Legal Protections for America's Military: The Soldiers' & Sailors' Civil Relief Act and USERRA

Active service members can take steps to avoid financial hardship and prevent legal problems while they're gone and ensure they have a home and a job when they return.

Two powerful federal laws can help all active service persons handle their legal affairs and reduce financial obligations while on active duty and ensure that the homes and jobs left behind are waiting for them when they return. Below we discuss the following benefits provided by these laws:

• reduced interest rates on existing debts
• special treatment for tenants regarding lease cancellations and evictions
• protection from court actions and repossessions, and
• guaranteed job reinstatement.

Reduced Interest Rates on Existing Debts

The Soldiers' and Sailors' Civil Relief Act of 1940, or SSCRA ( 50 U.S.C. App. Section 501 and following), applies to all active duty members of the military, including the activated National Guard and certain members of the Public Health Service. In 1940, Congress decided that sailors and soldiers should be free to serve, whether in peacetime or during war, without worrying about financial or court-related problems at home. In particular, Congress recognized that military pay for many activated reservists would likely be lower than their normal income, making it hard to pay prior debts.

Particularly helpful to members of the military are reduced interest rates on debt, including mortgage payments and credit card debt. Under Section 526 of the SSCRA, many active duty personnel are entitled to a 6% cap on debts or financial obligations of any kind (except federally guaranteed student loans). You must meet these conditions to take advantage of this interest rate reduction:

• You took out the loan before you began active duty. For example, a reservist who buys a car in June and is called up the following October is entitled to an interest rate reduction, but a sailor who secures a car loan while on active duty and is then shipped out will not qualify for the reduction.
• Your military service materially affects your ability to pay the loan at the pre-service interest rate. This usually boils down to showing that you make significantly less money now than before you went on active duty.

If you think that your loan meets these requirements, you must write a letter to the lender asking that the interest rate on the loan be changed as of the date your active duty began. Include copies of your orders and paychecks, and evidence that you are now making less money than you did prior to active duty.

The lender must reduce the interest rate on the loan to 6% or less if you've provided this information. (However, lenders can go to court to contest the reduction, which they may do if they think that your income reduction is not so great as to materially affect your ability to pay the interest on the loan. Until the court rules, however, the interest rate must remain reduced.) Once you resume inactive status, the loan will revert to its original rate.

Special Treatment for Tenants

Many active duty members will also be able to terminate lease obligations and avoid eviction.

Cancellation of Residential or Commercial Leases

Tenants who enter active military service after signing a lease or rental agreement have a right to get out of their rental obligations. This is true for both residential leases and commercial ones for businesses. You must mail written notice of your intent to terminate your tenancy to the landlord or manager.

• Month-to-month rental agreements. Once the notice is mailed or delivered to the landlord or manager, the tenancy will terminate 30 days after the day that rent is next due. For example, if rent is due on the first of June and you mail a notice on May 28, the tenancy will terminate on July 1. This rule takes precedence over any longer notice periods that might be specified in your rental agreement or by state law. If state law or your agreement provides for shorter notice periods, the shorter notice periods will control.
• Leases. Once the notice is mailed or delivered, the tenancy will terminate 30 days after the day that rent is next due. For example, suppose a tenant signs a one-year lease in April, and rent is due on the first of the month. The tenant enlists or is called up on October 10. If the tenant mails a termination notice on October 10, the lease terminates on December 1, which is 30 days after the first time that rent is due following the mailing of the notice (November 1). This tenant will have no continuing obligation for rent past December 1.

Delaying Eviction for Nonpayment of Rent

The SSCRA requires courts to stay (postpone), for up to three months, some residential evictions for nonpayment of rent.

• Which tenants are affected? The SSCRA applies if your spouse, children or other dependents occupy the rental unit.
• Rental amount. The Act's protections apply when the rent is $1,200 per month or less. However, courts are free to adjust that figure -- chosen by Congress in 1991 -- to account for inflation or cost of living increases.
• The effect on an eviction lawsuit. The Act does not prevent a landlord from serving a termination notice for the nonpayment of rent. But a landlord who has filed suit must tell the court that the tenant is an active service person (so be sure to notify your landlord when you are activated). The judge will decide whether the service person's status in the military affects his or her ability to pay the rent. If the judge decides that it does, the eviction case may be stayed for up to three months. If the judge decides otherwise, the lawsuit will continue and may result in an eviction.
• Requisitioned pay. The Secretary of Defense or the Secretary of Transportation may order that part of your pay be allotted to pay the rent, but only if your service branch has regulations in place providing for such allotments.

Protection From Court Actions and Repossessions

Congress recognized that it would be extremely unfair to allow civil court actions and judgments to proceed if the service person, whether a plaintiff or a defendant, was unable to attend the court proceedings. In addition, Congress added protections against repossession, since service people making less money than normal might be subject to repossession of their belongings for nonpayment.

Delay of All Civil Court Actions

The SSCRA allows active service persons to ask for a stay, or postponement, of many kinds of civil actions in which the service person is a defendant. In addition, when calculating the statute of limitations (the time during which a person must bring a lawsuit, or lose the right to do so), the period of time that the person has been in the military should not be counted.

These provisions of the Act have been used most frequently in foreclosure and domestic relations cases.

• Foreclosure. No lender, including credit unions, banks and individuals, may foreclose on, seize or sell the homes of military personnel during active duty and up to three months thereafter. To be eligible for this protection, you must have taken out the mortgage before you began active duty.

  However, a mortgage lender can go to court to obtain special permission to foreclose if it thinks that a borrower's ability to pay the loan or appear in court has not been materially affected by active status. For example, a newly activated reservist whose income level has not dropped, who has been posted to a nearby city and who can obtain leave to attend court will probably not qualify for a postponement of a foreclosure.

• Divorce proceedings. Active military personnel may ask for a postponement (stay) of divorce proceedings if they can show a court that their active status makes it impossible to attend the proceedings.

Default Judgments

When you are not on active duty, if you are sued but fail to show up in court, a judge may decide the case against you in your absence. In legal parlance, this is known as a "default judgment." Under the SSCRA, a plaintiff -- someone suing you -- who seeks a default judgment against an absent active duty service member must tell the court that the service person is on active duty. If neither you nor your attorney appears in court, the court may appoint an attorney to represent you in your absence.

If the court enters a judgment against you during your military service, under certain circumstances you may be able to reopen the case later.

Repossessions

The SSCRA prohibits repossessions performed without a court order (such as those done by merchants or "repo" specialists) of goods purchased by installment contract, such as consumer items or cars, as long as the purchase was made before active duty began. Merchants must go to court to obtain a court order before they can repossess an item. Once that happens, active duty service members may apply for a stay of repossession proceedings, which will be granted if the judge decides that the service person's ability to pay the debt has been materially affected by entering active service.

Guaranteed Job Reinstatement

Besides worrying about home or car payments, ongoing civil court disputes and evictions of family or dependents, active military persons are often concerned about whether they will have a job to return to once their period of active duty is over. Fortunately, the answer is usually yes.

Federal Law

A federal law known as the Uniformed Services Employment and Reemployment Rights Act of 1994, or USERRA ( 38 U.S.C. Section 4301 and following), prohibits discrimination against members of the United States military or those who serve in the military reserves. This law requires employers to reinstate an employee who has taken time off to serve in the armed forces, including reservists called up by the president, if the employee meets these conditions:

• The employee gave the employer notice, before taking leave, that the leave was for military service.
• The employee spent no more than five years on leave for military service.
• The employee was released from military service under honorable conditions.
• The employee reports back or applies for reinstatement within specified time limits (these limits vary depending on the length of the employee's leave).

USERRA requires employers to reinstate workers to the same position they would have held had they been continuously employed throughout their leave, provided they are otherwise qualified for that job. This means that your employer cannot simply return you to your old position. Instead, the employer must give you any promotions, increased pay or additional job responsibilities that you would have gotten had you never taken leave -- but only if you are qualified to do the job. If you are not qualified, your employer must try to get you qualified (by providing training, for example). You are entitled to the benefits and seniority that you would have earned had you been continuously employed. For purposes of benefits plans and leave policies, the time you spent on leave must be counted as time worked.

Returning members of the military receive one additional benefit: You cannot be fired without cause for up to one year after you are reinstated (the exact length of this protection depends on the length of your military service). Thus, no matter what your boss's employment policies say, you are not an "at-will" employee during a limited period after your return. ("At-will" employees may be terminated at any time, as long as it is not for an illegal reason.)

State Laws

Almost every state also has a law prohibiting discrimination against those in the state's militia or National Guard, and if your state law provides more protection than USERRA, your employer must follow the state law.

Most state laws also require employers to grant leave to employees for certain types of military service. Some states require leave only for those employees called to active duty; other states require leave for those called for training as well. Employers don't generally have to pay employees who take military leave, although some states provide paid leave for public employees.

When an employee takes military leave, under most state laws the employer must offer re-employment without any loss of benefits, status or reduction in pay. These re-employment guarantees vary from state to state and usually contain a number of additional conditions. Typical conditions for reinstatement include:

• The employee was not dishonorably discharged from military service.
• The employee satisfactorily completed military service.
• The employee requested reinstatement within a specified time period.

If the employee is not able to do the job formerly held, the employer must offer an appropriate substitute position. If changes in the workforce make reinstatement unreasonable, the service person may not be entitled to reemployment with this employer.