As the economy continues to decline, more people are finding themselves in financial trouble. With the recent Government Shutdown scare, Members of the Military have found that their income may not be as stable as they once thought. While the bankruptcy process can be very different for Active Military Members, they have the same right to file for bankruptcy as any civilian does.
Luckily, Military Professionals are protected by a Federal Law known as the Servicemembers’ Civil Relief Act. This Act was created to protect the Active Military men and women who protect our country every day. This Act was revised and expanded in 2003 from the Soldiers’ and Sailors’ Civil Relief Act of 1940. The SCRA is applicable to any civil lawsuit, including bankruptcy
Some of the Servicemembers’ Civil Relief Act protections include:
Mortgages Foreclosures can be halted while the Military Member is on Active duty and in some cases, a new payment plan may be worked out.
Rent Active Servicemen are protected from eviction, as well as their dependents. This applies for rental rates up to $1,700 a month. This was one of the revisions in 2003; the previous rental amount was $1,200 a month and did not adjust annually for inflation and cost of living, which the new Act will do.
Interest Rates Service members are protected against interest rates over six percent.
Insurance The SCRA will postpone the cancellation of any insurance plans where the premium has not been paid.
Taxes Taxation and legal residency can be complicated for Military Members. The SCRA protects Active Servicemen and women from double taxation, as their home state will be the only state allowed to tax their military income.
To qualify for the protections of the SCRA the Serviceman must be able to prove that their service has had a “material effect” on their ability to pay. Essentially, a well-paid General would not be able to take advantage of this Act.
The SCRA has its limitations, it can only protect a Servicemember for up to 60 days after he or she is discharged from Active Duty. The SCRA is more of a postponement of bankruptcy than a solution. Please contact a Rio Grand Valley Bankruptcy Attorney as soon as possible to get a full understanding the Servicemembers’ Civil Relief Act and what to do once those 60 days have expired.