How the Servicemembers Civil Relief Act Protects Military Families
Legal actions in 2025 are reminders of the importance of the Servicemembers Civil Relief Act, or SCRA, a law providing financial and legal protection to military members. Two important cases occurred in 2025 that service members and their families should know about.
Greystar Management Services LLC, a large property management company was ordered to pay $1.4 million in fines and restitution after a determination that Greystar charged early lease termination fees to military members who had to move due to military orders. The SCRA protects against such fees.
SCRA Versus Appeals Court
Another important decision in 2025 came from a federal appeals court in January. A military member sued Citibank, claiming the bank wrongly raised credit card interest rates after they left active duty. Citibank wanted the case moved to arbitration, citing clauses in their credit card agreements.
The appeals court determined that the SCRA, while allowing group lawsuits for servicemembers, does not necessarily override arbitration agreements made in writing. Military members who signed paperwork agreeing to private arbitration might have to settle SCRA disputes through private arbitration instead of a traditional courtroom.
This applies unless another specific law, like the Military Lending Act, prevents it. The ruling clarifies how the SCRA interacts with these contract clauses. It shows that for arbitration to be blocked, the law must state it clearly. This case will likely go to the Supreme Court, and this may not be the final word on the SCRA arbitration issue.
Knowing these legal nuances can help military families decide what to do if they feel their SCRA rights have been violated.
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How the SCRA Protects Military Families
How does the Servicemembers Civil Relief Act (SCRA) protect veterans? The SCRA is a federal law offering financial and legal protections to active-duty service members, including National Guard and Reserve members on federal orders, and in some cases, family members.
SCRA rights and protections are specific, and may be circumstances-based depending on the type of protection. For example, SCRA rules address pre-service financial obligations (debts or contracts entered into before active duty) or obligations that are materially affected by military service but does not necessarily cover certain debts incurred after becoming a military member.
SCRA Interest Rate Cap
At the heart of SCRA protection, a 6% interest rate cap on debts provides financial protection for debts the service member incurred before entering active duty. This cap includes interest, service charges, and fees. For most loans, this cap applies for the entire period of active duty. For mortgages, the cap extends for one year after active duty ends.
Specific types of loans covered include home and auto loans, credit cards, and installment loans:
Mortgages and Home Equity Loans:
SCRA protection includes an interest rate cap, postponement of foreclosure or seizure of property without a court order during or within nine months (or one year for loans secured by real property) after active duty.
Auto Loans
SCRA protection for auto loan borrowers includes an interest rate cap, and protection against repossession without a court order if the loan/lease was entered into and a payment made before active duty.
Installment Loans
SCRA law covers personal loans, lines of credit, and other installment contracts. Interest rate cap and protection against repossession without a court order if certain conditions are met (e.g., a deposit or payment was made before active duty).
Business Obligations
SCRA protection includes guidelines for non-business assets and military pay from creditors for business debts incurred before active duty.
Credit Cards and Student Loans
There is an interest rate cap for credit cards and student loans under SCRA.
SCRA Rules For Rental Leases on “Real Property”
The SCRA lets service members to terminate real estate rentals early without penalty under specific conditions:
The service member must have entered the lease before entering active duty, or while on active duty, and subsequently received orders for a Permanent Change of Station (PCS) or to deploy or support a military operation for a period of 90 days or more.
The service member must provide written notice to the landlord, along with a copy of their military orders.
- For leases with monthly rent payments, termination is typically 30 days after the first date on which the next rental payment is due. This applies for payments due after the notice is delivered.
- Landlords cannot charge early termination fees or penalties. However, the service member is responsible for rent due up to the termination date and any damages beyond normal wear and tear.
- Termination by the service member also terminates the lease obligations for dependents under the lease.
Service members and their families cannot be evicted from a residence with a monthly rent below a certain amount (adjusted annually by DoD) without a court order, regardless of the lease terms. If military service materially affects their ability to pay rent, a court may delay eviction proceedings for 90 days or adjust lease obligations.
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SCRA Protections For Cell Phone Contracts
The SCRA allows service members to terminate cell phone contracts without early termination fees under specific conditions. The contract must have been entered into before the service member received military orders to relocate for 90 days or more to a location that does not support the contract.
- The service member must deliver written or electronic notice of intent to terminate and a copy of military orders to the service provider.
- Providers cannot impose early termination charges.
- Any advance payments covering periods after the effective termination date must be refunded within 60 days.
If the relocation is for three years or less, and the service member resubscribes within 90 days of returning, they can often keep their original phone number without reactivation fees.
Automobile Leases
Similar to residential leases, service members can terminate auto leases without penalty if they received the lease before entering active duty and are called to active duty for 180 days or longer, or receive a PCS outside the continental U.S. (OCONUS) or from OCONUS to CONUS.
Life Insurance
While service members have specific military life insurance (SGLI), the SCRA protects private life insurance coverage. Insurers cannot terminate coverage or require additional premiums if the service member is on active duty, nor can they restrict coverage for activities required by military service. (Note: This does not cover increases in premiums based on age in individual term policies.)
Storage Liens
Protection against foreclosure or enforcement of liens applicable to storage, repair, or cleaning of property during military service plus three months, without a court order.
Default Judgments
The SCRA protects against default judgments in civil cases if a service member is sued while on active duty and unable to appear in court.
Credit Reporting
Creditors cannot report adverse information to credit bureaus solely because a service member exercised their SCRA rights.
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About the author
Editor-in-Chief Joe Wallace is a 13-year veteran of the United States Air Force and a former reporter/editor for Air Force Television News and the Pentagon Channel. His freelance work includes contract work for Motorola, VALoans.com, and Credit Karma. He is co-founder of Dim Art House in Springfield, Illinois, and spends his non-writing time as an abstract painter, independent publisher, and occasional filmmaker.
