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The Servicemembers Civil Relief Act or SCRA was recently updated effective January 2023. The SCRA was origianlly enacted in 2003 to protect the financial interests of servicemembers and their dependents.
The Veterans Auto and Education Improvement Act of 2022 introduced several amendments to the SCRA, which cover consumer transactions, civil legal proceedings, taxation matters, contract termination, and professional licenses.
In this post:
SCRA Credit Cards
Under the SCRA, credit card issuers must cap interest rates at 6% for servicemembers and their dependents. This applies to any credit card debt incurred before the servicemember's active duty military service began.
The SCRA also prohibits credit card companies from penalizing servicemembers for failing to meet their payment obligations while on active duty.
Under the Military Lending Act law, American Express and Chase both waive annual fees on all of their premium credit cards for covered borrowers. Covered borrowers under the MLA include active duty military, Guard and Reserve on active duty orders over 30 days, and military spouses.
These MLA fee waivers includes The Platinum Card® from American Express and the Chase Sapphire Reserve® Card. Learn more about these fee waivers and how to get them in my 100% free email course: The Ultimate Military Credit Cards Course or on the Military Money Manual Podcast.
Loans and Debt
The SCRA prevents lenders from foreclosing on the homes of servicemembers who are on active duty or within a year after their active duty ends. The Act also limits the interest rates on all loans, including mortgage loans, personal loans, credit card debt, and student loans, to 6% while the servicemember is on active duty.
Starting in January 2023, the SCRA has expanded its coverage of contracts to include gym memberships, fitness programs, and home security services. Previously, only cell phone service, internet access, and cable television were covered under this provision.
The new amendments also provide contract termination protections for dependents who accompany servicemembers during their relocation.
Rent contracts are also covered under the SCRA. You can break a lease with a landlord with 30 dates written notice and a copy of your military deployment or PCS orders. Never sign a rental agreement that has an SCRA rights waiver clause.
If you already signed a lease agreement, your SCRA rights usually cannot be waived by an lease agreement clause. Contact your JAG if you believe that you were asked to sign an illegal SCRA rights waiver agreement.
State Tax Residency
The SCRA has introduced changes that allow servicemembers and their spouses more freedom to elect a domicile for tax purposes. Previously, members were protected from state income tax based solely on their duty station.
However, they were also limited in their ability to change their residence as they wished.
Now, a member may choose between their own residence, their spouse’s residence, or their permanent duty station as their domicile for tax purposes, giving greater flexibility to the individual member and their family.
Military Spouses License Moving State
The 2023 amendments to the SCRA also allow members and their spouses with active professional licenses to transfer those licenses to their new jurisdiction.
A license seeker is entitled to a transferred license if they provide a copy of their military orders to the licensing authority in the new jurisdiction, are in good standing in the old jurisdiction, and have actively used the license in the last two years.
The individual must follow the new jurisdiction’s standards and continuing education requirements, and the license sought must be of the same nature and scope. Licenses to practice law are still not transferable.
Military spouses are also eligible for up to $1,000 of reimbursement for costs associated with a PCS and transfer of a professional license to a new state. Learn more about the Military Spouse Licensure Reimbursement in our podcast episode or on Military One Source.
You can verify your eligibility for SCRA benefits by checking the SCRA database. Military servicemembers on active duty orders and military spouses who are dependents of the military servicemember and listed in DEERS should be listed in the SCRA database.
The SCRA database is provided by the Defense Manpower Data Center or DMDC and draws on data from the DEERS system.
The recent amendments to the Servicemember Civil Relief Act offer greater protections to servicemembers and their dependents in matters of contracts, loans and debts, state tax residency, and professional licenses. These changes provide a comprehensive framework to safeguard the financial interests of those who serve our country.
If you have questions about the SCRA, contact your local JAG office for your base or unit or the Consumer Financial Protection Bureau (CFPB).