Tax Tips & Calculators

The Servicemembers Civil Relief Act of 2003 (SCRA) is a federal law that gives all military members some important rights and many protections as they enter or while on active duty. It covers such issues as rental agreements, security deposits, prepaid rent, eviction, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosure, civil judicial proceedings and income tax payments.

Highlights of the SCRA

Though the SCRA has been active for some time, the military and the lending community still need better awareness of this law and its provisions, which can be extremely beneficial to you and your family.

The SCRA requires mortgage lenders, landlords and other creditors to grant you special status. Here are some of the SCRA's most helpful provisions:

• Reduced interest rates and loan payments: Under certain circumstances, lenders must lower interest rates to 6% on your pre-existing home mortgages, credit cards, car loans and other personal loans. Any interest you owe above 6% during your period of active duty will be forgiven, not just deferred.
• Property protection: Lenders can't foreclose on your home mortgage or other loans without proving legally that your military duty didn't affect your ability to make payments.
• Rent protection: If your rent is less than $2,465 per month, your landlord can't evict you or your family for late payments or any reason without petitioning for a court order.
• Rental/auto lease protection: When you're deployed or relocated, you can terminate a preexisting residential or automobile lease. To terminate a lease, you generally need to give the landlord or lender 30 days written notice.
• State tax support: If your spouse works and owes tax in a state other than the state of your permanent legal residence, SCRA will protect your family from double taxation. When that state determines the tax rate on your spouse's income, it will exclude your servicemember income.
• Legal postponement: If your deployment prevents you from attending court or legal meetings related to a divorce or other legal process, you can request deferral for 90 days or longer. To do so, submit a written request to the court along with a letter from your commander that explains why you can't attend proceedings before a specified date.

Make Your Lenders Aware

To claim the SCRA benefits, you request them from your lenders and provide proof of your active status. For example, to obtain a reduction of your pre-active duty mortgage or credit card interest rates, send your lender/creditor a written request and a copy of your mobilization orders. If you encounter any problems, contact your military legal assistance officer.