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- The Secret About Prescriptive Easement: Top Guide 1 Must Know - December 4, 2023
- About Home Equity Loans In Texas And How Can One Obtain It - November 27, 2023
About Servicemembers Civil Relief Act (SCRA)
Being an active duty member of the U.S. Military, National Guard, or other U.S. service organization means that you are entitled to additional financial protection that is not available to the general public.
To understand the kind of financial protection that you would have if you are an active duty member of any of the U.S. service organizations, you might want to understand what is SCRA. In this post, we will learn what is SCRA in detail.
What Is SCRA?
The full form of SCRA is Servicemembers Civil Relief Act. The Service Members Civil Relief Act was passed by Congress in 2003 to provide financial protection to the US active forces like the Military, Reserves, Coast Guard, National Guard, and other organizations serving the country.
The law limits the interest rates that active service members pay when they apply for a mortgage, vehicle, personal, and student loan.
This rate limit also applies to all credit card debt incurred by members before enlistment in the Army, National Guard, Coast Guard, and other eligible US service organizations.
Under this act, the lender is required to take some additional steps if the entitled service member is unable to make the payments for the debt.
The law also makes it easier for eligible US service members to terminate leases, including apartments, private homes, and cars, without penalty.
How Does SCRA Work?
The Servicemembers Civil Relief Act protects all individuals currently serving in the armed forces, including non-members of the Army, Navy, Air Force, Marine Corps, and active duty members of the Coast Guard.
It was expanded to include reservists on active federal duty, members of the National Guard on federal duty for 30 days or more and military personnel on sick leave or furlough.
Children of military personnel and other dependents are also protected when they are co-signing a loan.
What Does SCRA Protect?
Interest Rate Limits:
One of the most popular benefits of this act is the cap on the interest rate that eligible service members have to pay.
Any debt held before their posting, including credit card, home, or auto loans, must not exceed 6%.
Home And Car Protection:
In addition to allowing military families to cancel their phone, cable, and internet contracts in some cases, the act also includes several other protections for landlords, renters, and car renters.
Home and car renters can terminate a lease under certain conditions, and landlords and mortgage lenders cannot foreclose or evict a family of an active service member from the home without a court order.
Insurance:
The law also includes health and life insurance protection for eligible members when they are called for active duty.
All health insurance in effect at the time of active duty must be reinstated at the same premium rate upon the member’s return. In addition, service members can defer paying life insurance premiums without losing coverage during active duty.
Protection From Default Judgment: In a default judgment, if you do not appear in court to defend yourself, the judgment is in favor of the person or party suing you.
This can be a serious problem for active duty personnel. It is impossible to appear in court if you are on active duty.
However, according to the Servicemembers Civil Relief Act, if you are on active duty and cannot appear in court to defend yourself in a civil suit, the court cannot pass the default judgment until it first appoints an attorney to represent you.
The law requires the party suing you to provide the court with proof that you are currently on active duty service through an affidavit. The law also requires courts to allow a case to be postponed for at least 90 days.
Conclusion
The SCRA provides significant protections to active service members. If you are applying for a loan or a new loan, it makes sense to apply for the statutory interest rate cap and utilize the act to your benefit.
It’s also important to take advantage of the law’s protections if you plan to terminate your lease or face foreclosure.
If you are an active service member and ready to make the transition to homeownership, Speak to your trusted loan officer to make an informed decision.
