Civil Protections for Servicemembers

(50 U.S.C.A. §§ 3901-4043)¹

Active duty members of the military are trained and equipped to overcome numerous challenges in the course of carrying out their mission. But when it comes to the challenges that they and their families face in their private lives, they are also equipped with laws to protect their legal rights, and their financial well-being. Among the most important is the Servicemembers’ Civil Relief Act (SCRA), which provides rights and protections to active duty and recently separated members of the military and their families in matters related to debt, foreclosure, insurance, leases, and other contracts. You can learn more about the SCRA below.

Maximum Interest Rates on Mortgages, Credit Cards, and Other Debts
- Interest rate on mortgage payments and credit card obligations may be capped at 6% (if service materially affects the member's ability to pay).
  - Applies only to obligations incurred before entering military service.
  - In the case of a mortgage, the cap continues for one year after the service member's return.
  - Any interest above 6% is forgiven during this period, not simply deferred.
  - The 6% cap may be placed on any loan obligation incurred prior to active duty.
- The Talent Nelson Military Lending Act (MLA), 10 U.S.C. § 987, applies to servicemembers who become obligated on a consumer credit transaction while on active duty, and their dependents.
  - 36% interest rate cap.
  - Effective October 3, 2016:
    - Mandatory arbitration banned
    - Creditors cannot require servicemembers and their dependents to waive their rights under the SCRA.
    - MLA coverage extended to almost all forms of credit within the Truth In Lending Act’s scope, including payday loans, deposit advance products, vehicle title loans, overdraft lines of credit, and installment loans. Residential mortgages, vehicle purchase loans, and other loans secured by property are not covered.
    - Scope of charges used to calculate 36% interest rate cap broadened to include finance charges, fees for credit-related ancillary products, and certain application, participation and annual fees.
    - Creditors are required to make additional disclosures, such as a disclosure of the 36% interest rate cap and a clear description of the borrower’s payment obligation.
- Provisions related to credit cards scheduled to go into effect October 3, 2017.
Foreclosure Protection
- Mortgage lenders may not foreclose, or seize property for a failure to pay a mortgage debt, while a service member is on active duty or for one year after active service, unless they have the approval of a court (based on the Foreclosure Relief and Extension for Servicemembers Act of 2015).
Life Insurance
- A service member may have the Department of Veteran Affairs guarantee payment of premiums on certain types of commercial life insurance policies for the period of military service and for two years thereafter.
Health Insurance
- Servicemembers are entitled to have their civilian health insurance reinstated when they return to civilian life following periods of active duty.
  - Reinstatement is to be without a waiting period or exclusion if: 1) the condition arose before or during service; 2) no exclusion or waiting period would have applied during the period of coverage; and 3) with respect to a servicemember, the condition is not considered by the Secretary of Veterans Affairs to be a disability incurred or aggravated in the line of duty.
  - Application for reinstatement must be filed no later than 120 days after the date that service ends.
  - Premiums generally cannot be increased for the balance of the period for which coverage would have been continued to an amount greater than the amount chargeable for such coverage before the termination.
Professional Liability Insurance Protection
- Available to certain persons ordered to active duty who were engaged in health care, legal or other professional services. It allows these servicemembers to suspend a professional liability insurance policy and subsequently reinstate such coverage upon proper notice to the carrier. This provision also limits the amount of premium increases permissible after reinstatement, and provides for the stay of certain civil or administrative actions during the period of suspension.
Residential Leases / Rental Agreement
- Right to terminate a lease upon written notice to landlord:
  - After executing a lease, a person who enters military service or a service member who receives a permanent change of station order, including discharge from the military, or who is deployed to a new location for 90 days or more has the right to terminate a lease for residential, professional, business, agricultural or similar purpose upon written notice to the landlord. Termination is effective 30 days after the next rental payment is due (if lease provides for monthly payment of rent) or the last day of the month following the month in which notice is given.
- Protections Against Eviction
  - A landlord may not evict a servicemember or servicemember's family for nonpayment of rent from home occupied as primary residence where the rent does not exceed $2,400.00, plus an annual housing price inflation adjustment, except by court order. As of January 1, 2016, the maximum monthly rent amount is $3,451.20 ².
Other Contracts
- Automobile Leases may be terminated when a servicemember receives permanent change of station orders, including discharge from the military,s or is deployed to a new location for 180 days or more. This provision applies if the lease is executed by or on behalf of a person who thereafter is called to enter service, or who executes the lease while in military service and thereafter is subject to a permanent change of station from a location in the continental United States to a location outside the continental United States, or from a location in a State outside the continental United States to any location outside that State, or is deployed for a period of not less than 180 days.
- Telephone Contracts, including cellular telephone service, may be terminated via written or electronic notice when a servicemember is ordered to relocate for 90 days or more to a location that does not support the contract (i.e. service is not provided in location).
- Installment Contracts, generally
  - A contract by a service member for the purchase of real or personal property, including a car, or the lease or bailment of such property may not be rescinded or terminated for breach of contract occurring before or during military service, and such property may not be repossessed without a court order.

Contract Penalties
- If a service member fails to perform an obligation arising under a contract and a penalty is incurred arising from that nonperformance, a court may reduce or waive the fine or penalty if (1) the service member was in military service at the time the fine or penalty was incurred; and (2) the ability of the service member to perform the obligation was materially affected by such military service.

New York State Soldiers' and Sailors' Civil Relief Act
(NY Military Law §§ 300-328)

In addition to the federal Servicemembers Civil Relief Act, New York State law also provides rights and protections for current and recently separated military servicemembers and their families in matters related to debt, foreclosure, insurance, leases, and other contracts under the New York State Soldiers’ and Sailors’ Civil Relief Act. Please read below to learn more.

Extension of Benefits to Dependents and Other Individuals

Upon application to the court, servicemembers' dependents shall be entitled to the same benefits as the servicemember, unless ability to comply with obligations, contract, lease or bailment is not materially impaired by reason of the military service.

Sureties, guarantors and endorsers benefit from any stay, postponement, or suspension or vacation of judgment under this statute.

The SCRA applies to: 1) members of the Army, Navy, Air Force, Maine Corps, and Coast Guard on active duty or absent form duty due to sickness, wounds, leave or other lawful cause; 2) members of the National Guard with certain activation orders; and 3) active service commissioned officers of the Public Health Service of the National Oceanic and Atmospheric Administration.

Storage Liens
- Without a court order, a person holding a lien on the property or effects of a service member may not, during any period of military service and for 90 days thereafter, foreclose or enforce any lien on such property.
Impact of Exercising Rights on Certain Future Financial Transactions
- Application pursuant to this statute for stay, postponement or suspension of tax, fine, penalty, insurance premium or other civil obligation alone shall not provide basis for: determination that person is unable to pay; denial or revocation of credit, change of terms of existing credit arrangement; refusal by creditor to grant credit in substantially same amount/terms; adverse credit report; change in insurance terms.
Selected Additional Rights and Protections provided by SCRA
- Civil Judicial Proceedings
  - Ability to Stay Civil Proceedings, Execution of Judgments, Attachments and Garnishments.
    - Servicemembers have the right to stay of any action or civil proceeding, including foreclosure action and actions to collect a debt for at least 90 days if they cannot appear.
    - The court has discretion to grant additional stays upon further application. When an action for compliance with a contract is stayed under the SCRA, contractual penalties do not accrue during the period of the stay.
    - The court may also stay execution of any judgment or order entered against the service member, and vacate or stay an attachment or garnishment of property, money or debts.
- Protection Against Default Judgments
  - If a defendant is in default for failure to appear in the action filed by the plaintiff, the plaintiff must file an affidavit with the court before a default judgment may be entered. The affidavit must state whether the defendant is in the military, or that the plaintiff was unable to determine whether the defendant is in the military.
Statutes of Limitations
- Generally, in an action or proceeding by or against a servicemember or his or her heirs, executors, administrators or assigns, a period of military service may not be included in computing statutes of limitations and similar provisions.
Taxes
- Income Tax
  - Income tax shall be deferred for a period not more than 180 days after termination of or release from military service, if ability to pay is materially affected by military service.
Anticipatory Relief
- A service member may, during military service or within 180 days thereafter, apply to the court for relief from an obligation or liability incurred before service or tax assessment or liability falling due before or during service.
Extension of Protection to Dependents
- Upon application to a court, a servicemember's dependent is entitled to the protections of the SCRA if the dependent's ability to comply with a lease, contract, bailment or other obligation is materially affected by reason of the servicemember's military service.
- Maximum Interest Rates on Mortgages, Credit Cards and Other Debts
  - During active military service, interest on obligation or liability incurred before service capped at 6 percent (unless ability to pay is not materially affected by service).
- Foreclosure Protection
  - With respect to property owned prior to commencement of military service, court may stay proceedings to enforce obligations for non-payment of mortgage or other breach of terms.
  - No sale, foreclosure, or seizure of property for non-payment of mortgage or other breach of terms shall be valid during period of military service or six months after, unless upon court order.
- Life Insurance
  - No life insurance policy of a member of a reserve component of the armed forces who is called to active duty, or policy which has been brought within the benefits of the federal SCRA, shall lapse or be forfeited for nonpayment of premium during period of service, or during two years after the expiration of that period;
  - If a servicemember's life insurance policy is assigned before military service to secure the payment of an obligation, the assignee of the policy (except the insurer in connection with a policy loan), during the servicemember's period of service and within one year thereafter, needs to obtain a court order before it exercises any right or option obtained under the assignment. This provision does not apply if the assignee has the insured's written consent made during such period, or when the premiums on the policy are due and unpaid, or upon the death of the insured.
- Accident/Health Insurance
  - No individual accident and health insurance policy which insures a member of the organized militia of the state shall lapse or be forfeited for non-payment during period of 60 days from date that member begins active duty if the insurer is provided with written notice within 30 days after duty begins.
- Professional Liability Insurance
  - Available to certain persons ordered to active duty who were engaged in health care or other professional services. Allows these servicemembers to suspend a professional liability insurance policy and subsequently reinstate such coverage upon proper notice to the carrier. This provision also limits the amount of premium increases permissible after reinstatement, and provides for the stay of certain civil or administrative actions during the period of suspension.
- Residential and Certain Other Leases / Rental Agreement
  - After military service begins, allows for termination of a lease upon proper notice, effective 30 days after next rental payment due or last day of the following month (depending on the type of lease).
  - No eviction during period of military service except upon leave of court.
- Other Contracts
  - Automobile Leases: After military service begins, lease can be terminated upon notice and effective 30 days after first date on which next lease payment is due and payable after notice is delivered, or the vehicle is returned to the lessor, whichever is later.
  - Installment Contracts, generally: After military service begins, contractors cannot exercise the right or option to rescind or terminate a contract or resume possession of property for nonpayment of any installment or for breach of the terms occurring prior to or during military service, except through court action.
  - Other rental contracts: After military service begins, servicemembers are entitled to, upon meeting certain notice requirements, cancel contracts at no penalty and with full refund of any moneys placed on deposit.
  - Other service contracts: As of July 21, 2016, contracts from telecommunications service providers, internet service providers, health clubs, health spas, or providers of television services may be terminated by certain servicemembers without penalty when they provide written notice to the service provider cancelling the contract within fourteen days of receiving orders to report to military service.
- Contract Penalties
  - When action for contract compliance stayed, no fine or penalty shall accrue for failure to comply with contract during period of stay.
- Storage Liens
  - No person shall exercise any right to foreclose or enforce any lien for storage of household goods, furniture, or personal effects of a person in military service during such person's period of military service and for three months thereafter except upon court order.
- Impact of Exercising Rights on Certain Future Financial Transactions
  - Application pursuant to this statute for stay, postponement or suspension of tax, fine, penalty, insurance premium or other civil obligation or liability alone shall not provide basis for: determination that the person is unable to pay, denial or revocation of credit, change of terms of existing credit arrangement, refusal by creditor to grant credit in substantially same amount/terms, adverse credit report, or refusal to insure.
- Selected Additional Rights and Protections provided by the NYS Soldiers’ and Sailors’ Civil Relief Act
  - Stay of Court Actions and Adjudicatory and Licensing Proceedings.
    - Adjudicatory and licensing proceedings before state agencies stayed during period of service or 60 days thereafter, unless ability of party to represent interest is not materially affected by reason of military service.
    - In court action or adjudicatory or licensing proceeding before or during period of service or 60 days thereafter, court may stay execution or judgment and vacate or stay order of attachment or garnishment.
    - A stay can be ordered for period of military service and three months thereafter.
  - Court Appointed Attorney
    - In actions or proceedings in which a service member is a party and does not appear or is not represented by an attorney, the court may appoint an attorney to represent the servicemember.
  - Protection Against Default Judgments
    - Within 90 days of termination of service, judgment rendered while person is in military service or 30 days thereafter may be reopened if it appears that the person was prejudiced by reason of military service.
  - Other Relief from Obligations
    - A person may at any time during a period of military service or 6 months thereafter apply to the court for relief from any obligation or liability incurred prior to military service or with respect to a tax or assessment falling due prior to or during military service.
  - Statutes of Limitations
    - Generally, in an action or proceeding by or against a service member or his or her heirs, executors, administrators or assigns, a period of military service may not be included in computing statutes of limitations and similar provisions.
  - Filing Fees
    - For certain civil actions or proceedings based on this statute or certain other statues, all court costs or filing fees for commencement of the civil action or proceeding shall be waived.
  - Taxes
    - Real Property Taxes
      - Regarding property owned by a service member and occupied by his dependents or employees, no sale of property to enforce collection of taxes or assessment, or proceeding for such purpose, shall be commenced without a court order.
    - Income Tax
      - Income tax collection shall be deferred for not more than six months after termination of military service, if the servicemember's ability to pay is impaired by reason of such service.
  - Professional Licenses, Certifications and Registrations
    - Servicemembers shall not be required to complete continuing education requirements during the period of military service.
    - Professional licenses, certifications or registrations that expire during period of active duty shall be automatically extended for the period of active duty and for 12 months thereafter.
  - Re-employment in Private Industry
    - A service member who was employed in private industry and makes an application for re-employment within 90 days after being relieved from service shall be restored to such position or a similar position unless the employer's circumstances have changed to make it impossible or unreasonable to do so.

The SCRA applies to: 1) members of the Army, Navy, Air Force, Marine Corps, and Coast Guard on active duty or absent form duty due to sickness, wounds, leave or other lawful cause; 2) members of the National Guard with certain activation orders; and 3) active service commissioned officers of the Public Health Service of the National Oceanic and Atmospheric Administration.

See Federal Register Publication of Housing Price Inflation Adjustment, https://www.federalregister.gov/documents/2016/02/09/2016-02445/publication-of-housing-price-inflationadjustment