Special protections exist for members of the military who are faced with bankruptcy. A federal law called the Servicemembers' Civil Relief Act is intended to strengthen national defense by giving servicemembers certain protections in civil actions. Following is an overview of the Servicemembers' Civil Relief Act and military members' rights under the Act.

The Servicemembers' Civil Relief Act

By providing for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect servicemembers during their military service, the SCRA enables servicemembers to focus their energy on the defense of the United States. Among other things, the SCRA allows for forbearance and reduced interest on certain obligations incurred prior to military service, and it restricts default judgments against servicemembers and rental evictions of servicemembers and all their dependents. The SCRA applies to all members of the United States military on active duty, and to U.S. citizens serving in the military of United States allies in the prosecution of a war or military action. The provisions of the SCRA generally end when a servicemember is discharged from active duty or within 90 days of discharge, or when the servicemember dies. Portions of the SCRA also apply to reservists and inductees who have received orders but not yet reported to active duty or induction into the military service.

The SCRA and Bankruptcy

The language of the SCRA states that it is generally applicable in any action or proceeding commenced in any court. Therefore, the SCRA applies to all actions or proceedings before a bankruptcy court. The default judgment protections of the SCRA also clearly apply in bankruptcy cases. SCRA protections are described in-depth below.

Protections Under the SCRA

There are three primary areas of coverage under the SCRA:

1. Protection against the entry of default judgments;
2. Stay of proceedings where the servicemember has notice of the proceeding; and
3. Stay or vacation of execution of judgments, attachments and garnishments.