One of the most useful tools available to people entering the Service is the Soldiers and Sailor’s Relief Act. It is now known as the Servicemembers Civil Relief Act. It was enacted in 2003 and has been amended several times since with the intent to ease financial burdens on Sailors, Soldiers, Marines, Coast Guardsmen, and Airmen during their periods of service as they enter active duty. It covers areas such as rental agreements, security deposits, prepaid rent, evictions, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, civil judicial proceedings, automobile leases, life insurance, health insurance and income tax payments. The Act provides a six percent cap on financial obligations that a servicemember has incurred prior to entering the military. It also the ability to stay civil court proceedings, provide protections in connection with default judgments, provide protections in connection with residential (apartment) lease terminations, and protections in connection with evictions, mortgage foreclosures, and installment contracts such as car loans.
When I entered military service I had financial obligations that I was worried about. Prior to entering the service, I had an outstanding debt of nearly $3,000 in credit card debt, but the APR had been as high as 28% on some cards because I had missed a few payments on several cards in the past. In addition, the balance on my vehicle was as high $10,000 with a monthly payment of $300 but I was able to keep the APR down to 14 percent.
In order to take advantage of the Servicemembers Civil Relief Act, I had to fax a copy of my orders to all of my creditors. Each creditor had a team dedicated to service members and they handled my case accordingly. Once the team verified my orders, they capped the APR to six percent. So my vehicle loan and credit cards were easier to manage, especially since I was going to be in boot camp where it would be difficult to manage my finances.
Another advantage that I had was that my vehicle could not be repossessed during a my period of military service without a court order as long I either placed a deposit for the vehicle, or made at least one installment payment on the contract before entering military service.
Had I been facing an eviction, the Servicemembers Civil Relief Act (SCRA) would have allowed me to terminate my lease 30 days after the next rent payment was due so long as I provided the lessor with proper notice and a copy of my military orders.
One of the key aspects to keep in mind is that in order for me to receive the protections of SCRA, my obligation on real or personal property needed to have been taken out prior to the entering military service. Therefore, all the protections were against creditors that I had done business with before I had signed orders to bootcamp. Any creditors that I done business after I entered military service were not subject to the SCRA.