The Service Members Civil Relief Act (SCRA) was passed in 2003. The SCRA allows individuals to break a lease when they go onto active duty if the lease was entered into before going onto active duty. Additionally, the act allows a service member to terminate a residential lease entered into while in the military if the member receives permanent change of station (PCS) orders, or orders to deploy for a period of not less than 90 days.

This protection covers “lease of premises occupied, or intended to be occupied, by a service member or a service member’s dependents for a residential, professional, business, agricultural, or similar purpose.”

To break a lease under these provisions, the service member must make the request in writing and must include a copy of their orders (orders placing them on active duty, PCS orders, or deployment orders). The member may deliver the notification by hand, by commercial carrier, or by mail (return receipt requested).

The termination date for a lease that requires monthly rent, the earliest termination date is 30 days after the first date on which the next payment is due, following proper notification of termination of lease. For example, if Sgt John pays his rent on the first of every month, and he notifies his landlord (and gives the landlord a copy of his orders), on the 18th of June, that he wishes to terminate the lease under the provisions of the SCRA, the earliest termination date August 1 (the next rent is due July 1, and 30 days later is August 1).

If it’s some other arrangement, other than monthly rent, the earliest termination of the lease is the last day of the month, following the month in which the notice is given. So, if notice is given on June 20, the earliest termination date would be July 31.

What if there are other people on the lease? Who has to make up the rent? Not the landlord, that’s for sure. Also, not the service member. The SCRA is silent in this area. In most states, the burden would likely fall on the remaining roommates. They would either have to make up the military member’s share of the rent or find another roommate. The SCRA gives the military member the right to terminate his/her own portion of the lease early, but the law does not require the landlord to decrease the amount of total rent for the property, nor does the law protect remaining non-military roommates (unless, of course, they are the member’s legal dependents).

If a service member’s military obligation has affected his/her ability to pay on financial obligations such as credit cards, loans, mortgages, etc., the service member can have his/her interest rate capped at 6% for the duration of the service member’s military obligation.

Qualifying debts are debts that were incurred by the service member, or the service member and their spouse, jointly, before coming on active duty. Debts entered into after going on active duty are not so protected.

Notice that this particular provision of the act only applies if a service member’s military service affects their ability to pay. However, the burden is on the creditor to seek relief in court if the creditor believes that the service member’s military career does not materially affect his/her ability to pay. The creditor must comply unless he/she gets a court order stating otherwise.

In order for an obligation or liability of a service member to be subject to the interest rate limitation, the service member must provide to the creditor written notice and a copy of the military orders calling the service member to military service and any orders further extending military service, not later than 180 days after the date of the service member’s termination or release from military service.

Upon receipt of notice, the creditor must reduce the interest rate to a maximum of 6 percent, effective the first day of active duty (even if the service member makes the request at a later time).

The law unambiguously states that no interest above 6 percent can accrue for credit obligations while on active duty (for debts incurred before going onto active duty), nor can that excess interest become due once the service member leaves active duty (that was a “trick” some creditors tried under the old law) – instead that portion above 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period.

A service member or dependent may, at any time during his/her military service, or within 6 months thereafter, apply to a court for relief of any obligation or liability incurred by the service member or dependent prior to active duty or in respect of any tax or assessment whether falling during or prior to the service member’s active military service. The court may grant stays of enforcement during which time no fine or penalty can accrue.

Additionally, the act prevents service members from a form of double taxation that can occur when they have a spouse who works and is taxed in a state other than the state in which they maintain their permanent legal residence. The law prevents states from using the income earned by a service member in determining the spouse’s tax rate when they do not maintain their permanent legal residence in that state.

Source: IRS Publication 3 is the Armed Forces Tax Guide

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