Glossary
SCRA (Servicemembers Civil Relief Act)
A federal law that gives active-duty military members financial and legal protections, including a 6 percent interest rate cap on debts taken on before service, protection from default judgments, and the right to end some leases.
The Servicemembers Civil Relief Act (SCRA), 50 U.S.C. 3901 and following, protects people on active military duty from financial and legal harm caused by their service. Its key protections include:
- Interest rate cap. Under 50 U.S.C. 3937, a debt a servicemember took on before entering active duty cannot carry interest above 6 percent per year during military service (and for one year after for mortgages), and interest above that rate must be forgiven, not just deferred. The servicemember must give the creditor written notice and a copy of their orders.
- Default judgment protection. Before a court enters a default judgment, the plaintiff must file an affidavit stating whether the defendant is in military service.
- Foreclosure and repossession limits on pre-service mortgages and installment contracts without a court order.
- Lease termination rights for housing and vehicle leases when a servicemember receives qualifying orders.
The SCRA can be enforced by the Department of Justice, and servicemembers can also sue privately for damages and attorney's fees. Banks, mortgage servicers, auto lenders, and towing companies have faced government enforcement and class actions for charging interest above 6 percent, foreclosing without court orders, or repossessing vehicles without required court approval.
If you or a family member served, check old loan statements for interest charged during active duty. See our pages on debt collection harassment, credit report errors, and the FDCPA explainer.
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