Assistance for Persons in the Armed Services
Colorado Real Estate Journal, July 7, 2004
The "Servicemembers' Civil Relief Act" was signed into law on December 19, 2003. It amends and updates the "Soldiers and Sailors Civil Relief Act of 1940." In addition to giving us a new gender-neutral word for people in the armed services, the act covers a wide range of financial and legal situations that might arise as a result of being in the military, particularly for reservists who are called up for active duty. Quite often those people get a significant pay cut once the military becomes their "day job." Think, for example, of a commercial airline pilot.
"The focus of the (new act) is the same as under the (prior act): To provide protections to servicemembers who have difficulty meeting their personal financial and legal obligations because of their military service," said Lt. Col. Patrick Lindemann, deputy director for legal policy in the office of the undersecretary of defense for personnel and readiness. "Servicemembers on long-term deployments, or called to active duty, should not have to worry about their families in their absence being evicted from their quarters without sufficient legal protections, or that they are paying on a leased car or apartment that they can't use, or about civil legal proceedings they can't attend because of their deployment," he said.
The Act applies to military personnel on active duty. Some of the protections are summarized below. (There are other protections, and there are certain notice requirements to be met in order to claim the protections):
- 6 percent Interest Cap. Upon entering active duty, service members may reduce annual interest rates on obligations incurred prior to military service to no more than 6 percent. Interest exceeding 6 percent is forgiven. Payments must be reduced to reflect the new interest rate. The 6 percent cap applies to obligations in the service member's name as well as obligations that are jointly in the names of a service member and spouse. The interest rate reduction applies from the date the service member receives military orders until the date the service member stops serving in the qualifying status.
- Right to Terminate Leases. These sections of the SCRA permit military personnel to terminate leases on real estate or personal property. The right to terminate a real estate lease accrues whenever the service member receives permanent change of station orders or if he or she is deploying with a military unit for at least 90 days. A service member may terminate a motor vehicle lease if it was executed at least 180 days before entering military service. Vehicle leases entered into after entering military service may be terminated if the lessee receives permanent orders for a change of station outside the continental U.S. or deployment for at least 180 days.
- Stay of Eviction Proceedings. The Act permits the service member to obtain a 90 day stay of any eviction action involving a service member or his or her dependents. The court may order a longer stay if it deems that to be equitable. The premises must be used as a residence. This protection only applies to rental units having a monthly rent of $2,400 (adjusted every two years according to the Consumer Price Index) or less. During the period of qualifying military service, the landlord cannot evict without a court order. The court may also make any other adjustment needed to preserve the interests of all parties to the lease.
- Stay of Foreclosure Proceedings. If, prior to entry into active duty, the service member entered an installment contract for the purchase of real or personal property, then the Act protects against foreclosure so long as the obligation is secured by real or personal property, the debt was incurred before active duty, the property was owned by the service member or his or her dependents before active duty, and is still owned by them; and the service member's or dependents' ability to pay is materially affected by such service.
- Stay of Other Civil Proceedings. Service members may delay civil court hearings (personal injury, divorce, child custody, etc.) and bankruptcy debtor/creditor meetings (but not administrative processes such as child support enforcement agency determinations or re-determinations, nor does this protection apply to criminal or traffic proceedings) for at least 90 days during the period of active service (or within 90 days after active service). To obtain a stay, two requirements must be met: 1). The service member must send a letter to the court setting forth why military duty is materially affecting the service member's ability to adequately defend his or her rights; and, 2). The service member's commander must send a letter to the court confirming the military duty, and confirming that military leave is not authorized for the service member at the time of the letter (assuming that is true). The request for stay may not be deemed an entry of appearance or a waiver of any substantive or procedural defense, including lack of personal jurisdiction.
- Protection Against Default Judgments. The SCRA provides significant protections against default judgments and any execution, attachments or garnishments that may have been levied while the service member was on active duty or for 60 days after active service ends. For any civil action against an absent service member, the plaintiff is required to file with the court an affidavit stating whether or not the defendant is in military service with facts to support the affidavit; or, if the plaintiff is unable to ascertain the defendant's military status, stating that. Under certain circumstances the Act requires the court to appoint an attorney to represent the service member. If a default judgment is obtained against a service member, he or she has 90 days from the termination of service to file a motion with the court to vacate that judgment.
