The Servicemember's Civil Relief Act (SCRA)

Most credit union's have members who are in one of the military branches. Make sure that when you discover that a member is on active duty that you follow all the provisions of the SCRA.

The SCRA gives relief to individuals who are called to active duty in any of the military branches, including reservists or members of the National Guard. SCRA replaces and expands the Soldiers' and Sailors’ Civil Relief Act of 1940.

Major provisions of the SCRA that may affect credit unions include:

• Allowing borrowers to have their interest rates reduced to 6% on loans granted before going on active duty, if the call up to military service materially affected their ability to pay.

• Permitting active duty servicemembers, who are unable to appear in a court or administrative proceeding due to their military duties, to postpone court proceedings for a mandatory minimum of ninety days upon the servicemember's request.

• Prohibiting foreclosures or repossessions without prior court approval, up until three months after leaving active service.

• Prohibiting future adverse credit decisions based on the grant of SCRA relief. The 6% interest limitation only affects loans granted before the member entered active duty. Any loan granted after the member entered onto active duty would continue to have the terms at the time the loan was granted.

The provisions related to foreclosures and repossessions apply to dependents also. The provision related to the maximum interest rates only apply to a dependent when the member of the military also signed the note, prior to entering active duty.

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