Soldiers' and Sailors' Civil Relief Act: a Legal Shield for Military Personnel
| Publication year | 1991 |
| Pages | 8 |
| Citation | Vol. 4 No. 4 Pg. 8 |
Kevin R. Anderson, J.D., and David K. Armstrong, J.D., CPA.
Due to the recent mobilization of military personnel for Operation Desert Shield and Operation Desert Storm, there has been increased interest in the Soldiers' and Sailors' Civil Relief Act of 1940 (50 U.S.C. App. §§501-591) (hereinafter the "Act"). This interest has come not only from military personnel but also from lenders, landlords, lessors and other credits who may be affected by the Act. The purpose of this article is to review some of the pertinent provisions of the Act and its application to military personnel and their creditors. This article also includes a discussion of the amendments to the Act recently passed by the House of Representatives.[1]
INTRODUCTION
The Act is intended to further the interests of the national defense by temporarily suspending the enforcement of certain civil liabilities of persons in active military service, thereby enabling such persons to devote their entire energies to the defense needs of the nation.[2] The Act is to be liberally construed to protect those who leave their personal affairs to serve in the nation's defense.[3] Service persons who incur financial obligations prior to entering military service, based on their earning capacity as a civilian, should not be prejudiced when they are called to active duty. While the Act does not relieve a service person's responsibility to repay debts, it does recognize that a call to active duty may reduce the service person's ability to keep current on such debts.
In general, a service person, whose ability to repay obligations is materially affected by a call to active duty, is entitled to a reduction of interest accrual, a stay against certain civil proceedings and actions, and a possible suspension of payments.
TEMPORARY STAY OF JUDICIAL ACTIONS
The 1991 Amendments create a temporary stay of "any judicial action or proceeding." Upon application by a qualified service person or his or her representative, the court shall enter such a stay which remains in effect "until a date after June 30, 1991." A qualified service person is one on active duty and who is serving outside the state in which the court having jurisdiction over the action or proceeding is located.
SECTION 511: PERSONS PROTECTED BY THE ACT
The Act applies to all persons on active duty in the National Guard, Reserves, Army, Navy, Marine Corps, Air Force, [4] or Coast Guard. The Act also applies to persons in training prior to induction into military service, [5] officers of the Public Health Service detailed for duty with the military service, and persons ordered to report for induction.[6] Certain provisions of the Act are made applicable to a service person's dependents[7] and to those secondarily liable on debts.[8]
The provisions of the Act take effect on the date the service person begins active duty and terminate on the date of the service person's release. Enlisted reservists receive protection as soon as they receive orders to report.[9]
SECTION 517: WAIVER OF PROTECTION UNDER THE ACT
A service person may waive the Act's protection by modifying or terminating contracts or by allowing a creditor to repossess or sell its collateral. The waiver must be made pursuant to a written agreement that is executed by the service person after the call to active duty.
SECTION 518: PROHIBITION AGAINST DISCRIMINATORY ACTIONS
The 1991 Amendments add §518 which provides that a stay, postponement or suspension made pursuant to the Act shall not, without regard to other considerations, serve as the basis for the following actions against the protected person:
(a) A determination by a lender that such person is unable to pay his or her obligations in accordance with their stated terms.
(b) A denial or revocation of credit.
(c) A change in the terms of an existing credit arrangement.
(d) A refusal to grant credit to such person in substantially the amount or on substantially the terms originally requested.
(e) The creation of an adverse credit report relating to such person.
(f) A refusal to insure such person.
SECTION 520: DEFAULT JUDGMENTS
Most attorneys are familiar with §520 which requires the filing of an affidavit stating that the defendant is not protected by the Act before seeking a default judgment. If the default judgment is entered during the period of active duty or 30 days thereafter, it can be set aside by a motion made within 90 days after termination of active duty providing the service person has a meritorious or legal defense to the action. However, this Section does not impair any right, title or interest acquired by a bona fide purchaser under the default judgment.[10]
SECTION 521: STAY OF CIVIL PROCEEDINGS
If the service person is involved in a civil proceeding during active duty, or within 60 days thereafter, either as a plaintiff or defendant, the civil action may be stayed by the court, sua sponte, or by motion of the service person, unless it appears that the service person's ability to defend or prosecute the action is "not materially affected by reason of his [or her] military service."
SECTION 522: STAY OF FINES AND PENALTIES
When an action on a contract is stayed by any provision of the Act, the accrual of fines and penalties is likewise stayed. Furthermore, if the service person fails to perform any obligation during the period of active duty which results in the imposition of a fine or penalty, a court may discharge such liability if it appears that the military service materially impaired the service person's ability to perform.
SECTION 523: STAY OF EXECUTION OF JUDGMENTS
During active duty or within 60 days thereafter, a court, sua sponte, or on the motion of the service person, may stay the execution of any judgment entered against the service person and vacate or stay any attachment or garnishment of the service person's property.
SECTION 524: DURATION OF STAYS
A stay of any action under the Act...
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