The Servicemembers Civil Relief Act And Debt Collection
Active servicemembers are eligible for extra protection from debt collection and unsavory collectors through the SCRA, the Servicemembers Civil Relief Act. If you are a member of the U.S. armed forces and having trouble with debts or with collections, then the SCRA may be able to offer you some relief.
Who is protected by the SCRA?
You qualify for protection under the Servicemembers Civil Relief Act if you are an active member of the Army, Navy, Air Force or Marine Corps, and currently serving. Members of the National Guard and reservists who have been called to active duty are covered as well. You fall under the guidelines of the SCRA from the day you begin active duty until at least 30 days after you leave the service.
What other qualifications are there?
You may be able to benefit from the SCRA if your ability to repay your debts is directly linked to your service. If you were working a regular, fulltime position and then were called back into service, your income may have dropped significantly. This drop in income makes you a prime candidate for SCRA protection, and is referred to as being "materially affected" by your service status.
About SCRA interest rate reduction:
If you are an active service person, and your service has impacted your ability to pay your debts, you can have the interest rate on your loans reduced to 6% during your service period. The SCRA uses this provision to protect servicemembers from skyrocketing interest rates and predatory debt collection practices. If you are in the service and your ability to repay your loans or debt has been affected, then you can send a letter to each creditor, asking for the interest reduction you qualify for. Your request should be approved, provided the interest rate is already above 6% and you incurred the debt prior to your duty period. This coverage extends to military spouses as well.
About SCRA property protection:
If you have installment loans on larger items, like a home mortgage or automobile, then the SCRA can be used to protect these items and prevent foreclosure or repossession. As long as you owned your home or car prior to being affected by your service, then these items are covered under the Servicemembers Civil Relief Act. Notify your creditors of your status and that you are protected under the SCRA to be sure that your home or cars are not in jeopardy from your military service commitments. Even if your home is already in foreclosure, you can use the SCRA property protection to prevent the foreclosure from taking place.
The SCRA and debt collection:
The SCRA protects servicemembers from debt collectors by disallowing default judgments, a common collector ploy. Debt collectors are not allowed to pursue a case when the servicemember is unavailable to respond due to military service. Filing a case in a place where the consumer no longer lives is one way collectors attempt to win a judgment; since the consumer is not notified of the case, they don't show up in court, and lose by default. The SCRA prohibits this type of activity, adding a layer of protection for servicemembers.
Who is protected by the SCRA?
You qualify for protection under the Servicemembers Civil Relief Act if you are an active member of the Army, Navy, Air Force or Marine Corps, and currently serving. Members of the National Guard and reservists who have been called to active duty are covered as well. You fall under the guidelines of the SCRA from the day you begin active duty until at least 30 days after you leave the service.
What other qualifications are there?
You may be able to benefit from the SCRA if your ability to repay your debts is directly linked to your service. If you were working a regular, fulltime position and then were called back into service, your income may have dropped significantly. This drop in income makes you a prime candidate for SCRA protection, and is referred to as being "materially affected" by your service status.
About SCRA interest rate reduction:
If you are an active service person, and your service has impacted your ability to pay your debts, you can have the interest rate on your loans reduced to 6% during your service period. The SCRA uses this provision to protect servicemembers from skyrocketing interest rates and predatory debt collection practices. If you are in the service and your ability to repay your loans or debt has been affected, then you can send a letter to each creditor, asking for the interest reduction you qualify for. Your request should be approved, provided the interest rate is already above 6% and you incurred the debt prior to your duty period. This coverage extends to military spouses as well.
About SCRA property protection:
If you have installment loans on larger items, like a home mortgage or automobile, then the SCRA can be used to protect these items and prevent foreclosure or repossession. As long as you owned your home or car prior to being affected by your service, then these items are covered under the Servicemembers Civil Relief Act. Notify your creditors of your status and that you are protected under the SCRA to be sure that your home or cars are not in jeopardy from your military service commitments. Even if your home is already in foreclosure, you can use the SCRA property protection to prevent the foreclosure from taking place.
The SCRA and debt collection:
The SCRA protects servicemembers from debt collectors by disallowing default judgments, a common collector ploy. Debt collectors are not allowed to pursue a case when the servicemember is unavailable to respond due to military service. Filing a case in a place where the consumer no longer lives is one way collectors attempt to win a judgment; since the consumer is not notified of the case, they don't show up in court, and lose by default. The SCRA prohibits this type of activity, adding a layer of protection for servicemembers.
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