WARNING. Some States have now written their own version of "The Act" that applies when the National Guard is called to active duty by the Governor of the State for a local emergency. Example: When the Federal Building was bombed in Oklahoma City, the Governor (not the US) activated the National Guard. A State form of the Soldiers’ and Sailors’ Act was written for their protection.
Mr. Eason pointed out that although "The Act" was written to protect the service member for debts incurred before being called into service, the courts at this time are most likely to be very lenient to activated service members.
Repossessing on Military Bases: Bases are maintaining very tight security. Gaining access is difficult and the ability to repossess is tightly controlled if allowed at all. Clients, when assigning an account for a service member, should be alerted of the problems involved and that a delay is likely.
The Soldiers’ and Sailors’ Civil Relief Act of 1940 (the Act), as amended, was passed by Congress to provide protection for individuals entering or called to active duty in the military service. It is intended to postpone or suspend certain civil obligations to enable service members to devote full attention to duty. The protections extend to all those who are not borrowers, but who are nevertheless obligated to pay the obligation of a service member prior to his entry into active duty. The Act does not apply to any written agreements entered into during or after the service member's period of active duty.
The Act applies to the United States, the states, the District of Columbia, all U.S. territories and in all courts therein, Reservists and the members of the National Guard are protected under the Act while on active duty. The protection begins on the date of entering active duty and generally terminates on the day active duty ends, unless otherwise specified in the statute.
Before a court can enter a default judgment (for failure to respond to a lawsuit or failure to appear at trial) against a military member, the person who is suing the service member must provide the court with an affidavit stating the defendant is not in military service. If the plaintiff files no affidavit and defendant is in the military, the court will appoint an attorney to represent the defendant's interests (usually by seeking a delay in the proceedings). The court may also require the plaintiff to secure bond to protect the defendant against harm. If a default judgment is entered against a military member, the judgment may be reopened if the member makes an application within 90 days after leaving active duty, shows he or she was prejudiced, and shows he or she had legal defense.
The court has direction to delay a civil court proceeding when the requirements of military service prevent the member from either asserting or protecting a legal right. The stay provisions are applicable during the period of service plus 60 days thereafter. Stays are normally granted unless the court finds the service member's ability to pursue or defend the action is not materially affected by the military service.
If the person against whom action brought is, or within the last 60 days was, in military service the court may stay the execution of or vacate judgments, court actions, attachments and garnishments. If the member requests a stay, it must be granted unless the court finds the member's ability to comply with the order or judgment is not materially affected by military status.
Member's time in service cannot be used to compute the time limits for bringing any action or proceeding by or against a member, whether in court or elsewhere. However, this does not apply to time limitations established under federal tax laws.
If, prior to entering service, a member incurs a loan or obligation with an interest rate in excess of six percent, the member will, upon application to the lender, not be obligated to pay interest in excess of six percent per annum during any part of the period of military service unless the court finds the member's ability to pay has not been materially affected.
Landlords cannot, unless they obtain permission from a court, evict dependents from rented housing where the rent does not exceed $1,200.00 per month. The Court may stay such proceedings for up to three months. Protection will likely be afforded in cases where the rental amount exceeds $1,200.00 when the agreed rent is modest and, taking inflation into account, is equal to or less than the $1,200.00 limit.
A lease for property occupied for dwelling, professional, business, agricultural or similar purposes may be terminated by a service member if both of the following two conditions are met:
1). The lease was entered into by the member before he or she started active duty; and 2). The leased premises have been occupied for the above purposes by the member or his/her dependents.
To terminate the lease, the member must deliver written notice to the landlord at any time after call to active duty or receipt of orders for active duty. The effective date of termination is determined as follows: Month to month rentals: the termination becomes effective 30 days after the first date on which the next rental payment is due subsequent to the date when the notice of termination is delivered. For example, if the rent is due on the first day of each month, and notice is mailed on August 1, then the next rental payment is due and payable on September 1. Thirty days after that date would be October 1, the effective date of termination. All other leases terms: the termination becomes effective on the last day of the month following the month in which proper notice is delivered. For example, if the lease requires a yearly rental and proper notice of termination is given on July 20, the effective date of termination would be August 31. The service member is required to pay rent for only those months before the lease is terminated. If rent has been paid in advance, the landlord must prorate and refund the unearned portion. If a security deposit was required, it must be returned to the service member upon termination of the lease.
A service member who, prior to entry into active duty, entered an installment contract for the purchase of real or personal property, will be protected under the Act if the service member's ability to make the payments is "materially affected" by the military service. The service member must have paid, prior to entry onto active duty, a deposit or installment under the contract. The seller is then prohibited from exercising any right or option under the contract to rescind or terminate the contract, to resume possession of the property for nonpayment of any installment due, or to breach the terms of the contract, unless authorized by the court. The court may order repayment of prior installments or deposits as conditions of terminating the contract and resuming possession of Property. The Court may also stay the proceedings unless the ability of the service member to pay is not materially affected by the military service.
The Act protects service members against foreclosures of mortgages, as long as the following facts are established:
1). The relief is sought on an obligation secured by a mortgage, trust deed, or other security in the nature of a mortgage on either real or personal property; 2). The obligation originated prior to entry on active duty; 3). The property was owned by the service member or family member prior to entry on active duty; 4). The property is still owned by the service member or family member at the time relief is sought; 5). The ability to meet the financial obligation is materially affected by the service member's active duty obligation.
Insured or beneficiary must make application to the Veterans Administration for protection. The service member's private life insurance policy is protected against lapse, termination, and forfeiture for nonpayment of premiums or if any indebtedness for period of military service plus two years. Payment of the premiums and interest are guaranteed by the United States and the service member will repay the United States. If the service member dies or insurance policy matures before the service member leaves active duty, the insurer may deduct the amount of the premium plus interest from the amount of the insurance.
A person called to active duty is entitled to reinstatement of any health insurance that was in effect on the day before such service commenced, and was terminated effective on a date during the period of such service.
Coverage of professional liability insurance shall be suspended upon written request to the insurance carrier. The insurance carrier may not require premiums be paid during the suspension. During such period o f suspended coverage, the insurance carrier shall either refund any amount paid for such coverage during that period or apply the premiums to any premiums after reinstatement. Coverage shall be reinstated upon written request to the carrier if written request is sent within 30 days of release from active duty.
The member's state of legal domicile may tax military income and personal property. Property cannot be sold to satisfy a tax obligation or assessment except upon application to the court. The Court then determines if stay is appropriate. Legal domicile is not changed solely by virtue of military service. Collection of income tax may be deferred for period of service plus six months if the ability to pay is impaired by military service.
A person may apply to the court at any time during his period of military service or for up to six months after, for relief in respect to any obligation or liability incurred prior to his period of military service or in respect to any tax or assessment, whether falling due prior to or during his period of military service. After notice and a hearing, the court may grant relief, unless the court determines that the ability of the service member to pay has not been materially affected by his military service. The relief will be:
For purchase of real estate: a stay of the enforcement during the service member's period of military service plus a period of time equal to the time from the termination of the military service to the end of the time remaining on the installment contract plus a period of time equal to the period of the service member’s time in service, if the service member pays all the unpaid balance and interest due at the termination of his service in equal installment payments. For other obligations: a stay of the enforcement during the service member's period of military service and for a period of time equal to the period of the service member’s time in service, if the service member pays all the unpaid balance and interest due at the termination of his service in equal installment payments.