Banks, lenders, credit card issuers, and collection agencies are not simply allowed to act as they see fit when it comes to your debt. Yes, you are expected to honor your agreements and pay back your loans according to their terms, but there is still a long list of rules and regulations your creditors must follow. There is no shortage of these consumer protection laws at both the state and federal level that serve to protect your rights when it comes to your credit and your debt.
For members of our military, the protections run much deeper than they do for non-military. In fact, there’s a federal statute written for the sole purpose of protecting military members while they’re on active duty. This statute is called the Servicemember’s Civil Relief Act (SCRA).

The Purpose of the Servicemember’s Civil Relief Act

Formerly known as the Soldier’s and Sailor’s Civil Relief Act, the SCRA was expanded and improved upon in 2003 to provide the myriad of protections that are available to servicemembers under the law today. Both laws were created with the intention of helping to relieve the financial stress of those deployed and active duty members of the military and their family members back home, allowing the servicemembers the ability to better focus on their duties. The law extends special protections to active duty members of all 5 branches of the military – Army, Navy, Air Force, Marine Corps, and National Guard – as well as to reservists (while on duty) and the families of these eligible servicemen.

Unique Protections

1. Credit Card Debt Protections

If a servicemember acquired credit card debt prior to his/her enlistment then they may be eligible to have the interest rate on that debt capped at an affordable rate of only 6%, which is extremely low relative to the average credit card interest rate that’s closer to 16%. That low rate can even be extended for up to an entire year after the active duty period has ended. Additionally, card issuers are not allowed to close an account or lower the credit limit due to this special interest rate reduction.

2. Mortgage Protections

As is the case with credit card debt, if a servicemember has taken out a mortgage prior to enlistment then he/she may also be eligible to request a 6% interest rate cap on the loan while serving as an active duty soldier. In all likelihood, if the servicemember has decent credit then the mortgage interest rate being paid is probably well below 6% as the best mortgage rates are currently under 4%. Still, the benefit is available if needed.

3. Lease Termination Protections

Active duty servicemembers may be eligible to terminate the lease on an apartment or home early if either (a) the lease was signed prior to enlistment or (b) the servicemember receives orders for a permanent change of station. This allows them to be nomadic, a reality for most servicemembers, without the fear of being sued or hounded by their former landlords or property management companies.

4. Mobile Phone Contract Protections

If a servicemember is deployed to a new location, for a period of at least 90 days or more, then the SCRA affords the right to terminate a mobile phone contract if the provider does not offer cell phone service in the new area. This can be especially helpful for overseas deployments where the cellular options are not necessarily the same as they are stateside.

5. Civil Litigation Protections

Certain types of civil court cases, aka lawsuits, can be temporarily suspended while a servicemember is serving in an active duty role. These types of cases include (but are not limited to) foreclosures and lawsuits filed by landlords or creditors.