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Servicemembers Civil Relief Act, Simplified

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Upon receipt of notice, the creditor must reduce the interest rate to a maximum of 6 percent, effective the first day of active duty (even if the servicemember makes the request at a later time).

The law unambiguously states that no interest above 6 percent can accrue for credit obligations while on active duty (for debts incurred before going onto active duty), nor can that excess interest become due once the servicemember leaves active duty (that was a "trick" some creditors tried under the old law) – instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.

Court Proceedings. If a servicemember is a defendant in a civil court proceeding, the court may (note the word "may"), on it's own motion, grant a 90-day stay (delay) in the proceedings. If the servicemember asks for a stay, the court must grant a minimum 90 day stay, if:

  1. The servicemember submits a letter or other communication setting forth facts stating the manner in which current military duty requirements materially affect the servicemember's ability to appear and stating a date when the servicemember will be available to appear; and

  2. The servicemember submits a letter or other communication from the servicemember's commanding officer stating that the servicemember's current military duty prevents appearance and that military leave is not authorized for the servicemember at the time of the letter.
The provision applies to civil lawsuits, suits for paternity, child custody suits, and bankruptcy debtor/creditor meetings, and administrative proceedings.

The new act specifically states that a servicemember communicating with the court requesting a stay does not constitute an appearance for jurisdictional purposes and does not constitute a waiver of any substantive or procedural defense (including a defense relating to lack of personal jurisdiction). Under the old act, some courts held that merely communicating with the court (i.e., requesting a stay, implied that the member agreed to jurisdiction of the court).

A servicemember who is granted a stay may request an additional stay, if he/she can show that military requirements affect his/her ability to appear (commander's letter is also needed). However, the court is not obligated to grant the additional stay.

If the court refuses to grant an additional stay of proceedings, the court must appoint counsel to represent the servicemember in the action or proceeding.

If a default judgment is entered in a civil action against a servicemember during the servicemember's period of military service (or within 60 days after termination of or release from such military service), the court entering the judgment must, upon application by or on behalf of the servicemember, reopen the judgment for the purpose of allowing the servicemember to defend the action if it appears that--

  1. the servicemember was materially affected by reason of that military service in making a defense to the action; and

  2. the servicemember has a meritorious or legal defense to the action or some part of it.
Enforcement of Obligations, Liabilities, Taxes. A service member or dependent may, at any time during his/her military service, or within 6 months thereafter, apply to a court for relief of any obligation or liability incurred by the service member or dependent prior to active duty or in respect to any tax or assessment whether falling during or prior to the service member’s active military service. The court may grant stays of enforcement during which time no fine or penalty can accrue.

Additionally, the act prevents servicemembers from a form of double taxation that can occur when they have a spouse who works and is taxed in a state other than the state in which they maintain their permanent legal residence. The law prevents states from using the income earned by a servicemember in determining the spouse’s tax rate when they do not maintain their permanent legal residence in that state.

Reemployment Rights. Contrary to what many people believe, there are no provisions for Reemployment Rights as part of the Soldiers and Sailors Civil Relief Act. Reemployment rights are a completely separate legislation, the The Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA).

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