Servicemembers Civil Relief Act

The Servicemembers Civil Relief Act (SCRA) was signed into law by President Bush in December 2003. The new law updates protections enacted during World War II, and replaces the old Soldiers and Sailors Civil Relief Act.

The law includes the following major provisions:

• Restates and clarifies the provision that limits interest on existing loans to a maximum of 6 percent. The loan must have existed when the servicemember entered the military. The law specifically states that the interest above 6 percent is permanently forgiven, and that the monthly payments must be reduced by the amount of the forgiven interest.
• Servicemembers deployed or moving to locations outside the US can now terminate vehicle leases without paying early termination penalties. The law also prohibits repossession of personal property without a specific court order.
• Gives more protection to servicemembers who are unable to attend court proceedings due to military duty.
• Provides additional protections to prevent eviction.
• Adds a new provision that allows servicemembers to terminate a housing lease if they receive PCS orders or orders to deploy for 90 days or more.
• Activated Guard and reserve members will receive more protection from cancellation of life insurance policies that might otherwise default due to nonpayment of premiums.
• Changes the way states may compute income taxes for military spouses.