New Federal Law Protects Troops’ Finances
The horror stories are almost as numerous as the battles we’ve fought since 9/11.
In Fort Hood, Tex., the Tallahassee Memorial Hospital credit union recently sued Sgt. Michael Gaskins and his wife, Melissa.
The credit union was trying to collect on a loan Gaskins had taken out just before he enlisted in November 2001. At the time of the suit, Gaskins was assigned to duty in Baghdad . Despite being briefed by a local military lawyer, County Judge Susan R. Stephens found the Gaskins in default. This should not have happened, since the Gaskins were eligible for relief under the Servicemembers Civil Relief Act of 2003 (SCRA), and the ruling is under review at this time.
Wells Fargo recently served a young northern Ohio Army couple with foreclosure papers, even though the wife had repeatedly attempted to negotiate their payment terms. Eventually, when Wells Fargo learned that this couple was eligible for relief under the SCRA, it dropped the foreclosure proceedings.
More than a dozen Camp Pendleton Marines returned to California from Iraq to find that their cars and other possessions had been sold to cover unpaid storage and towing fees. They were able to recover their belongings, or receive financial compensation, because the offending firms had ignored provisions of the SCRA that require a court order prior to such actions, which they had never obtained.
Army reservist Sgt. John J. Savage III was about to board a troop transport to Iraq from Fayetteville , N.C. , when his wife called to tell him that EverHome Mortgage Company was foreclosing on their house. After repeated threats from military lawyers, EverHome Mortgage eventually dropped its foreclosure proceeding against Savage, but by then the damage was done. Savage’s credit rating was ruined, and he was never able to reestablish completelyhis struggling wireless internet connection business. In a strange twist, Savage retired on a full disability pension, so he has financial security, but this still doesn’t change what happened to his finances.
In each of these cases, the lender or landlord acted outside the provisions of the 16-month-old federal law in their handling of each case. Typically, the reason was not so much malicious as simple ignorance of the law. Fortunately, each of the service branches has lawyers specially trained to deal with situations like these. Nevertheless, unless the affected service member acts in his or her own interest, the consequences can be both severe and long lasting, as in Sgt. Savage’s case.
These examples are typical of what can happen when a service member is not vigilant in pursuing his or her rights under current federal law.
When I joined the Navy back in 1962, I was protected from certain financial and legal situations by the Soldiers’ and Sailors’ Civil Relief Act of 1940 – the SSCRA. Passed shortly after commencement of World War II, the SSCRA played a significant role in setting service members’ minds at ease as they put it all on the line for family, home and country. This law remained essentially unchanged through the Persian Gulf War of 1991.
The SSCRA provided significant protection to me and to service members who came before me and who followed me. These included: staying court hearings if military service materially affected a service member’s ability to defend his or her interests; reducing interest to 6 percent on pre-service loans and obligations; requiring court action before a service member’s family could be evicted for nonpayment of rent if the rent was $1,200 or less; termination of a pre-service residential lease; and allowing a service member to maintain his or her state of residence for tax purposes.
In the decades following World War II, it became clear that the world had changed significantly, and America ’s fighting men and women and their service organizations had changed as well. As a result, on Dec. 16, 2003, Congress passed, and President Bush signed into law, a complete revision of the SSCRA called the Servicemembers Civil Relief Act of 2003 (SCRA).
Although the SSCRA served us well, the new SCRA was written to clarify the language of the old law, to incorporate many years of judicial interpretation, and to update the law to reflect changes and developments in American life since 1940.
Here are the significant elements of the new SCRA, and how they differ from the old law:
* A service member can now stay administrative hearings in addition to court hearings by 90 days – instead of an undefined period, and additional stays can be granted at the discretion of the judge or hearing official.
* The interest rate on pre-service loans is still capped at 6 percent, but the difference between the original rate and 6 percent must be forgiven, and not merely deferred. Furthermore, a service member must request this reduction in writing and include a copy of his or her orders with the request.
* Without a court order, service members and their dependants cannot be evicted from residential rental properties for which the monthly rent does not exceed $2,465 (for 2004) – increased from $1,200 in the old law. The Act also provides a formula to calculate the rent ceiling for subsequent years – the amount for 2005 is being determined as this is written.
* Active duty service members may now terminate real property leases when moving pursuant to permanent change of station (PCS) orders or deployment orders of at least 90 days. There is no longer a need to request a military termination clause in leases, as required by the old law.
* Pre-service automobile leases for service members and their dependants may be cancelled if the service member receives orders to active duty for a period of 180 days or more. Automobile leases entered into while a service member is on active duty may be terminated if the service member receives PCS orders to a location outside the continental United States or deployment orders for a period of 180 days or more. This is a new provision that was not contained in the old law.
* States may not increase the tax bracket of a nonmilitary spouse who earned income in the state by adding in the service member’s military income to determine the nonmilitary spouse’s tax bracket. This is a new provision that was not contained in the old law.
* Legal services as a professional service is now specifically named under the provision that provides for suspension and subsequent reinstatement of existing professional liability insurance coverage for designated professionals serving on active duty. The SSCRA specifically named only health care services. Although legal services have been covered since May 1999 by Secretary of Defense designations under an SSCRA clause permitting such a secretarial designation, this revision clarifies this area.
The bottom line is that service members and their families are protected from losing their homes and personal possessions as a consequence of the impact of military service on their lives. This law is not automatically enforced, and it certainly does not give a member license to renege on legal obligations.
The SCRA does, however, provide excellent protection for every service member and his or her dependants, if the member takes the time to understand the law, and to implement its provisions. Most legitimate commercial concerns that have dealings with the general public and with service members and their dependants will bend over backward to accommodate service members – if they are apprised of the situation in advance, and if they understand the provision of the SCRA.
When you as an active service member or your dependants find yourselves in a situation where a creditor or landlord is taking advantage of you, the nearest military legal office will have one or more staff members specifically trained to help enforce the law. Seek them out immediately!
It makes no sense for someone to attempt solving these problems without expert help. This law was created to ensure that your service to your country would not jeopardize your family’s financial future.
Take advantage of it!
Robert G. Williscroft is DefenseWatch Navy Editor
