Protecting military with the SCRA

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Day 61 of our familyroom renovation.

Under the dubious logic of “Might as well…”, my spouse and I agreed that it seemed like a good idea to expand beyond the familyroom to add new baseboard moldings in the kitchen, livingroom, and diningroom. This despite those three rooms being already filled with furniture from what used to be our familyroom, and we’d have to shift it all around (like one of those kid’s interlocking sliding puzzles) to remove the old moldings.  So to help reduce the cost and labor, we spent last weekend priming & painting over 400 board feet of 5″ routed baseboard molding.  

This morning it’s pouring rain (again!), and after three weeks of daily winter soakings the “temporary” tar paper covering our roof is starting to let some of the mauka showers into our new familyroom. The brand-new drywall is still mostly dry, but the drywall guy won’t start mudding & taping until tomorrow. The roofers just called to share that they’re delayed by rain at their other job so they’ll be here tomorrow. Next day at the absolute latest.  Eh, dis time fo’ real brah.

My spouse and I are apparently slow learners. We’re hunkered down in our bedroom ad hoc study– surrounded by contractors with not one but two shrill chop saws, a thudding air compressor, exploding nail guns, and miscellaneous banging with intermittent cursing. Every hour or so it abates while we move more furniture out of the way of another stretch of baseboard molding, and then the noise resumes anew. It started at 6:30 AM and it’ll go until 2:30 PM.

You dolphin-wearin’ steely-eyed killers of the deep are all thinking the same thing right now: “Gosh I miss shipyard.” NOT.

The one bright spot amid this construction chaos is the contractor’s laptop: Pandora streaming classic Janis Joplin* wailing across our wireless network.

*(Note to my daughter: Google her!)

The good news is that the contractors are more than half finished, the whole renovation is actually going quite well, many chronic annoyances are being fixed, and this home is starting to look like a house again.

But freakin’ “Just Write It” indeed. 

Well, in between furniture moves I’m going to pitch a couple of softballs this week. First up is a little-known piece of legislation known as the “Servicemembers Civil Relief Act”.   (We received a PDF summary in our e-mail this week that I’ve included here: Servicemembers Civil Relief Act Simplified) Usually the only way you learn about this one is when you’re desperate, so file this post away in your “Good to know but hope I never need it” folder.

Yesterday I was reading “1001 Things To Love About Military Life“.  (Book review post coming up next week, and it’s good!) In item #180, USAA financial planner J.J. Montanaro writes that the original version of the SCRA traces back to the Civil War. The (Northern) Congress tried to protect the rights of the state militia members while they were away from home “for the duration”, and the laws have continued in one form or another for nearly 150 years. The “Soldiers and Sailors Civil Relief Act” was passed in 1940, and the SCRA updates and clarifies its intent.

The SCRA covers active-duty servicemembers, of course, and it also covers the Reserves and National Guard during active duty (beyond certain minimums). It provides the legal right to break the lease on a rental home, to terminate the lease on a rental vehicle, and to be protected from eviction or repossession. It actually caps the interest rate on debts at 6% for the duration of the member’s military obligation. It can even authorize a 90-day stay in civil court proceedings.

The act now protects military spouses from a form of double income taxation. If a spouse is paying tax on earned income in a state other than their state of permanent legal residence, then the servicemember’s income is not used to determine the spouse’s tax rate. The spouse is only taxed on their own income at the tax bracket for that income.

I upgraded my landlord knowledge while researching this post: the act also includes the “military clause” in rental property leases. Military tenants used to have to ask landlords to add the right to terminate a lease upon receiving deployment orders (at least 90 days) or permanent change of station orders. The act includes this provision in its legislation so the military clause is no longer necessary in a lease– it’s automatically covered by the act.

Is the act that easy to enforce? I wish it was. In most cases, it only applies to obligations and debts incurred before the start of active duty. Guard members must be activated for at least 30 days (which may not be much help for a week of disaster recovery after a hurricane). The act doesn’t apply to debts taken on after the active duty starts (debts which may have been incurred because of expenses related to the active duty). There are limits to the protection. Servicemembers are required to provide written advance notice of the active duty and may be required to formally apply for relief. However some provisions of the act apply for a period after the end of the active duty, and may be extended to cover family members as well.

The act can reduce the interest rate on private student loans– not federal loans. However there are several other military programs for deferring, reducing, or eliminating student loans that were borrowed before joining the service. Consider all your choices before using the SCRA to reduce the interest rates on student loans.

The SCRA isn’t perfect. For example, entrepreneurs and small-business owners are certainly entitled to its protection if they’re mobilized. However the SCRA won’t help them make their delivery deadlines, grow their business, or even keep their clients. The act also won’t prevent an adversarial relationship from developing for the duration of a lease or a debt. If a landlord or a creditor hasn’t been properly educated on the act then the justice system will eventually intervene, but it may be after a painful and protracted delay with legal expenses.

Another issue is cell phone contracts, which aren’t specifically covered by the act. While I was researching this article, I came across Ryan Guina’s excellent TheMilitaryWallet.com post on other ways to cancel cell phone contracts.

However the SCRA works. In May 2011, two mortgage-servicing companies agreed to pay more than $20M compensation to settle litigation in over 150 illegal home foreclosures on mortgages held by servicemembers.

Tomorrow’s softball:  DFAS’ new eRAS… 

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WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

7 Comments
  1. […] I know what a few of you are thinking: “Eh, I’ll just join the Reserves or Guard and drill for a few years as a side hustle while I’m growing the business. If the startup hits an air pocket then I can always go back on orders for a few weeks.” If you ever decide to raise seed capital or talk to angel investors, this attitude may also be seen as “a lack of commitment”. But if you decide to take this route, learn how to protect yourself with the Servicemember’s Civil Relief Act. […]

  2. […] articles: Will the military pay off your student loans? Protecting military with the SCRA Guest post Wednesday: Financial independence on an E-5 paycheck Book review: “Why We Buy” Book […]

  3. […] rate to 6% or to accelerate its repayment terms. (Yes, some lenders have tried to do that.) The SCRA gives you additional protection against consumer debts, rental agreements, and contracts. Even if you’ve already completed your active duty, within six months you can invoke SCRA and […]

  4. Reply
    Deserat November 7, 2011 at 2:49 PM

    Hmm – yes, the SCRA is nice, but getting someone to pay attention to it when they don’t want to is another issue. I ran into this when returning from my 4 year sojourn in Germany courtesy of 11 Sep….had to fight tooth and nail to get what was supposedly my right due to the SCRA (or what came before that)….and one of the offenders was a cell phone company…finally just threw my hands up in the air and reported them to the FCC. Then there were the retirement bennies from the civilian employer….got half of what I asked for…went to the ESGR- they would help me if I paid the Reservist lawyer. Sigh – wasn’t worth the hassle at that point.

    I liken it like going to small claims’ court – great you got the judgement, now it’s time to collect. That’s the hard part.

    Excellent on the house – will need to come see it someday 😉

    • Reply
      Doug Nordman November 8, 2011 at 2:48 AM

      Thanks for letting us know the “real world” version of SCRA. It sounds great on paper but still takes a fight.

      We’re getting closer to the end of the renovations, and it’s good!

  5. Reply
    Jay November 2, 2011 at 10:41 PM

    Yes, streamin’ Janis Joplin sounds perfect. At our football tailgates, Janis Joplin plays as we set up the tents, chairs, and tables, lay out the food and drink. Great background music … but I wonder how many of our “younger” tailgaters appreciate it? Can the Nordmans come to a tailgate sometime once the roof is sealed and home renovations are done?

    • Reply
      Doug Nordman November 3, 2011 at 9:11 AM

      Our daughter informs me “Yes Dad, I know who Janis Joplin is.” I’m filled with hope for the younger generation.

      I’m also filled with hope that this renovation will be finished before football season is over!

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