SCRA benefits: everything you need to know

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SCRA benefits and protections

The SCRA offers several key benefits to eligible active duty service members.

Advantage: limited interest rate ceiling

One of the most important financial protections under this law is the cap on interest rates. According to the SCRA, any debt you incurred before joining the Army, Coast Guard, National Guard, Reserves, or other qualifying organizations should be capped at a 6% interest rate, regardless of original interest rate. This rate is valid while you are on active duty.

What’s particularly impressive is that this interest rate cap is available on most forms of debt, including mortgages, credit cards, home equity loans, student loans, automobiles and personal loans.

Protection: Military Foreclosure Relief

SCRA can protect you if you are struggling to make your mortgage payments and risk losing your home to foreclosure. By law, if you took out your mortgage before you entered active duty, your lender can’t seize you without first registering a valid court order. Such a court order will lengthen the time it takes to complete foreclosure proceedings against you.

This protection lasts while you are on active duty and for 12 months after you leave the Army, Reserves, Coast Guard, National Guard, or other qualified agency.

Advantage: SCRA benefits for spouses

If you are married to a service member or are the child of a service member, the protections and benefits of the SCRA also apply to you while the service member is on active duty.

You can also receive the benefits of this law if a member of the service gives you financial support. Under the law, you will qualify if an active duty member provides more than half of your financial support within 180 days of you applying for one of the benefits of this law.

It’s also important to note that the SCRA generally requires a child to be under 18 and unmarried to qualify for a parent’s SCRA benefits.

Protection: Lease/Contract Forgiveness

Through SCRA, you can also terminate all leases – including those for vehicles, apartments and single-family homes – without any financial penalty if you are deployed for 90 days or more.

This protection also applies to contracts such as those you may have with your telephone, Internet or cable providers.

To benefit from this protection, you must have entered into your lease or contract before being called into active service.

Protection: Protection against default judgments

This federal law also protects you from default judgments if you are sued in a civil action.

A default judgment is a court order favoring the person or party suing you if you don’t go to court to defend yourself. If you are on active duty, you may not be able to appear in court, which is where SCRA protections come in.

Under the SCRA, if you are on active duty and cannot defend yourself in a civil action, the court is not allowed to enter default judgment against you until it appoints a lawyer to represent you.

The party who sued you must file an affidavit with the court stating whether you are on active duty. The court must also allow a postponement of the case for at least 90 days.

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