
A Servicemember may reduce the higher interest rates the Servicemember pays for any financial obligation (for example, a credit card, loan, or mortgage) individually or jointly entered into before active service to 6% if active service materially affects the Servicemember’s ability to repay the financial obligation .
In addition, the SCRA prohibits the lender from accelerating the principal amount owed, and the SCRA forgives (as contrasted to defers) the excess interest payments that would have been due under the higher interest rate so that the Servicemember is not liable for the excess after he or she is released from active service.
This reduced interest rate is effective only during the period of active military duty for most obligations. But for a mortgage obligation, the reduced interest rate continues for one year following release from military service.
Importantly, this reduced rate does not apply to financial obligations (including refinancing or credit card balance increases) entered into or accrued while on active service, or to federally guaranteed student loans.
To receive this benefit, you must be proactive. You must notify your lender in writing and include a copy of your orders to active duty service or a letter from your commanding officer that shows the date you began active duty service.
The written notice and proof of military service must be provided to the creditor within 180 days of the end of the Servicemember’s military service.
(e) Contractual Penalties
When an action for compliance with a contract is stayed under the SCRA, contractual penalties do not accrue during the period of the stay .
(f) Protection for Small Business Owners
If a Servicemember owns a small business (and even if the Servicemember executed a guaranty or otherwise is personally liable for the business’s debts), the Servicemember’s non-business assets and military pay are protected from creditors enforcing business debts or obligations while the Servicemember is on active duty .
4. Credit Rating Protection
Lenders cannot deny or revoke credit, change the terms of an existing loan, or refuse to grant credit because the Servicemember sought SCRA protections. Any claim of rights under SCRA cannot be used as the basis for a lender to conclude that the Servicemember is unable to pay a debt, or as the basis to generate an adverse credit report. Furthermore, an insurer may not refuse to insure a Servicemember based on any SCRA protections the Servicemember may invoke.
Servicemembers’ rights with respect to several different types of insurance that they might have obtained are protected under the SCRA.
(a) Life Insurance
Life insurance companies cannot terminate coverage or require payment of additional premiums if you are in military service. (But increases in premiums based on age in individual term insurance are not covered by SCRA.) An insurer also may not limit or restrict coverage for any activity required by military service.
Life insurance also is protected against lapse, termination, and forfeiture for nonpayment of premiums or indebtedness for the period of military service plus two years.
For SCRA protection for life insurance policies, the Servicemember must submit a written request to the Department of Veteran Affairs.
(b) Health Insurance
The SCRA provides for reinstatement of health insurance without waiting periods or other penalties, provided the insurance was effective before the active duty period, the insurance was terminated during the active duty period, and certain other conditions exist.
If your health insurance was canceled when on active duty, it can be reinstated without loss of benefits, waiting periods, or penalties in most instances.
(c) Professional Liability Insurance
Professionals in health care, legal services or another profession, as determined by the Secretary of Defense, called to active duty may suspend their professional liability insurance policy by written request to the insurance carrier. Premiums for suspended insurance do not have to be paid, and any premiums paid by an individual while on active duty must be refunded. To reinstate suspended insurance, the individual must send a request to the insurance carrier within 30 days of release from active duty.
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Deadlines for applying for reinstatement differ depending on the type of insurance. For instance, you have only 30 days after release from active duty to request reinstatement of professional liability insurance and receive SCRA protections, but you have 120 days to request reinstatement of health insurance benefits.
6. Tax Relief.
(a) Deferral of Taxes Due When Ability to Pay is Materially Affected by Military Service
The Internal Revenue Service and state and local taxing authorities must defer Servicemembers’ income taxes due before or during their military service if their ability to pay the income tax is materially affected by military service. No interest or penalty can be added because of this type of deferral.
Important—This is not a general exemption from the duty to pay taxes—and it requires proof that your ability to pay the tax is materially affected by the military service.
(b) Taxes on Military and Nonmilitary Income
If you receive military orders that require you to move from your home state to another state, your “domicile”—your state of legal residence, for tax, voting, inheritance and other purposes—does not change. And the SCRA prevents you from having to pay state taxes on your military income—or on personal property, such as a car—to any state other than your home state of legal residency .
If you or your spouse earns non-military income, you may have to pay income taxes to the state where you’re stationed, if that state has an income tax. But the state cannot use your military earnings to increase either your tax liability or your spouse’s.
7. Domicile (Legal Residence) & Taxation
A Servicemember can maintain the domicile or legal residence in the state the Servicemember resided before entering active duty. A Servicemember does not lose the domicile (legal residence) in a state when absence from that state is due to military orders.
A Servicemember can, however, change his or her domicile if he or she wants to, and meets the conditions for changing legal residence.
Domicile should not be confused with residence. A person can have as many residences as he or she can afford but can have only one domicile.
A Servicemember does not acquire a new domicile or legal residence for purposes of income tax when the Servicemember’s presence in the state is solely due to military orders. Furthermore, the SCRA prohibits states (where the Servicemember is located merely because of military orders) from including military income of a nonresident Servicemember to increase the tax liability imposed on nonmilitary income earned by the nonresident Servicemember or spouse subject to tax by the state. The military income is taxable only by the Servicemember’s domicile state, if the domicile state has an income tax.
8. For Military Spouses: The Military Spouses Residency Relief Act (MSRRA) and Taxation
In November 2009, the MSRRA became law and amended the SCRA. The MSRRA changes some basic rules of taxation that could affect Servicemembers and their spouses.
Under the MSRRA, a military spouse who is present with a Servicemember in a particular State under military orders does not have to pay State income tax on wages earned in that State as long as that State is NOT the spouse’s domicile. But the spouse would have to pay taxes to the State of domicile, if the laws of that State required such payments. (Some States, of course, don’t have State income taxes.)
But the MSRRA doesn’t allow a spouse to pick or chose a domicile in just any State. Domicile is established, not arbitrarily chosen. The spouse must have actually been present in the State, established it as his or her domicile, and maintained it by forming and maintaining the necessary contacts, such as registering to vote, owning property, registering vehicles, holding professional licenses, declaring a homestead, or indicating a State of probate in a last will and testament. Similarly, the MSRRA does not allow a spouse to “inherit” or assume the Servicemember’s domicile upon marriage without the necessary contacts with the State. The law under the MSRRA is complex, and because its effect will depend on the interpretations of each State, Servicemembers and their spouses are encouraged to seek free, confidential advice from an Armed Forces Legal Assistance Office.
The law under the MSRRA is complex, and because its effect will depend on the interpretations of each State, Servicemembers and their spouses are encouraged to seek free, confidential advice from an Armed Forces Legal Assistance Office.
 Active duty personnel become eligible for SCRA protection starting on the date their active duty orders are received. Protection generally terminates within 30-90 days after the date of release from extended active duty. Those absent from duty as a result of being wounded or being granted leave are also granted protection under the SCRA.
 § 3931(a).
 § 3931(b)(1).
 § 3931(b)(2).
 § 3931(d).
 § 3931(b)(3).
 § 3931(g).
 § 3931(g)(1).
 § 3932.
 § 3932(c).
 § 3932(b)(1).
 § 3932(d).
 § 3934.
 § 3951.
 § 3951(b)(1).
 § 3951(b)(1)(A).
 § 3951(b)(B).
 § 3951(b)(2).
 § 3953.
 § 3953.
 § 3953(a)(1).
 § 3953(a)(1).
 § 3952.
 § 3953.
 § 3953(a)(1).
 § 3958.
 § 3955(a)(1)(A).
 §3955(a) (1)(B).
 § 3955(c).
 § 3955(a)(2).
 § 3955(b)(2).
 § 3956.
 § 3956(e).
 § 3956(d).
 § 3937.
 § 3933.
 §§ 3955, 4026. See also https://www.militaryonesource.mil/family-relationships/relationships/relationship-challenges-and-divorce/servicemembers-civil-relief-act.
 For example, if your state of legal residence is Texas and the military sends you to Virginia, you won’t have to pay Virginia’s state income tax on your military earnings, nor will you have to pay personal property taxes to the state of Virginia.
In some situations, civilian employers have agreed to pay the military member the difference between the military pay and the civilian pay earned before the call to active duty. In most such situations, military service hasn’t materially affected the member’s ability to pay, so it’s unlikely that the SCRA 6% interest limitation would apply. Of course, if Servicemember’s expenses increased (for example, if the Servicemember had to pay for a second apartment at the duty station, or the Servicemember’s spouse gave up a job to move with the Servicemember), military service might have materially affected the Servicemember, and the SCRA 6% interest limit could apply. https://www.jag.navy.mil/legal_services/documents/The%20SCRA%20Overview%20(RevJan2014).pdf