|Soldiers & Sailors Civil Relief Act (SSCRA)|
|Chapter 4, Rents, Morgages and Foreclosures (Page 4)|
Anticipatory, Applied for Relief
(50 U.S.C. App. § 590)
General. This section is similar to sections 301 and 302. It provides a means by which a person in military service may orderly liquidate obligations and liabilities affected by that service. The essential difference is that section 700 permits the service member to initiate the action instead of waiting for the creditor to commence proceedings. Dependents do not have independent protection under this section, as they do for Article III protection.
A court may suspend enforcement of all or any portion of any obligation or liability that arose prior to entry on active duty, or any tax or assessment falling due either before or during service. To obtain relief, the service member must apply to the court during his/her military service, or within six months thereafter, and satisfy the court that his/her ability to meet his/her obligations are materially affected by his/her service.
Application. This section includes all contracts and mortgages covered by sections 301 and 302 plus any other obligation or liability incurred prior to entry on active duty or any tax or assessment regardless of when the tax or assessment falls due. This section differs from sections 301 and 302 as follows:
Action in court. To obtain relief under this section, the service member is required to apply to the court in accordance with subsection (1). No court, as yet, has granted relief on its own motion under the provisions of this section.
The question of whether or not a service member is entitled to a stay where there is no default and no action pending was raised in Application of Marks. The court decided that no action need be pending and the service member need not be in default. Additionally, a service member is not prohibited from applying for relief after action has been brought or a stay been granted under the provisions of sections 301 or 302.
Nature of relief. Once the court is satisfied that the service member's ability to meet his/her obligations is materially affected by his/her service, it has authority not only to stay the enforcement of the obligation, but also to set up an equitable plan or schedule for him/her to repay the debts he/she is unable to handle because of military service.
The stay provisions of this section provide that if the obligation involved is for the purchase of real estate or is secured by real estate, the court may grant a stay to allow the service member to suspend all payments while in service. The service member may then make up these back payments, plus interest, by spreading them out equally over the remaining life of the contract, plus a period of time equal to his/her time in service. For all other debts, the time allowable to make up the back payments cannot exceed a period of time equal to his/her time in service.
An example provides the best explanation of these provisions. Assume that when A enters the service, he owns a mortgaged house with 20 years remaining on the mortgage, and a boat with 5 years of installment payments remaining. While spending two years on active duty, he made reduced payments on both obligations by obtaining a stay under this section. When he is separated from the service, he has 18 more years on his mortgage and is $1400.00 in arrears. He also has three years of payments remaining on his boat and is $800.00 in arrears on this debt. The court may allow the $1400.00 to be spread out for a period of 20 years and the $800.00 for a period of two years. The maximum permissible period for the stay on the mortgage is calculated by adding the 18 years remaining on the mortgage at the time of separation to the two years A spent in the service. As to the installment contract on the boat, A could be permitted a maximum of 2 years to make up the arrears since the court is allowed to grant a stay equal to his term of service.
In addition, the discharged service member will be required to resume his regular payments at the same time he is paying the arrears. The stay described in the example is the maximum allowable stay. The court could order less time for repayment, in accordance with its equitable powers.
This provision is very useful in dealing with auto lease problems. For example, a Reserve physician has a pre-service BMW auto lease that he cannot afford upon activation. He voluntarily surrenders the vehicle back to the lease-holder. After he returns from active duty, the lease-holder sues him for the deficiency payment left on the vehicle of several thousand dollars. How could the soldier have prevented the deficiency problem? One option could have been to use §590 to get prospective relief from his lease payments, prior to any default. Of course, upon his return, the discharged soldier must pay all back payments due during the period of time equal to the time in active service, and he must continue to make his regular payments, without incurring any early termination penalties.
Above Information Courtesy of United States Army JAG Corps