Civilians are not the only ones who experience financial troubles that end in bankruptcy. Many members of the U.S. military have debt problems that overwhelm them despite their best efforts. When this happens, the Servicemembers’ Civil Relief Act (SCRA) can provide important protections that help them regain solvency, either through modified repayment terms or personal bankruptcy.
The SCRA Explained
The Servicemembers Civil Relief Act (SCRA) provides members of the U.S. Armed Forces with specific legal protections that do not apply to civilians. It covers all active-duty personnel as well as reservists and members of the National Guard during periods of active duty.
The SCRA serves a dual purpose:
- To improve the defense of the nation by allowing service members to focus on their military responsibilities
- To protect military personnel from administrative proceedings and lawsuits that could potentially harm their civil rights
In general, all civil actions must be suspended from the moment the person assumes active-duty status until 30 to 90 days after discharge. Below is an overview of three ways that this mandate affects bankruptcy proceedings against the military.
Protection from Default Judgments
If a creditor seeks a default judgment against an absent debtor during civil lawsuits, the law requires them to submit an affidavit as to the person’s military status. In bankruptcy actions, they must file this affidavit with the bankruptcy court clerk.
If the debtor is on active duty, an attorney must be appointed to represent them and the person may seek to reopen their case if they felt that their rights were prejudiced in their absence. If their military status is unknown, the court may require the plaintiff to post a bond to indemnify the debtor for any losses or damage that arise from the default judgment. It is a serious offense to seek a default judgment against a defendant without making reasonable efforts to confirm their military status first.
Stayed Civil Proceedings
Military debtors may request that proceedings against them be stayed for up to 90 days and even longer at the court’s discretion. A letter from the service member and their commanding officer confirming their military obligations is generally all that’s required to suspend any civil proceedings in progress.
Stay of Execution on Attachments, Garnishments, and Judgments
If a creditor already has a judgment, they can be ordered to cease all collection efforts while the debtor is serving the nation, plus another 90 days after discharge. This extra time can allow the service member to seek counsel and protect their interests when the stay is finally lifted.
If you are a member of the U.S. military who is dealing with creditor demands and possibly contemplating Chapter 7 or 13 bankruptcy, contact the Law Offices of B. David Sisson for a no-obligation consultation today. Attorney Sisson can meet with you at your convenience, review your financial situation, and explain how bankruptcy or one of its alternatives can relieve your debt. Your military service is both valued and essential, and our firm will protect your rights so you can do your duty.