The Servicemembers Civil Relief Act (P.L. 108-189)

Order Code RL32360

CRS Report for Congress

Received through the CRS Web

The Servicemembers Civil Relief Act

(P.L. 108-189)

April 20, 2004

(name redacted)

Legislative Attorney

American Law Division

Congressional Research Service ˜ The Library of Congress

The Servicemembers Civil Relief Act (P.L. 108-189)

Summary

Recognizing the special burdens that members of the military may encounter in

trying to meet their financial obligations while serving their country, Congress passed

the Soldiers’ and Sailors’ Civil Relief Act of 1940 (SSCRA). This law has been

amended from time to time, ordinarily in response to military operations that require

the activation of the Reserves. P.L. 108-189, the “Servicemembers Civil Relief Act

(SCRA),” was enacted on December 19, 2003 and overhauls the SSCRA. This report

summarizes the rights granted to persons serving on active duty in the U.S. Armed

Forces under the newly enacted SCRA.

SCRA is a comprehensive rewrite of the SSCRA which clarifies language that

has been subject to differing interpretations by courts, and modifies or expands

certain benefits. The SCRA provides protections for servicemembers in the event

that their military service impedes their ability to meet financial obligations incurred

before their entry into active military service. The SCRA does not require forgiving

any debts or the extinguishment of contractual obligations on behalf of

servicemembers who have been called up for active duty, nor does it provide absolute

immunity from civil lawsuits. Instead, it suspends claims against servicemembers

and protects them from default judgments. The SCRA also protects military

members and their families from eviction, protects against cancellation of life

insurance policies or non-reinstatement of health insurance policies, allows some

professionals to suspend malpractice or liability insurance while on active duty, and

protects from taxation in multiple jurisdictions as well as forced property sales to pay

overdue taxes.

The SCRA provides for a cap on interest at an annual rate of 6% on debts

incurred prior to a person’s entry into active duty military service, sets forth

procedures for requesting such a reduction, and clarifies that the balance of interest

for the servicemember’s period of military service is to be forgiven by the lender.

Other measures protect military families from being evicted from rental property or

from mortgaged property, from cancellation of life insurance, from taxation in

multiple jurisdictions and from foreclosure of property to pay taxes that are due, and

from losing certain rights to public land. It raises the amount of the rent that

qualifies for protection from eviction, allows servicemembers on active duty to

terminate housing leases, and allows some servicemembers to terminate automobile

leases.

Contents

I. General Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

‘Servicemember’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

‘Military Service’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

‘Period of military service’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

‘Dependent’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

‘Court’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

‘State’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

‘Secretary Concerned’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

‘Motor Vehicle’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Jurisdiction and Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Protection of persons secondarily liable . . . . . . . . . . . . . . . . . . . . . . . . 6

Criminal bail bond sureties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Waiver of protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Citizens serving with the forces of war allies . . . . . . . . . . . . . . . . . . . . 7

Notification of benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Benefits to Reserves ordered to report for military service and to persons

ordered to report for induction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Waivers; Effects on other rights and remedies . . . . . . . . . . . . . . . . . . . 7

Protection from adverse action due to exercise of rights . . . . . . . . . . . . 8

Legal representation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

II. General Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Protection against default judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Stays of proceedings when servicemember has notice . . . . . . . . . . . . 10

Fines and penalties under contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Stay of enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Duration and term of stays; co-defendants not in service . . . . . . . . . . 11

Statute of limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Maximum rate of interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

III. Rent, Installment Contracts, Mortgages, Liens, Assignments, Leases . . . . . 12

Evictions and distress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Protection under installment contracts . . . . . . . . . . . . . . . . . . . . . . . . . 13

Mortgages and trust deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Settlement of stayed cases relating personal property . . . . . . . . . . . . . 14

Cancellation of residential or motor vehicle lease . . . . . . . . . . . . . . . . 14

Protection of life insurance policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Enforcement of storage liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Dependents’ rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

IV. Life Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Insurance rights and protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Application for insurance protection . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Policies entitled to protections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Policy restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Deductions of unpaid premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Premiums and interest guaranteed by the United States . . . . . . . . . . . 18

Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

V. Taxes and Public Lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Personal and real property taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Rights in public lands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Desert-land entries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Mining claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Mineral permits and leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Perfection or defense of rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Distribution of information concerning benefits . . . . . . . . . . . . . . . . . 20

Land rights of servicemembers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

Regulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Income taxes; residence for tax purposes . . . . . . . . . . . . . . . . . . . . . . 21

Residence for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

VI. Administrative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Inappropriate use of the Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Certification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Interlocutory orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VII. Further Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Anticipatory relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Extension of power of attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Professional liability insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Reinstatement of health insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Guarantee of residency for military personnel . . . . . . . . . . . . . . . . . . . 26

Business or trade obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

The Servicemembers Civil Relief Act

(P.L. 108-189)

The increasing number of activations of Reserve and National Guard military

units for support in the war against terrorism or the war in Iraq means that a growing

number of Americans may be entitled to invoke civil protections provided to them

on the basis of their service in the Armed Forces. This led to calls for a reexamination of the Soldier’s and Sailors’ Civil Relief Act of 1940 (SSCRA) which

provided servicemembers certain civil protections.

P.L. 108-189, the

“Servicemembers Civil Relief Act (SCRA),” enacted on December 19, 2003,

restates and strengthens the protections available to servicemembers. This report

summarizes the SCRA, and describes other legislative efforts aimed at amending the

former SSCRA.

Congress has long recognized the need for protective legislation for

servicemembers whose service to the nation compromises their ability to meet

obligations and protect their legal interests. During the Civil War, Congress enacted

an absolute moratorium on civil actions brought against soldiers and sailors. During

World War I, Congress passed the Soldiers’ and Sailors’ Civil Relief Act of 1918,1

which did not create a moratorium on legal actions against servicemembers, but

instead directed trial courts to apply principles of equity to determine the appropriate

action to take whenever a servicemember’s rights were involved in a controversy.

During World War II, Congress essentially reenacted the expired 1918 statute as the

Soldiers’ and Sailors’ Civil Relief Act of 1940, and then amended it substantially in

1942 to take into account the new economic and legal landscape that had developed

between the wars. Congress has enacted amendments on several occasions during

subsequent conflicts, including in the 107th Congress, when the benefits of the

SSCRA were extended to certain members of the National Guard called up by their

respective state governors to support federal efforts during national emergencies

(such as the war against terrorism).2 Most recently, on December 19, 2003,

Congress enacted P.L. 108-189.

1

2

40 Stat. 440 (1918).

P.L. 107-330. The 107th Congress also held hearings on H.R. 5111, the Servicemembers’

Civil Relief Act, but delayed further action on that bill until the 108th Congress. It was

reintroduced as H.R. 100 with only a few changes, and passed the House of Representatives

on May 7, 2003. The Senate Committee on Veterans’ Affairs held hearings July 10, 2003,

on two companion bills to H.R. 100, as well as other proposed changes to the SSCRA.

CRS-2

The SCRA3 is an exercise of Congress’ power to raise and support armies (U.S.

Const. Art. I, sec. 8, cl. 12) and to declare war (Art. I, sec. 8, cl. 11).4 In order to

lessen the potential hardship suffered by those whose entry into active duty military

service materially affects their ability to meet financial obligations and to protect

their legal interests, the SCRA provides certain rights and other types of legal

protection, to enable servicemembers to devote their full attention to their military

duties. The law does not forgive any debts or extinguish contractual obligations on

behalf of servicemembers who have been called up for active duty, nor does it

provide absolute immunity to servicemembers from civil lawsuits. Instead, it

provides for the suspension of claims against servicemembers and protection from

default judgments, as well as certain other contractual rights and protections. In this

way, it seeks to balance the interests of servicemembers with those of their creditors

and others to whom the servicemember owes a legal obligation, spreading the burden

of national military service to a broader portion of the citizenry.

Many of the SCRA provisions are especially beneficial for Reservists activated

to respond to a national crisis, but many provisions are also useful for career military

personnel.5 One of the measures that affects many who are called to active duty is

the SCRA’s cap on interest at an annual rate of 6% on debts incurred prior to a

person’s entry into active duty military service (Sec. 207). Other measures protect

military families from being evicted from rental property or from mortgaged property

(Secs. 301 and 303); from cancellation of life insurance (Secs. 402 through 409);

from taxation in multiple jurisdictions (Sections 510 and 511) and from foreclosure

of property to pay taxes that are due (Secs. 501 and 511); and from losing certain

rights to public land (Secs. 501 through 508).

This report summarizes the SCRA section by section, as enacted by P.L. 108189, codified in 50 U.S.C. app. § 502 et seq. It will be updated as necessary.

I. General Provisions

Sec. 2 (50 U.S.C. app. § 502). The purpose of the Act is to provide for,

strengthen, and expedite the national defense through protection to servicemembers,

to enable them to “devote their entire energy to the defense needs of the Nation.”

The SCRA protects servicemembers by temporarily suspending certain judicial and

administrative proceedings and transactions that may adversely affect their civil

rights during their military service.

3

One of the amendments effected by P.L. 108-189 is the change in the name of the Act from

Soldiers’ and Sailors’ Civil Relief Act (SSCRA) to Servicemembers Civil Relief Act

(SCRA). Therefore, all of the historical and legal background of this Act makes reference

to SSCRA instead of SCRA. This report will use the current name of the Act, SCRA, when

making reference to any historical or legal background information.

4

5

Dameron v. Brodhead, 345 U.S. 322 (1953).

See James P. Pottorff, Contemporary Applications of the Soldiers’ and Sailors’ Civil Relief

Act, 132 MIL. L. REV. 115, 118 (1991) (noting that many protections are ordinarily

unavailable to career servicemembers because they enter into most major legal and financial

obligations, such as mortgages, while on active duty).

CRS-3

Definitions

Sec. 101 (50 U.S.C. app. § 511). This section supplies definitions for terms that

are used throughout the Act. For the purposes of the SCRA, the following definitions

apply:

‘Servicemember’.

Persons covered by the SCRA include members of the “uniformed services”

found in 10 U.S.C. § 101(a)(5), which includes the Army, Navy, Air Force, Marine

Corps, Coast Guard, and the commissioned corps of the National Oceanic and

Atmospheric Administration and the Public Health Service.

‘Military Service’.

The Act defines “military service” to include “active duty” as defined in 10

U.S.C. § 101(d)(1), National Guard service as service under a call to active service

authorized by the President or the Secretary of Defense for a period more than 30

consecutive days under 32 U.S.C. § 502(f)6 for purposes of responding to a national

emergency declared by the President and supported by Federal funds, for officers of

the Public Health Service or the National Oceanic and Atmospheric Administration,

“active service” (not further defined), and any period during which a servicemember

is absent from duty on account of sickness, wounds, leave, or other lawful case.

“Active duty” for armed services is defined in 10 U.S.C. 101(d)(1) as “full-time duty

in the active military service of the United States ... [including] full-time training

duty, annual training duty, and attendance, while in the active military service, at a

school designated as a service school by law or by the Secretary of the military

department concerned.” “Active military service” is not further defined in section

101 of title 10, U.S. Code, although “active service” is given the meaning “service

on active duty or full-time National Guard duty,” in § 101(d)(3).

Under the prior law the definition of “military service” included language

referring to “periods of training or education under the supervision of the United

States preliminary to induction into military service.” Under the new law, persons

on active duty and attending a service school are covered, while persons attending

training prior to entering active duty, such as officer candidates, may not be covered.

It is unclear, for example, whether “active military service” under 10 U.S.C. § 101(d)

covers training as a member of the Reserve Officer Training Corps7 or attendance at

a military academy.8

6

32 U.S.C. § 502(f) states that under regulations from the Secretary of the Army or the

Secretary of the Air Force, a member of the National Guard may be ordered to perform

training or other duty in addition to the mandatory yearly training.

7

See Brown v. United States, 151 F.3d 800 (8th Cir. 1998) (finding that senior ROTC

training activities are “active military service” under the Veterans Benefits Act)

8

The question does not appear to have been tested in court, possibly due to the unlikelihood

that a person attending a service academy would be materially affected by such status. In

contexts other than the SCRA, military cadets have been considered to be in active military

(continued...)

CRS-4

‘Period of military service’.

A servicemember’s “period of military service” begins when he or she enters

military service and ends on the date of release from military service or upon death

during military service. This new meaning differs from the previous meaning only

in the use of the word “release” rather than “discharge” from military service. In

military terminology, a “discharge” can mean a complete severance from all military

status with respect to enlisted personnel, while “release from active duty” means

termination of active-duty status and transfer or reversion to reserve status.9 The

phrase is used in the SCRA to determine the length of the availability of certain

benefits. The SCRA also uses the phrase “termination or release from military

service” in some provisions, but does not provide a definition for “termination.”

‘Dependent’.

The Act defines “dependent” as a servicemember’s spouse or child (as defined

for purposes of veterans’ benefits, in 38 U.S.C. § 10110), or another individual for

whom the servicemember provided more than one half of the support in the 180 days

prior to an application for relief under the Act. This language appears to codify

courts’ treatment of the term “dependent” as relating to financial dependency rather

8

(...continued)

service for some purposes. See Collins v. United States, 642 F.2d 217, 220-21 (7th Cir.),

cert. denied 452 U.S. 964 (1981) (finding a cadet at the Air Force Academy to be on active

duty for purposes of applying the Feres doctrine to prohibit his bringing suit against the

government); Porath v. McVey, 884 S.W.2d 692 (Mo.App.S.D.1994) (West Point cadet was

considered to be on active duty for the purpose of determining whether he was

“emancipated,” under state law, for child support purposes), Bishop v. Bishop, 671 A.2d 644

(N.J.Super.Ch.,1995) (same); Minnich v. World War II Service Compensation Bd., 57

N.W.2d 803 (Iowa 1953) (plaintiff awarded military bonus for time during World War II as

military cadet based on definition of “active duty” that included “active service” at an

“armed forces school”).

9

10

53A Am.Jur. 2d Military and Civil Defense § 183.

38 U.S.C. § 101(4) defines child as a person who is unmarried and under the age of

eighteen; who before attaining the age of eighteen became permanently incapable of selfsupport; or who after attaining the age of eighteen and until completion of education or

training (but not after attaining the age of twenty-three) is pursuing a course of instruction

at an approved educational institution; and who is a legitimate child, a legally adopted child,

a stepchild who is a member of a veteran’s household or was a member at the time of the

veteran’s death, or an illegitimate child but, as to the alleged father, only if acknowledged

in writing signed by him, or if he has been judicially ordered to contribute to the child’s

support or has been, before his death, judicially decreed the father of such child, or if he is

otherwise shown by evidence to be the father of the said child.

CRS-5

than strict familial relationships,11 although the formula for determining what portion

of support is required appears to be new.12

‘Court’.

Courts obligated to honor the protections of SCRA include any federal or State

court or administrative agency, whether or not a court or administrative agency of

record. This definition expands the definition of “court” expressly to include

administrative agencies of record.

‘State’.

The Act defines “state” as a commonwealth, territory, or possession of the

United States and the District of Columbia.

‘Secretary Concerned’.

The Act defines “Secretary concerned” with respect to a member of the armed

forces as having the meaning in 10 U.S.C. § 101(a)(9)13; with respect to

commissioned officers of the Public Health Service, the Secretary of Health and

Human Services; and with respect to commissioned officers of the National Oceanic

and Atmospheric Administration, the Secretary of Commerce.

‘Motor Vehicle’.

The Act defines “motor vehicle” as a vehicle driven or drawn by mechanical

power and manufactured primarily for use on public streets, roads and highways, but

does not include a vehicle operated only on a rail line (as defined in 49 U.S.C.

§ 30102(a)(6)).

Jurisdiction and Application

Sec. 102 (50 U.S.C. app. § 512). The SCRA applies everywhere in the United

States, including the District of Columbia, and in any territory “subject to the

jurisdiction of” the United States. It applies to any civil judicial or administrative

11

See, e.g., Balconi v. Dvascas, 507 N.Y.S. 2d 788 (N.Y. Civ. Ct. 1986)(finding ex-spouse

of serviceman who relied on his child support payments to be a “dependent” within the

meaning of the SCRA who could assert the protection against eviction).

12

See id. It is not clear how much support the plaintiff in that case had been receiving from

her ex-husband; it is conceivable that she might not be covered under the proposed

definition.

13

10 U.S.C. § 101(a)(9) defines “Secretary” as the Secretary of the Army with respect to

Army matters; the Secretary of the Navy with respect to matters concerning the Navy,

Marine Corps, and the Coast Guard when it is operating as a service of the Department of

the Navy; the Secretary of the Air Force with respect to matters concerning the Air Force;

and the Secretary of Homeland Security with respect to matters concerning the Coast Guard

when it is not operating as a service in the Department of the Navy.

CRS-6

proceeding in any court or agency in any jurisdiction subject to the Act. However,

it does not apply to criminal proceedings.

Protection of persons secondarily liable.

Sec. 103(a-b) (50 U.S.C. app. § 513(a-b)). These subsections extend some

protection to persons who share a debt with one or more covered servicemembers or

have secondary liability as a “surety, guarantor, endorser, accommodation maker, comaker, or other person who is or may be primarily or secondarily subject to the

obligation or liability” at issue. If the SCRA provisions are invoked as to the

servicemember, the court has discretion to grant a stay, postponement, or suspension

of the proceedings against such persons, or to set aside or vacate a judgment.

Whether a court grants such relief appears to be influenced by equitable

considerations, including whether the servicemember is able to appear in court,

whether the servicemember’s presence is necessary for the defense, and whether an

unjust forfeiture could otherwise result. If the servicemember is only nominally a

party to the suit, as in cases of negligence where the insurance company might be

considered the “true defendant,” the modern trend is to deny a stay.14 The right to

open a default judgment taken against a person in the military service is reserved to

that person only and is not available to a judgment co-debtor.

The Act added the term “co-maker”15 to the list of persons who may be entitled

to a stay in an action which has been stayed with respect to a servicemember. This

effectively codifies courts’ interpretations of the previous version of the SCRA.16

However, it does not explicitly adopt the test some courts have used to determine

whether a stay is appropriate.

Criminal bail bond sureties.

Sec. 103(c) (50 U.S.C. app. § 513(3)). This subsection protects bail bondsmen

who are unable to procure the appearance of the principal due to that person’s active

duty service. In such a case, the court hearing the charge may not enforce the bond

during the period of military service of the accused, and has the discretion to return

the bail in its entirety to the bail bondsman in the interest of equity and justice.

While some courts have interpreted this subsection to allow for no discretion,17 others

have required sureties to make a further showing that the appearance of the principal

14

See Tabor v. Miller, 369 F.Supp. 647 (D. Pa.), aff’d, 389 F.2d 645 (3d Cir.), cert. denied

sub nom Stearns v. Tabor, 391 U.S. 915 (1968) (where servicemember did not claim he was

precluded by service from appearing and his insurer had rejected an offer to settle within the

limits of the policy, stay of proceedings was denied).

15

A co-maker is “one of two or more persons who sign an instrument to indicate a promise

to pay a financial obligation. Any co-maker may be sued for the entire amount of the

indebtedness, although a co-maker who is forced to pay more than his or her share may seek

contribution from the other co-makers.” MERRIAM-WEBSTER’S DICTIONARY OF LAW

(2001).

16

Modern Industrial Bank v. Zaentz, 29 N.Y.S.2d 969 (N.Y.Mun.Ct. 1941); Modern

Industrial Bank v. Grossman, 40 N.Y.S.2d 628 (1943).

17

See United States v. Jeffries, 140 F. 2d 745 (7th Cir. 1944).

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was in fact prevented due to military service and that the surety made an effort to

secure the appearance of the principal in court.18

Waiver of protection.

Sec. 103(d) (50 U.S.C. app. § 513(d)). Persons who are primarily or secondarily

liable on the obligation of a person in military service may waive their benefits, but

such a waiver must be executed in a separate instrument from that which creates the

obligation. Such a waiver ceases to be valid if the person who executed it

subsequently enters active military service or is the dependent of a person who

subsequently enters active duty, unless the waiver is executed after the person

ordered to active duty receives those orders.

Citizens serving with the forces of war allies.

Sec. 104 (50 U.S.C. app. § 514). This section extends the benefits of the SCRA

to citizens of the United States who serve in the armed forces of allies of the United

States in the prosecution of a war or military action, as long as such service is similar

to service in the U.S. armed forces. The Act eliminated the protection revocation for

those who are dishonorably discharged.

Notification of benefits.

Sec. 105 (50 U.S.C. app. § 515). This section requires military authorities to

provide servicemembers with written information of their rights and benefits under

the SCRA.

Benefits to Reserves ordered to report for military service and to

persons ordered to report for induction.

Sec. 106 (50 U.S.C. app. § 516). This section provides benefits under titles I,

II, and III of the SCRA to servicemembers during the period of time between the date

they receive their induction or activation orders and the date they report for active

duty. The coverage ends in the event the orders to active duty are revoked.

Waivers; Effects on other rights and remedies.

Sec. 107 (50 U.S.C. app. § 517). This section provides that servicemembers

may waive some of the benefits of the SCRA by agreeing to modify or terminate a

contract, lease or bailment, or an obligation secured by a mortgage, trust, deed, lien,

or other security in the nature of a mortgage. Such a waiver is effective only if

executed in writing during or after the servicemember’s period of active military

service. The written agreement must specify the legal instrument to which the waiver

applies, and if the servicemember is not a party to that instrument, the servicemember

concerned. This section extends the protections to servicemembers covered under

18

See Ex parte Moore, 12 So.2d 77 (Ala. 1943); Cumbie v. State, 367 S.W.2d 693 (Tex.

Civ. App. 1963).

CRS-8

section 106 of the Act (reservists ordered into active duty and persons ordered to

report for induction).

Protection from adverse action due to exercise of rights.

Sec. 108 (50 U.S.C. app. § 518). This section protects the rights and credit of

servicemembers from any penalty imposed solely due to their invocation of rights

under the SCRA. In other words, a lender cannot revoke a covered person’s credit

card or exercise foreclosure rights merely because the servicemember requests the

rate of interest be capped at 6% pursuant to the SCRA. It provides that no stay,

postponement, or suspension of any tax, fine, penalty, insurance premium, or other

civil obligation or liability applied for, or received by, a person in military service

can be the sole basis for any of the following:

(1) a determination by a lender (or other person) that the servicemember is unable

to pay the civil obligation or liability;

(2) a decision by a creditor to deny or to revoke credit; to change the terms of an

existing credit arrangement; or to refuse to grant credit in substantially the amount,

or on substantially the terms, requested;

(3) an adverse creditworthiness report by, or to, a consumer credit information

enterprise;

(4) an insurer’s refusal to sell insurance coverage;

(5) an annotation by the creditor or a person engaged in the practice of assembling

or evaluating consumer credit information, to reference the servicemember’s

military status on his or her credit report; or,

(6) a change in the terms offered or conditions required for issuance of insurance.

Creditors may, however, take adverse action against a servicemember who fails

to comply with obligations after they are adjusted by reason of the Act. The Act does

not appear to preclude insurers or creditors from offering different terms or

conditions, denying credit, or taking other adverse actions based solely on the

servicemember’s status in anticipation that the servicemember might later invoke a

right under the Act.

Legal representation.

Sec. 109 (50 U.S.C. App. § 519). The Act added new section 109 to clarify that

legal representatives, such as attorneys or persons possessing a power of attorney,

may assert the benefits of the Act when acting on the servicemember’s behalf. Prior

to the Act, courts had sometimes denied a motion for a stay or other relief requested

by a servicemember’s attorney in an action on behalf of the servicemember. This

section states that the use of the word “servicemember” includes persons with legal

authority to act on their behalf.

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II. General Relief

Sections 201 through 207 describe the general relief available to

servicemembers in most kinds of court actions. They serve to suspend civil liabilities

of military personnel and preserve causes of action either for or against them.

Protection against default judgments.

Sec. 201 (50 U.S.C. app. § 521). In a civil lawsuit, the failure of the defendant

to appear in court may result in the award of a default judgment on behalf of the

plaintiff. This section protects servicemembers from default judgments in civil

actions while they are unable to appear in court due to military service. Before a

court can grant a default judgment, the plaintiff must file an affidavit stating that the

defendant is not on active duty in military service showing necessary facts to support

the affidavit19 or that the plaintiff was unable to determine whether or not the

defendant is in military service. A false affidavit to that effect is punishable by

imprisonment for up to one year, a fine of up to $1,000, or both. The court, before

entering a judgment, must also appoint an attorney to represent the person on active

duty in order to protect his or her legal rights and interests. However, if the attorney

appointed to the case cannot locate the servicemember, actions by the attorney would

not waive any defenses of or otherwise bind the servicemember. Additionally, if the

court is unable to determine if a defendant is in military service, the court may

require a bond which may later be used to indemnify the defendant if it is determined

that he or she was in military service and the judgment against the defendant is set

aside or vacated in part. Moreover, if a court enters a default judgment against a

servicemember, the court may set aside its judgment if the servicemember files a

motion within 60 days after leaving active military service and can demonstrate that

military service prejudiced his or her availability to appear in court (unless the default

was based on a false affidavit by the plaintiff regarding military service of the

defendant, in which case such a showing is unnecessary) and that there are

meritorious or legal defenses to the suit. This is a change from the previous SSCRA

where the motion had to be filed within 30 days after leaving military service.

This section does not provide a means to challenge judgments resulting from

cases in which the servicemember made an appearance before the court. Some courts

have found that a communication to the court regarding the servicemember’s military

status, and the resulting applicability of the SCRA to the suit, constitutes an

appearance and bars the servicemember from asserting certain defenses,20 such as a

lack of jurisdiction of the court over the servicemember, and negates the

servicemember’s right to petition to have the judgment overturned. An informal

communication, such as a letter or a telegram to the court asking for protection under

19

This requirement may be satisfied by a statement, declaration, verification, or certificate,

in writing, under oath.

20

See Blankenship v. Blankenship, 263 Ala. 297, 82 So. 2d 335 (1978); Vara v. Vara, 14

Ohio 2d 261, 171 N.E.2d 384 (1961); Reynolds v. Reynolds, 21 Cal. 2d 580, 134 P.2d 251

(1943).

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the SCRA should not be counted as an appearance,21 but some courts have found that

a letter from a legal assistance attorney constitutes an appearance, waiving the

servicemember’s protection against a default judgment. An appearance by

defendant’s counsel may also waive protection, unless the counsel was appointed

pursuant to this section.

Subsection (h) contains a provision to protect the rights of a bona fide purchaser

by stating that vacating, setting aside, or reversing any judgment under the Act will

not impair any right or title acquired by any bona fide purchaser for value under the

judgment. Therefore, it may be impossible to recover property that had been attached

to satisfy a default judgment, although the servicemember would have the right to

damages for the value of the property.

Stays of proceedings when servicemember has notice.

Sec. 202 (50 U.S.C. app. § 522). A court must stay further proceedings in civil

litigation where the servicemember’s ability to participate in the litigation is

materially affected by absence due to military service. It applies to servicemembers

who are in military service or within 90 days after termination or release from

military service.

The servicemembers must to set forth, in their application for a stay, facts

stating the manner in which current military duty requirements materially affect their

ability to appear and state a date when the servicemembers will be able to appear, and

submit a letter from the servicemember’s commanding officer certifying that leave

is not authorized for the servicemember to attend proceedings at that time. Courts

have been divided as to how to allocate the burden of proof regarding the issue of

whether the servicemember’s ability to appear in court is “materially affected” by

military duty. Courts must also take into account the interests of the opposing party.

While a stay is a reasonable imposition upon an individual citizen on behalf of those

discharging their obligations to the common defense, it is not available to shield

wrongdoing or lack of diligence or to postpone relief indefinitely, or to be used to

stay proceedings in matters where the interests or safety of the general public may be

at stake. Courts may deny a stay in cases involving purely legal issues or where the

servicemember is not the true party in interest, in which the servicemember’s

presence is not essential.

A request for a stay under this section does not constitute an appearance for

jurisdictional purposes or a waiver of any substantive or procedural defense.

Therefore, a servicemember may apply for relief without waiving the right, for

example, to assert that the court has no jurisdiction in the case. Moreover, additional

stays may be granted based on continuing material effect of military duty on the

servicemember. If additional stays are denied, the court must appoint counsel to

21

See Kramer v. Kramer, 668 S.W. 2d 457 (Tex. Ct. App. 1984) (letter from servicemember

invoking the SCRA and requesting a stay did not constitute an “appearance” for the purpose

of providing personal jurisdiction); see generally United States Judge Advocate General

School, Soldier’s and Sailor’s Civil Relief Act Guide, JA-260, § 3-2 (2000)[hereinafter “JA260"].

CRS-11

represent the servicemember. A servicemember who is unsuccessful in securing a

stay under this section is precluded from seeking the protections against default

judgments granted under section 201. This section is inapplicable to section 301

(protection from eviction or distress).

Fines and penalties under contracts.

Sec. 203 (50 U.S.C. app. § 523). Whenever an action is stayed by the court

pursuant to the SCRA, penalties that would otherwise accumulate against the person

for failing to carry out the terms of the contract cannot be imposed during the period

the stay remains in effect. Even if no stay is in effect, the court has the discretion to

relieve an active duty servicemember of the obligations to pay any fines or penalties

for failing to carry out the terms of a contract if that person’s ability to pay the fines

and penalties or to carry out the terms of the contract is impaired by active military

service.

Stay of enforcement.

Sec. 204 (50 U.S.C. app. § 524). If a servicemember is materially affected by

reason of military service in complying with a court judgement or order, the court

may, on its own motion, and will on the application of the servicemember, stay the

execution of any judgment or order against the servicemember and vacate or stay an

attachment or a garnishment of property, money, or debts in the possession of the

person on active duty in military service for actions or proceedings commenced

against the servicemember. This section applies to actions brought against the

servicemember before the period military service or within 90 days after termination

of the servicemember’s.

Duration and term of stays; co-defendants not in service.

Sec. 205 (50 U.S.C. app. § 525). Stays granted by courts under the SCRA can

remain in effect for the entire period of a servicemember’s active duty military

service plus 90 days, or any part thereof. As a practical matter, however, courts do

not look favorably on protracted stays, and expect most military members to make

themselves available to participate in proceedings within a reasonable period of time,

especially during peacetime if the servicemember is not stationed abroad.22 Suits

against any co-defendants not in military service may proceed even if the suit has

been stayed with respect to the person in the military. This section does not apply to

sections 202 (stays for actions for which the defendant has notice) and 701

(anticipatory relief). These sections contain their own rules for determining the

maximum length of a stay granted under them.

Statute of limitations.

Sec. 206 (50 U.S.C. app. § 526). In cases in which a statute of limitations

would prohibit any court action with respect to a lawsuit brought after expiration of

22

See Roger M. Baron, The Staying Power of the Soldiers’ and Sailors’ Civil Relief Act,

32 SANTA CLARA L. REV. 137 (1992).

CRS-12

the time specified by law, this section tolls (extends) the time period applicable to a

covered servicemember by an amount of time equal to the person’s period of military

service. That time is not counted in determining the servicemember’s deadline for

exercising rights such as redeeming real estate that has been sold or forfeited or to

pay any other obligation or assessment. The section applies not just to courts but also

to any other board, commission or agency, and may be exercised by the

servicemember’s heirs, executors, administrators, or assigns, regardless of whether

the right or cause of action arose prior to or during the person’s period of military

service. It does not, however, apply to federal tax laws.

Maximum rate of interest.

Sec. 207 (50 U.S.C. app. § 527). This section caps the maximum interest

charged on any debt incurred by a servicemember prior to entering active duty at a

rate of interest no higher than six percent (6%) a year, if that servicemember’s ability

to pay is materially affected by active duty status. The interest above the 6% cap is

to be forgiven by the creditor and does not accrue to be owed after the debtor’s

release from active duty. The monthly payments of an obligation or liability covered

by this section is to be reduced by the amount in excess of the 6%, but the terms of

the original obligation are to remain the same. A lender seeking to charge a higher

rate must get a court order to do so. It is up to the lender to prove that the

servicemember’s ability to pay the higher rate is not affected by military activation.

With regard to credit card debt, the 6% rate applies only to debt incurred prior to

service. Therefore, any purchases charged to the same credit card after entry into

military service will be subject to the full interest rate charged by the credit card.

A servicemember who wrongly receives an adverse credit report or has his or

her credit limit reduced or further credit denied after invoking the 6% interest cap

provision may seek relief through the Fair Credit Reporting Act23 (FCRA) provisions

for “adverse actions” and consumer remedies for “willful or negligent noncompliance

by credit reporting agencies upon consumer showing of causal connection between

inaccurate credit report and denial of credit or other consumer benefit.”24

III. Rent, Installment Contracts, Mortgages, Liens,

Assignments, Leases

Sections 301 through 308 provide protections from eviction and loss of other

benefits or rights due to the failure of a servicemember to meet payments on rent,

loans, mortgages, or insurance policies. Unlike the other parts of the SCRA, the

rights described in these sections can be asserted by a servicemember’s dependents

in their own right.

23

Fair Credit Reporting Act, 84 Stat. 1128, codified at 15 U.S.C. §§1681 et seq.

24

See JA-260, supra note 21, at § 3-8.

CRS-13

Evictions and distress.

Sec. 301 (50 U.S.C. app. § 531). Under this section, unless a court orders

otherwise, a landlord or person with “paramount title” may not evict a

servicemember in military service or his or her dependents from a rented home (such

as an apartment, a trailer, or a house) if the rent is $2,400 per month or less. In a case

where the landlord seeks a court order for the eviction of a servicemember or his or

her dependents, the court is obligated to stay the proceedings for up to three months

if the servicemember requests it. In the alternative, the court may adjust the

obligation under the lease to preserve the interests of all the parties. The $2,400 rent

ceiling will be adjusted for inflation. Section 202 (stay of proceedings when

servicemember has notice) of the Act is not applicable to this section.

Penalty for violation. Anyone who knowingly takes part in an eviction in

violation of this section can be punished by imprisonment for up to one year, a fine

as provided in Title 18, U.S. Code, or both. Persons claiming relief under this

section may collect consequential and punitive damages in cases involving wrongful

eviction.

Relief for landlord. This section allows the courts to grant landlords, or other

person with “paramount title,” equitable relief in cases where a stay is granted.

Subsection (d) of this section authorizes, if the court orders payment, the secretary

of the branch of service to order an allotment of military pay for rent of a dwelling

for the wife, children, or other dependents of a person on active duty in military

service.

Protection under installment contracts.

Sec. 302 (50 U.S.C. app. § 532). Except by court order, no one who has

collected a deposit as partial payment for property, where the remainder of the price

is to be paid in installments, can repossess the property or cancel the sale, lease or

bailment of the property because of the failure to meet the terms of the contract, if the

buyer enters active duty military service after paying the deposit and subsequently

breaches the terms of the contract. A violation of this section is punishable by

imprisonment for up to one year, a fine as provided in Title 18, U.S.Code, or both.

A court may order the cancellation of the installment sale, mandating the return of

the property to the seller as well as the return of paid installments to the buyer, or the

court may stay the proceedings. This section does not permit a servicemember

unilaterally to terminate the contract, although the servicemember may be able to

bring an action under § 701 for relief.

Mortgages and trust deeds.

Sec. 303 (50 U.S.C. app. § 533). This section protects servicemembers who,

prior to a period of active military service, entered into a property transaction subject

to a mortgage, a trust deed, or some other kind of security loan. If the servicemember

is unable to make payments on the loan due to military service, the provision

prevents the vendor from exercising any right or option under the contract to rescind

or terminate the contract, resume possession of the property for nonpayment of any

installment due, or to breach the terms, except by action in a court of competent

CRS-14

jurisdiction, until three months after the term of active duty terminates. This section

does not prevent the parties from entering into a written agreement with regard to

repossession or forfeiture of the property after the servicemember’s entry into active

duty or receipt of notice of induction. A sale, foreclosure, or seizure of property

during a servicemember’s period of military service is prohibited unless under a court

order issued prior to foreclosure on the property, or if made pursuant to an agreement

under section 107 of the Act. At least one court had interpreted the wording of the

SSCRA, which states an action is forbidden “unless upon an order previously granted

by the court” to mean that the order must have been issued prior to the

servicemember’s entry into active duty.25

If the servicemember breaches the terms of a mortgage, trust deed, or other loan,

the court may stay any proceedings brought by the lender to enforce the terms of the

agreement. The court may also order any other disposition of the property that it

decides is fair to both the borrower and the lender. Property repossessed or other

action taken without benefit of a court order is punishable by imprisonment up to one

year, a fine as provided by Title 18, U.S.Code, or both, and may subject the creditor

to a suit for wrongful conversion. In addition, where a covered person can show

oppression, fraud, or malice on the part of the creditor, punitive damages may be

awarded.

Settlement of stayed cases relating personal property.

Sec. 304 (50 U.S.C. app. § 534). If a court stays an action for foreclosure on

property, repossession, or the cancellation of a sales contract against a

servicemember, the court can appoint three disinterested persons to appraise the

property and, on the basis of the appraisal, order any amount it decides is fair to be

paid back to the person on active duty in military service as a condition for allowing

the foreclosure, repossession, or cancellation.

Cancellation of residential or motor vehicle lease.

Sec. 305 (50 U.S.C. app. § 535). This section allows military persons who live

in rental property to terminate leases they entered into prior to a period of active

service. It applies to: (1) property leased for a dwelling or for professional, business,

or farm use, or other similar purpose, where the person leasing the property later

enters active duty in military service, or where the servicemember executes the lease

while in military service and thereafter receives military orders for a permanent

change of duty station (PCS) or to deploy with a military unit for a period of at least

90 days; and (2) motor vehicle leases for personal or business transportation where

the person later enters active military service of not less than 180 days or where the

servicemember executes the lease while in military service and thereafter receives

PCS orders outside of the continental United States or to deploy with a military unit

for at least 180 days. Servicemembers who rent premises are advised to ensure the

25

Syracuse Savings Bank v. Brown, 181 Misc. 999, 42 N.Y.S. 2d 156 (N.Y. Sup. Ct. 1943).

CRS-15

rental agreement contains a “military” clause to allow for early termination of a lease

in case of military orders to deploy.26

The servicemember may terminate a property lease by delivering by hand,

private business carrier or mailing return receipt a written notice and a copy of the

servicemember’s military orders to the lessor or its agent. With regards to a motor

vehicle lease, the servicemember must return the motor vehicle subject to such lease

to the lessor or its agent no later than 15 days after the date of delivery of the written

notice. As for a residential lease, if the lease called for monthly rent, then

cancellation takes effect thirty days after the next due date for rent following the day

the written notice is sent. For all other property leases, the cancellation is considered

effective at the end of the month following the month in which the written notice is

sent. Any unpaid rent prior to the effective cancellation must be paid to the landlord

on a prorated basis. The servicemember is entitled to a refund of any prepaid rent for

time after the lease is canceled within 30 days of the termination of the lease. A

court can make adjustments if the landlord petitions the court for an “equitable

offset” prior to the date the lease is effectively canceled.27 For motor vehicle leases,

the cancellation is considered effective on the day on which the vehicle is returned

to the lessor. The lessor cannot impose early termination fees, but the servicemember

is still responsible for any taxes, summonses, title and registration fees, and any other

obligation or liability under the lease such as fees for excessive wear, use and milage.

The section provides for the punishment of anybody who knowingly seizes

personal effects, security deposit or any other property belonging to a person who has

lawfully canceled a lease pursuant to this section. Anyone who seizes or otherwise

interferes with the removal of property in order to satisfy a claim for rent due for any

time after the date of the effective cancellation of the lease may be punished by

imprisonment for up to one year, a fine as provided in Title 18, U.S.Code, or both.

Protection of life insurance policy.

Sec 306 (50 U.S.C. app. § 536). If a person entering military service has used

a life insurance policy as collateral to secure a debt, this section protects the

servicemember from foreclosure on the policy to satisfy the debt unless the assignee

first obtains a court order, except in the case that the assignee is the insurance

company itself (in which case the debt amounts to a policy loan). A court may refuse

to grant the order if it determines that the servicemember’s ability to repay is

materially affected by military service. This rule applies during the entire time the

insured is on active duty plus one year. The rule does not apply in three cases: (1)

if the insured gives his or her written permission to let a creditor make a claim

against the policy in order to satisfy the debt involved; (2) if any premiums required

under the life insurance policy are due and unpaid (excluding premiums guaranteed

under title IV of this Act); or (3) if the person whose life is insured has died.

26

27

See JA-260, supra note 21, at § 4-7.

An “equitable offset” may allow the landlord to retain part or all of the amount of rent

remaining on the lease as well as the security deposit, to compensate for unreasonable

expenses incurred as the result of early lease termination. Omega Industries, Inc., v.

Raffaele, 894 F.Supp. 1425 (D. Nev. 1995).

CRS-16

Finally, this section provides that anyone who knowingly takes or attempts

action contrary to this section will be punished to imprisonment for up to a year, or

a fine as provided in title 18, U.S. Code, or both.

Enforcement of storage liens.

Sec. 307. (50 U.S.C. app. § 537). This section protects servicemembers with

property or effects subject to a lien, including liens for storage, repair or cleaning of

property, by providing that no one is allowed to foreclose or enforce lien during the

servicemember’s in military service plus three months unless a court finds that the

servicemember’s ability to meet the obligation is not materially affected by military

service. A court can also stay the proceedings in these types of enforcement actions

or order some other disposition of the case it deems equitable to the parties. This

section does not affect the scope of section 303 (mortgages and trust deeds).

Finally, the section provides a penalty for anyone who knowingly takes any

action contrary to its provisions. Such an action is punishable by imprisonment up

to one year, a fine as provided by title 18, U.S.Code, or both.

Dependents’ rights.

Sec. 308 (50 U.S.C. app. § 538). This section extends the benefits of the rules

provided under title III (50 U.S.C. app. §§ 531 to 537) of the SCRA to dependents

of active duty personnel in their own right. Dependents must petition a court in order

to permit them to take advantage of those rules, and the court is not required to grant

permission if it determines that the ability of the applicant dependents to comply with

the terms of the obligation, contract, lease, or bailment has not been materially

impaired by the military service of the person upon whom the applicants are

dependent.

IV. Life Insurance

Title IV provides relief from insurance premiums and guarantees

servicemembers continued coverage under certain commercial life insurance policies.

Definitions

Sec. 401 (50 U.S.C. app. § 541). This section defines which life insurance

policies are covered, and provides other definitions relevant to title IV of the SCRA.

To be covered by the Act, the policy must be for a whole, endowment, universal, or

term life insurance (other than group term life insurance), or benefit similar to life

insurance that comes from membership in any fraternal or beneficial association and

has to satisfy all of the following conditions:

(1) the policy does not include a provision limiting the amount of

insurance coverage based on the insured’s military service;

CRS-17

(2) the policy does not require the insured to pay higher premiums if

he or she is in military service;

(3) the policy does not include a provision that limits or restricts

coverage if the insured person engages in any activity required by military

service; and

(4) the policy has to be “in force” (premiums have to be paid on time

before any benefit guaranteed by these sections of the law can be claimed)

for at least 180 days before the insured enters military service.

‘Premium’. ‘Premium’ is defined as the amount specified in the policy to be

paid to keep the policy in force.

‘Insured’. ‘Insured’ is defined as a servicemember who owns a life insurance

policy.

‘Insurer’. ‘Insurer’ is defined as any firm, corporation, partnership,

association, or business that can, by law, provide insurance and issue contracts or

policies.

Insurance rights and protections.

Sec. 402 (50 U.S.C. app. § 542). This section further defines who is entitled to

take advantage of the provision and how to apply for protection, and limits total

amount of covered policies to the greater of $250,000, or an amount equal to the

maximum limit of the Servicemember’s Group Life Insurance(SGLI). Either the

person insured, an insured’s legal representative, or, when the insured person is

outside the United States, a beneficiary of the insurance policy must make a written

application to the insurer and send a copy to the Secretary of Veterans Affairs.

Application for insurance protection.

Sec. 403 (50 U.S.C. app. § 543). This section provides that to invoke protection

for the policies under this part of the SCRA the servicemember, his or her legal

representative or beneficiary, must submit an application in writing identifying the

policy and insurer, with an acknowledgment that the insured’s rights under the policy

are subject to and modified by the provisions of title IV of this Act. The Secretary

of Veterans Affairs may require the parties to provide additional information as

necessary. The insurer then reports the action to the Department of Veterans Affairs

as required by regulation (found in 38 C.F.R. part 7). By making an application for

the protection guaranteed by these sections of the law, the insurer and insured are

deemed to have accepted any necessary modifications to the terms of the life

insurance policy.

Policies entitled to protections.

Sec. 404 (50 U.S.C. app. § 544). The Secretary of Veterans Affairs determines

whether a policy is entitled to the protection guaranteed by these sections, and is

responsible for notifying the insurer and the insured as to his determination. Once

CRS-18

the policy is deemed qualified for protection, the policy will not lapse or be canceled

or forfeited if the insured fails to pay premiums, or pay any debt or interest due on

a policy loan. This protection applies during the time the insured person is in

military service and for two years after he or she leaves military service.

Policy restrictions.

Sec. 405 (50 U.S.C. app. § 545). The approval of the Secretary of Veterans

Affairs is necessary for a policy holder to make certain withdrawals and other

payments or credits under a policy protected by this part of the SCRA. If such

approval is not obtained, rather than paying dividends to the insured or reinvesting

them to purchase additional coverage, the insurer must add dividends to the value of

the policy to be treated as a credit. The insured is not permitted to take out loans

against the policy or cash it in while it is protected without the approval of the

Secretary of Veterans Affairs. However, the insured retains the right to modify the

designation of beneficiaries.

Deductions of unpaid premiums.

Sec. 406 (50 U.S.C. app. § 546). If a covered policy matures due to the death

of the insured, the insurance company may reduce its settlement with the

beneficiaries by the amount of any unpaid premiums (plus interest). If the rate of

interest is not specified in the policy, it will be the same rate applied to policy loans

in other policies issued at the time when the insured’s policy was issued. Deductions

must be reported to the Secretary of Veterans Affairs.

Premiums and interest guaranteed by the United States.

Sec. 407 (50 U.S.C. app. § 547). This section provides a government guarantee

for premiums and interest that become due on a policy. In the event the insured fails

to pay all of the premiums owed on a policy at the time the guarantee period expires

and the cash surrender value of the policy is less than the amount due, the United

States will pay the unpaid premiums and may then attempt to collect the amount from

the insured. (Any funds collected from the insured are added to appropriations for the

payment of guaranteed premiums under this part of the SCRA). If the unpaid

premiums do not exceed the policy’s cash surrender value, the insurer will treat them

as a policy loan. Moreover, any money paid by the government to an insurance

provider under this section is a debt owed by the insured to the government and may

not be discharged by bankruptcy.

Regulations.

Sec. 408 (50 U.S.C. app. § 548). The Secretary of Veterans Affairs will

promulgate regulations to carry out the provisions of the article.

Review.

Sec. 409 (50 U.S.C. app § 549). The findings of fact and conclusions made by

the Secretary in administering these sections are subject to review by the Board of

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Veterans’ Appeals and the U.S. Court of Appeals for Veterans’ Claims. Judicial

review is permitted only to the extent provided by chapter 72 of title 38, U.S. Code.

V. Taxes and Public Lands

The fifth broad category of provisions of the SCRA provides protection for

certain rights regarding public lands and protects servicemembers from having to pay

certain taxes to multiple jurisdictions. It also protects servicemembers from having

certain personal or real property attached in order to satisfy tax liens.

Personal and real property taxes.

Sec. 501 (50 U.S.C. app. § 561). This section applies to all taxes except income

taxes, and it protects all personal property (including motor vehicles) belonging to

a person in military service, as well as all real property used by the servicemember

as a home, a business, or for agriculture, as long as the property continues to be

occupied by the servicemember’s family or employees. Property belonging to a

person in military service cannot be sold to collect unpaid taxes unless a court first

gives its permission. A court may stay an action to force the sale of property

belonging to a person in military service for the collection of unpaid taxes if it finds

that the debtor’s ability to pay the taxes is materially affected by his or her military

service. In the event a servicemember’s property is sold for such a purpose, the

servicemember has the right to redeem the property up to six months after the person

leaves military service, without regard to any impairment of the servicemember’s

ability to pay the taxes due to military service. This section will not be construed to

shorten any period provided by state law. Finally, the section provides that a 6%

interest rate will be applied to the assessment or lien resulting from the unpaid taxes,

but that no other penalty will apply. Finally, this section applies to joint ownership

of all forms of personal and real property by a servicemember and his or her

dependents.

Rights in public lands.

Sec. 502 (50 U.S.C. app. § 562). Persons in military service cannot be deemed

to have forfeited any right they had to use public lands of the United States prior to

entering military service based on absence from the land or failure to perform

required maintenance or other improvements. Holders of permits and licenses who

subsequently enter military service may suspend the licenses for the duration of

military service plus six months, allowing the servicemember to obtain a reduction

or cancellation of fees for the duration of that time.

Desert-land entries.

Sec. 503 (50 U.S.C. app. § 563). This section protects the rights of persons in

military service who had claims to desert lands prior to entering military service. The

protection lasts while the person is in military service and for six months after he or

she leaves military service or is released from hospitalization because of wounds or

disability suffered while in military service. To qualify for this protection, the

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servicemember must give notice of military service to the appropriate land office

within six months after entering military service.

Mining claims.

Sec. 504 (50 U.S.C. app. § 564). This section suspends certain requirements for

maintaining a mining claim during the holder’s period of active military service and

for six months after he or she leaves military service or is released from

hospitalization because of wounds or disability suffered while in military service.

During this time period, the mining claim cannot be forfeited due to nonperformance

of the requirements of the lease. To qualify for this protection, the servicemember

must notify the appropriate claims office that he or she has entered military service

within 60 days after the end of the assessment year in which the person enters

military service.

Mineral permits and leases.

Sec. 505 (50 U.S.C. app. § 565). Any person who holds a permit or a lease

under the federal mineral leasing laws who enters military service is allowed to

suspend all operations during military service (plus six months), in which case the

period of service is not counted as part of the term of the person’s permit or license

but the holder is not required to pay rentals or royalties during that time. However,

to qualify for these privileges, the person has to notify the Bureau of Land

Management that he or she has entered military service within six months after

entering military service.

Perfection or defense of rights.

Sec. 506 (50 U.S.C. app. § 566). Nothing in title V of the SCRA prevents a

person in military service from taking any action authorized by law or regulations of

the Department of the Interior to assert, perfect, or protect the rights covered in those

sections. A servicemember may submit any evidence required to assert this right in

the form of affidavits or notarized documents. Affidavits provided pursuant to this

section are subject to 18 U.S.C. § 1001.

Distribution of information concerning benefits.

Sec. 507 (50 U.S.C. app. § 567). The Secretary concerned is responsible for

providing military authorities with information about the benefits of this article

(except those pertaining to taxation) for distribution among servicemembers and

forms to be used by applicants for these benefits.

Land rights of servicemembers.

Sec. 508 (50 U.S.C. app. § 568). This section extends the protection of land

rights under this article to servicemembers under the age of 21. Any residency

requirements related to the establishment of a residence within a limited time will be

suspended for 6 months after release from military service.

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Regulations.

Sec. 509 (50 U.S.C. app. § 569). The Secretary of the Interior has the authority

to issue regulations necessary to carry out title V of the Act, other than the sections

that deal with taxes (secs. 501, 510, and 511).

Income taxes; residence for tax purposes.

Sec. 510 (50 U.S.C. app. § 570). The collection of income taxes (excluding

Social Security (FICA) taxes) owed by a person in military service either before or

after he or she entered into military service is deferred while the person is in military

service, and for up to six months thereafter, if the servicemember’s ability to pay the

taxes is impaired because of his or her military service. No interest or other penalty

may be imposed on a debt deferred under this section. The statute of limitations for

paying the debt is tolled for the length of the person’s period of military service plus

nine months.

Residence for tax purposes.

Sec. 511 (50 U.S.C. app. § 571). In order to prevent multiple state taxation of

the property and income of military personnel serving within various tax jurisdictions

by reason of military service, this section provides that servicemembers neither lose

nor acquire a state of domicile or residence for taxation purposes when they serve at

a duty station outside their home state in compliance with military orders. A

servicemember who conducts other business while in military service may be taxed

by the appropriate jurisdiction for resulting income. This section does not protect the

income of a spouse or other military dependant from being taxed. However, a tax

jurisdiction cannot include the military compensation earned by nonresident

servicemembers to compute the tax liability imposed on the non-military income

earned by the servicemember or spouse. Personal property of a servicemember will

not be subject to taxation by a jurisdiction other than his or her domicile or residence

when they serve at a duty station outside of their home state. However, relief from

personal property taxes does not depend on whether the property is taxed by the State

of domicile. Property used for business is not exempt from taxation. An Indian

servicemember whose legal residence or domicile is a Federal Indian reservation will

only pay taxes under the laws of the Federal Indian reservation and not to the State

where the reservation is located.

The section defines the term “tax jurisdiction” as “a State or a political

subdivision of a State,” which would include the District of Columbia and any

commonwealth, territory or possession of the United States (Sec. 101(6)).

“Taxation” includes licenses, fees, or excises imposed on an automobile that is also

subject to licensing, fees or excise in the servicemember’s state of residence.

“Personal property” includes intangible and tangible property including motor

vehicles.

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VI. Administrative Remedies

Title VI provides courts the authority to deny remedies that would abuse the

purpose of the SCRA, indicates how a servicemember’s military and financial status

can be established in court, and covers other technicalities.

Inappropriate use of the Act.

Sec. 601 (50 U.S.C. app. § 581). This section provides that a court may deny

the protections of the Act with respect to a transfer it finds was made with the intent

to exploit the provisions of the Act, in order to delay enforcement of the contract, to

obtain reduced interest rates, or to avoid obligations with respect to property that was

the subject of the transaction.

Certification.

Sec. 602 (50 U.S.C. app. § 582). This section provides that a certificate signed

by the Secretary concerned serves as prima facie evidence in an action under the

SCRA that the individual is in the military service, date of induction or discharge,

person’s residence at time of induction, rank and rate of pay, and other facts relevant

to asserting rights under the SCRA. A servicemember who is missing in action is

presumed to continue in military service until he or she is accounted for or his or her

death has been reported to the Department of Defense or determined by a court or

board with the authority to make such determination.

Interlocutory orders.

Sec. 603 (50 U.S.C. app. § 583). This section permits courts to revoke, modify,

or extend any interlocutory orders they has issued pursuant to the SCRA.

VII. Further Relief

Title VII of the SCRA provides a means for servicemembers to petition for

relief without having to wait until a creditor brings an enforcement action against

them. It also treats powers of attorney and provides relief from liability insurance

premiums for servicemembers who need to maintain such policies for their civilian

occupations.

Anticipatory relief.

Sec. 701 (50 U.S.C. app. § 591). This section provides relief similar to that

provided in sections 301 and 501, except that it permits the servicemember to initiate

the action prior to defaulting on the obligation, rather than having to wait for the

creditor to commence proceedings. Dependents do not have independent protection

under this section as they do for the provisions of Article III. A servicemember can

petition the court to stay the enforcement of any pre-service obligation or liability,

including a tax obligation, while on active duty or within six months of release from

active duty.

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Courts may grant the following relief:

(1) if the obligation involves payments of installments for the

purchase of real estate (like a mortgage), the court can stay enforcement of

the obligation by adding a period of time no greater than the period of

military service to the remaining life of the contract, subject to the payment

of the balance of principal and accumulated interest that remains unpaid

at the termination of the applicant’s military service, in equal installments

over the duration of the extended life of the contract; and

(2) for any other type of obligation, liability, tax, or assessment, the

court can stay enforcement for a period of time equal to the petitioner’s

period of military service, subject to payment of the balance of principal

due plus accumulated interest in equal installments over the duration of the

stay.

If a stay has been granted under this section, no fine or penalty can be imposed

during the period of the stay as long as the servicemember complies with the terms

and conditions of the stay. This provision allows servicemembers who are not yet

in default on an obligation, but whose ability to make payments is materially affected

by military service, to petition the court in effect to rewrite the contract by extending

its life, allowing the servicemember to pay down the amount in arrears with equal

installments over a longer of period of time. The servicemember must resume

making regular payments on the debt after leaving active duty, in addition to the

payments to make up for the smaller payments he or she made while on active duty.

Extension of power of attorney.

Sec. 702 (50 U.S.C. app. § 592). This section provides for the automatic

extension of any valid power of attorney for a person who is declared to be missing

in action. Unless the document explicitly states that it is to expire even in the event

the person who executed it becomes missing in action, the document continues in

force for the entire period the person remains in missing status. It is limited to

documents that designate the servicemember’s spouse, parent, or named relative as

the servicemember’s attorney in fact.

Professional liability insurance.

Sec. 703 (50 U.S.C. app. § 593). This section provides relief for professional

persons who are required to maintain professional liability insurance in their civilian

occupation. Beginning July 31, 1990, certain persons who, prior being called to

active duty, were furnishing “health care services” or legal services or any other

services which the Secretary of Defense determines to be “professional services” and

who had in effect a professional liability (i.e., malpractice) insurance policy, may

suspend payment of premiums on their liability insurance while they serve on active

duty without losing any coverage. The section covers insurance policies that,

according to their terms, would not continue to cover claims arising prior to a lapse

in coverage unless the insured continues to pay premiums.

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Definitions.

“Profession” is defined in subsection (i) to include “occupation.” Similarly, the

expression “professional” includes the term “occupational.” Subsection (i) also

defines “active duty,” adopting the definition used in section 101 of title 10, U.S.

Code. However, the provision is further limited to persons called to active duty

(other than for training) under 10 U.S.C. §§ 688 (retired members of regular armed

forces, members of the Retired Reserves, and members of the Fleet Reserve or Fleet

Marine Corps Reserve); 12301(a) (activation of Reserves during war or national

emergency declared by Congress); 12301(g) (member of Reserve component in

captive status); 12302 (Ready Reserve); 12304 (Selected Reserve and certain

Individual Ready Reserve members called to active duty other than during war or

national emergency); 12306 (Standby Reserve); 12307 (Retired Reserve); and, if any

of the preceding sections are invoked, section 12301(d) (volunteer member of a

Reserve component).

Suspension of coverage.

Professional liability insurance policies covered by this section are suspended

from the time the insurer receives a request for protection until the insured requests

in writing to have the policy reinstated. In the case of a joint insurance policy, no

suspension of coverage is required for the policyholders who are not called to active

duty. For example, if several physicians jointly purchase a group policy of

malpractice insurance, and only one of them is called to active duty, the coverage of

those not called to active duty need not be suspended by the insurer.

Premiums.

The insurer may not charge premiums for coverage that is suspended. The

insurer must either refund any amount already paid for coverage that is suspended or,

if the insured professional person chooses, apply the amount toward payment of any

premium that comes due after coverage is reinstated.

Liability during suspension.

The insurer is not obligated to pay any claim that is based on a professional’s

actions (or inaction) during a period when a policy is suspended. In the case of

claims involving obligations imposed by state law on a professional person to assure

that his or her patients or clients will receive professional assistance in his or her

absence to serve on active duty, the section clarifies that the failure of the

professional person to satisfy such an obligation will generally be considered to be

a breach that occurred before the professional person began active duty. In such a

situation, the insurer would be liable for the claim. In the event a claim arises while

the patient is receiving alternate care as arranged by the servicemember for patients

during his or her absence, the insurer would not be liable for the claim.

Actions against policy holder during suspension of coverage.

In the event a malpractice suit (or administrative action) is filed during the

period when the insurance is suspended, the litigation will be stayed until the end of

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the suspension period. The stay only applies where the malpractice is alleged to have

occurred before the suspension began, and would thus be covered by the policy.

Litigation stayed under this rule is deemed to be filed on the date the suspended

insurance is reinstated. The period of any stay granted under this provision is not

counted when computing whether or not the relevant statute of limitations has run.

In the event that a professional person whose malpractice insurance coverage

has been suspended under the section should die during the period of the suspension,

any stay of litigation or administrative action against the person under this section is

lifted. In addition, the insurer providing the coverage that was suspended is to be

liable under the policy just as if the deceased person had died while covered by the

policy but before the claim was filed.

Reinstatement of coverage.

The insurer is required to reinstate the insurance coverage on the date the

servicemember transmits a written request for reinstatement, which must occur

within 30 days after the covered servicemember is released from active duty. The

insurer must notify the policy-holder of the due date for payment of any premium

required for reinstatement of the policy, and that the premium must be paid within

30 days after the notice is received by the professional person. The section also limits

the premium that the insurer can charge for reinstated coverage to the rate that would

have applied if the servicemember had not been deployed. The insurer is not allowed

to recoup missing premiums by charging higher rates for reinstated coverage, but it

may charge higher rates for reinstated coverage if it raised the rates for all

policyholders with similar coverage, if the servicemember would have had to pay a

higher premium even if he or she had not suspended coverage.

Reinstatement of health insurance.

Sec. 704 (50 U.S.C. app. § 594). This section grants servicemembers who were

called to military service as described in § 703(a)(1) the right, upon termination or

release from military service, to reinstatement of any health insurance policy that was

in effect on the day before the servicemember entered military service, and that

terminated at any time during his or her service. No new exclusions from coverage

or waiting periods for reinstatement of coverage may be imposed with respect to

conditions arising prior to or during the servicemember’s period of military service,

if such an exclusion or waiting period would not have applied during regular

coverage and the condition has not been determined to be a disability incurred in the

line of duty under 38 U.S.C. § 105. The section does not apply to employersponsored health insurance plans covered by the provisions of the Uniformed

Services Employment and Reemployment Rights Act (USERRA).28 Insurance plans

covered by USERRA are subject to similar protections under 38 U.S.C. § 4317.

Servicemembers must apply for reinstatement within 120 days of termination or

release from active duty.

28

P.L. 103-353, 108 Stat. 3161 (1994), codified at 38 U.S.C. §§ 4301 et seq.

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Guarantee of residency for military personnel.

Sec. 705 (50 U.S.C. app. § 595). This section guarantees that military personnel

are not deemed to have changed their state residence or domicile for the purpose of

voting for any federal, state, or local office, solely because of their absence from the

respective state in compliance with military or naval orders.

Business or trade obligations.

Sec. 706 (50 U.S.C. app. § 596). The assets of a servicemember are protected

from attachments to satisfy business debts for which the servicemember is personally

liable, as long as the assets sought to be attached are not held in connection with the

business. The obligor would have the right to apply to the court for a modification

of the servicemember’s relief where warranted by equitable considerations.

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