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What Is the SCRA? – Who Qualifies? | 6% Cap on Interest Rates | Foreclosure and Eviction Protections | Penalty-Free Lease Breaking | Pausing Court Proceedings | The Military Lending Act

When you’re in the military, moving frequently is tough for more than one reason. Separation from family and friends, as well as the cost of moving itself, is taxing emotionally and financially. Many service members and their families are unaware that there is a law made specifically for this.

This law is called the Servicemembers Civil Relief Act (SCRA), and it’s one of the most commonly overlooked military benefits.

What Is the SCRA?

The SCRA gives financial and legal aid to active-duty service members while acting as a bridge between your military orders and the financial troubles that they can cause. Because some protections are only activated under certain conditions, many families miss opportunities they never knew they had. The SCRA assists with: 

• Interest rates on old debt
• Eviction protection
• Lease terminations
• Life insurance

Who Qualifies?

• National Guard on federal active-duty order
• Reserve members (benefits begin when orders are issued)
• Army
• Navy
• Marine Corps
• Air Force
• Space Force
• Coast Guard

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6% Cap on Interest Rates 

If you have any debt from prior to entering active duty, your creditors must reduce your interest rate to no more than 6% per year under the law when you are on active duty. Aside from interest, it also covers fees, renewal charges and is effective on: 

• Car loans
• Credit card balances
• Personal loans
• Some student loans 

Unlike other debts covered by the SCRA, mortgage protections extend beyond your service. The reduced interest rate continues for a full year after your active duty ends. This creates a cushion while transitioning out of active-duty when you may be in a rough spot financially.

To qualify, send your creditor a written notice of your request and a copy of your military orders. Service members must submit their request no later than 180 days after leaving active duty. Missing this window means losing the protection.

Excess Interest is Forgiven, Not Deferred

The SCRA mandates that creditors must forgive any interest exceeding 6%, not defer it, and it is retroactive on the first day of active-duty service. Meaning, if a creditor was charging you 22% on a credit card balance when you entered active duty, and you submit your written request three months later, they still owe you a refund on interest above 6% charged during those first three months.

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Foreclosure and Eviction Protections

Things can get complicated when you receive deployment orders. Here’s how the SCRA helps:

Foreclosures 

• A lender cannot complete a foreclosure or seize property during or up to nine months after active duty without a valid court order. 
• In many states, foreclosures can progress without a judge. This protection recognizes the issue and gives you time to figure things out.

Evictions 

Landlords can not remove a service member or their family without first going through the court, regardless of what the lease says. If the service member’s ability to pay is materially affected by military service, a court can either: 

• Delay eviction proceedings by 90 days
• Restructure the lease obligations entirely

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Penalty-Free Lease Breaking

PCS orders and deployment don’t wait for lease agreements to expire. SCRA gives service members the right to terminate a residential lease early without facing a penalty, but this is only acceptable in two situations:

1. You signed the lease before entering active duty.
2. You signed the lease during active duty and received PCS or deployment orders for 90 days or more afterward.

To break the lease, you must deliver a written notice and a copy of your orders to the landlord, by hand or return-receipt mail. This benefit also applies to:

• Automobile leases
• Cell phone contracts (under certain relocation circumstances)

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Pausing Court Proceedings

If a civil court case is filed against you while you’re on active duty, a judge must appoint an attorney to represent you in your absence. You’re also entitled to a minimum 90-day stay (delay) of the proceedings if:

• There’s a valid defense that can’t be presented without you being there.
• You need to take civil action, but can’t because of military service

This doesn’t apply to criminal matters, but it also covers civil cases like:

• Family law 
• Foreclosure proceedings

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The Military Lending Act

Similar to the SCRA is the Military Lending Act (MLA) caps the total cost of credit at a 36% Military Annual Percentage Rate for those on orders of 30 days or more. It also stops lenders from requiring repayment by military allotment or forcing service members to waive their legal rights. The MLA can be used by:

• Active-duty service members
• Guard members
• Reservists

The MLA applies to: 

• Credit cards
• Vehicle title loans
• Installment loans
• Other credit products  

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Why This Matters

Knowing how the SCRA benefits you before deployment gives you time to plan rather than scramble or miss out on this significant financial tool. Only waivers made during or after active service are accepted; any signed beforehand are invalid. Taking advantage of this benefit makes all the difference when relocating and helps you stay financially stable during difficult times.

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