• Mortgage Relief: Under certain conditions, an active-duty military member or his dependents may receive temporary relief from paying a mortgage.
• Termination of Leases: A member of the military just entering active duty may be able to terminate a lease without repercussions, if certain conditions are met.
• Protection from Eviction: An active-duty member of the military who leases a house or apartment can prevent an action for a period of time, usually three months, if the rent does not exceed $1,200 a month and the active-duty status impacts their ability to pay rent.
• Six Percent Cap on Interest Rates: Under the SSCRA, an active-duty military member can cap the interest rate at six percent for all obligations, including mortgages and car loans, entered into before beginning active duty. Once a service member requests the rate reduction, the creditor must either comply or apply for court relief. The SSCRA puts the burden on the creditor to show that military service has not “materially affected” a service member’s ability to repay the debt. The court generally grants relief if the creditor can make his or her case.
• Stay of Proceedings: If an active-duty member of the military is sued, he or she may have the proceedings postponed.
• Reopening Default Judgment: If a default judgment is issued against an active military member, he or she can reopen the judgment once certain conditions are met.
• Relief is also available in regards to taxes or assessments for qualified service members and dependents. A service member or dependent may, at any time during his/her military service, or within six months thereafter, apply for relief of any obligation or liability incurred before active duty. The court may grant stays of enforcement during which time no fine or penalty can accrue.

SOURCE: Department of Housing and Urban Development

The SSCRA’s 6 percent interest rate applies in two instances:

1. where the individual incurs a debt, then enlists in the military; and
2. where the individual is in the reserves or the Guard and incurs a debt and is subsequently called to active duty.

The law is in effect all the time -- not just during times when the U.S. is involved in a war.

More than 100,000 National Guard and military reservists have been called to active duty, and another 1.3 million reservists may be called if the war escalates. The provisions of the Act are not necessarily granted automatically, so service members are advised to notify their lenders, and, where applicable, their attorneys or the Internal Revenue Service to apply for the protections.

Some protections for reservists and members of the National Guard are provided only if the service member is "materially affected" by being called to duty. For example, if a service member cannot show up in court for legal actions, he or she would be materially affected. In the case of financial obligations, if low military pay scales create an economic hardship for the military member or her family, the protection might apply.

None of the provisions of the Soldiers’ and Sailors’ Civil Relief Act of 1940 are automatically granted. In order to receive the benefits, the more than 100,000 National Guard and military reservists who have been called to duty must notify their lenders either by the phone or through a letter. Lenders will want to see a copy of the service member’s military orders and information about earnings.

Lenders also may want:
    • The date on the Induction Order (activation date) and the mortgage date to ensure the mortgage pre-dates the Induction Order.
    • The rank, branch of service, and service number for the service member.

(Name and address of creditor)

Reference: (Your name)

Account #________________

(Date)

Dear Sir or Madam:

I incurred this debt before my entry into the Armed Forces at a time when I was earning substantially more than I am now. My pre-service earnings were ($______per month/year.) My military earnings are ($______per month/year.) See attached income documentation. Therefore, my military service has substantially affected my ability to make the payments that I agreed to make while a civilian.

Please be advised that I entered active duty on (date) and am presently on active duty assigned to (unit). Enclosed is the order placing me on active duty. Under the Soldiers’ and Sailors’ Civil Relief Act of 1940, 50 U.S.C. Appendix, Section 526, there is a 6 percent per annum ceiling on interest charges (including service charges, renewal charges and fees) during a service member’s service if the obligation was made prior to the date of entry onto active duty and the active duty materially affects the ability to pay. This is a Federal act and it applies during the time of war and peace. 

Please ensure that your records reflect this statutory ceiling and that any excess charge is withdrawn effective (date entered active duty). Please apply the excess that I have paid since that date to the principal.

To avoid application of this section, a creditor must show a court of competent jurisdiction that the individual’s military service has not materially affected his or her ability to pay the higher amount. Further, the Act offers protection from repossession of property, recision of contracts, or penalties without court authority, (50 U.S.C. Appendix Section 531). 

I am eager to resolve this matter with you and regret very much that circumstances have arisen that prevent full payment to you on the original schedule. I will advise you immediately of any improvements in my financial condition.

Please inform me as soon as possible concerning your action on this reduction of future payments and reapplication of past excess payments to principal.

Sincerely,

(name)

(rank)

(branch)

(service number)

(address)

Enclosed: Earnings documents

Copy active duty entry orders