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InfoSight Highlight: Servicemembers Civil Relief Act
Friday, May 19, 2017 7:00 AM

The Servicemembers Civil Relief Act (SCRA or Act) restates, clarifies, and revises the Soldiers' and Sailors' Civil Relief Act of 1940 in an effort to help ease the economic and legal burdens on military personnel called to active duty status.

The Act provides protection to individuals who are on full-time active military service of the United States. Active duty personnel includes individuals appointed, enlisted, or inducted into regular branches of the U.S. military service, that is the Army, Air Force, Navy, Marines, and Coast Guard, as well as personnel mobilized in National Guard and Reserve Units and certain public health officers. Active duty also includes full-time training such as boot camp.

Coverage under the SCRA begins when the servicemember receives his or her orders to report for active duty. Generally, it ends with the date of termination from active duty or upon death while in active service. It also includes any time-period during which a person in military service is absent from duty because of sickness, wounds, leave, or other lawful cause. Some of the protections of the Act continue beyond the period of active duty for a short time.

Under the SCRA (as was the case under the SSCRA), while a service member is on active duty, a credit union may charge no more than 6 percent simple interest on loan balances incurred prior to active duty status. The SCRA clarifies this requirement by extending that limitation to the servicemember and his or her spouse jointly.

As many credit unions learned during the Desert Shield/Desert Storm call-up of reservists in 1990/91, this protection causes an immediate compliance responsibility of uncertain duration. The SCRA also clarifies that any interest in excess of 6 percent that otherwise would have been incurred (while on active duty) is forgiven. The SCRA also extends protections to co-debtors who may also be obligated on loans with the active duty servicemember.

The SCRA severely restricts the ability of credit unions to obtain default judgments against servicemembers whose ability to defend themselves in court has been prejudiced by active duty status.

Source: InfoSight Compliance.

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