Marrying someone in the military means getting used to uncertainty. Not just uncertainty about your spouse's safety but about her financial affairs as well. Congress passed a law that helps diminish some of this uncertainty. It may help your military spouse hold onto her car after defaulting on the loan.
Servicemembers Civil Relief Act
The Servicemembers Civil Relief Act is a law designed to protect members of the military from the financial mess that can result from being called away from home to serve on active duty. Congress passed SCRA in 2003 to replace the similarly focused Soldiers' and Sailors' Civil Relief Act of 1940. SCRA limits the amount of interest lenders may charge military personnel, suspends certain court actions and restricts evictions. It's possible for military personnel to waive their SCRA protection, so check your spouse's loan paperwork to ensure her protection is still in tact.
Installment Contract
Your military spouse's car loan is considered an installment contract. An installment contract generally is an agreement to pay money in fixed increments. SCRA may prohibit your spouse's lender from exercising rights, such as repossession, without first obtaining a court order. The court may stay, or suspend, its decision to issue a court order while your spouse is away. To obtain this protection, however, your spouse must have been paying the car loan before she entered the military. She must also request that the court stay its decision to enter the order.
Requirements
Your spouse must be on active duty to qualify for SCRA protection. This extends to members of the National Guard and Reserve called on federal active duty. It does not, however, extend to National Guard members called on state, rather than federal, duty. SCRA also doesn't apply if your spouse is retired from the military. Generally, your spouse's SCRA protection also extends to you.
Consequences
Your spouse's car lender could face severe penalties for violating SCRA. One penalty is money damages based on a wrongful conversion theory. Wrongful conversion generally is defined as unlawfully taking another person's property with the intent of permanently or temporarily depriving her of that property. Another penalty is jail time. Your spouse's creditor could face up to one year in jail for violating SCRA because doing so is a misdemeanor.
Warning
SCRA will not allow your military spouse to get out of paying the amount she owes on her car loan, it will simply give her additional time to return and properly manage her financial affairs. Accordingly, if she wants to keep the vehicle, she must, at minimum, come up with the funds to do so.
0 comments:
Post a Comment