What if I am called to active military service?
By Joseph A. Ferrise, Staff Attorney for Chapter 13 Office
The Soldiers' and Sailors' Civil Relief Act (SSCRA) is found at 50 U.S.C. app. §§ 501 et seq. The purpose of the SSCRA is to promote national defense by giving service members certain unique protections in civil actions. By providing for the temporary suspension of judicial and administrative proceedings and transactions that may adversely affect service members during their military service, the SSCRA enables service members to focus their energy on the defense of the United States. Among other things, the SSCRA allows for forbearance and reduced interest on certain obligations incurred prior to military service, and it restricts default judgments against service members and rental evictions of service members and all their dependents. The SSCRA 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 SSCRA generally end when a service member is discharged from active duty or within 90 days of discharge, or when the service member dies. Portions of the SSCRA also apply to reservists and inductees who have received orders but not yet reported to active duty or induction into the military service.
General Provisions
There are three primary areas of coverage under the SSCRA: (1) protection against the entry of default judgments (see 50 U.S.C. app. 521); (2) stay of proceedings where the service member has notice of the proceeding (see 50 U.S.C. app. 522); and (3) stay or vacation of execution of judgments, attachments and garnishments (see 50 U.S.C. app. 524.)
The language of the SSCRA states that it is generally applicable in any civil action or proceeding commenced in any court. 50 U.S.C. app. §§ 521, 522 and 524. Therefore, absent contravening language with respect to bankruptcy proceedings, the SSCRA applies to all actions or proceedings before a bankruptcy court.
Protection Against Default Judgments
Section 521 of the SSCRA establishes certain procedures that must be followed in all civil proceedings in order to protect service member defendants against the entry of default judgments. These procedures are discussed below.
If a defendant is in default for failure to appear in the action filed by the plaintiff, the plaintiff must file an affidavitwith the court before a default judgment may be entered. The affidavit must state whether the defendant is in the military, or that the plaintiff was unable to determine whether the defendant is in the military. Often the service member's commanding officer will write a letter to the court and/or the plaintiff's attorney stating that he or she is unavailable due to military commitments.
Other issues to consider:
- If, based on the filed affidavits, the court cannot determine whether the defendant is in the military, it may condition entry of judgment against the defendant upon the plaintiff's filing of a bond. The bond would indemnify the defendant against any loss or damage incurred because of the judgment if the judgment is later set aside in whole or in part.
- The court may not order entry of judgment against the defendant if the defendant is in the military until after the court appoints an attorney to represent the defendant.
- If requested by counsel for a service member defendant, or upon the court's own motion, the court will grant a stay of proceedings for no less than 90 days if it determines that (1) there may be a defense and the defense cannot be presented without the defendant's presence; or (2) after due diligence the defendant's attorney has not been able to contact the defendant or otherwise determine if a meritorious defense exists.
- The court may, in its discretion, make further orders or enter further judgments to protect the rights of the defendant under the SSCRA.
- If a judgment is entered against the defendant while he or she is in military service or within 60 days of discharge from military service, and the defendant was prejudiced in making his or her defense because of his or her military service, the judgment may, upon application by the defendant, be opened by the court and the defendant may then provide a defense. Before the judgment may be opened, however, the defendant must show that he or she has a meritorious or legal defense to some or all of the action.
Stay of Proceedings Where Service member Has Notice
Outside the default context, and at any time before final judgment in a civil action, a person covered by the SSCRA who has received notice of a proceeding may ask the court to stay the proceeding. 50 U.S.C. app. § 522. The court may also order a stay on its own motion. 50 U.S.C. app. § 522. The court will grant the service member's stay application and will stay the proceeding for at least 90 days if the application includes: (1) a letter or other communication setting forth facts demonstrating that the individual's current military duty requirements materially affect the service member's ability to appear along with a date when the service member will be able to appear; and (2) a letter or other communication from the service member's commanding officer stating that the service member's current military duty prevents his or her appearance and that military leave is not authorized for the service member at the time of the letter. The court has discretion to grant additional stays upon further application.
Stay or Vacation of Execution of Judgments, Attachments and Garnishments
In addition to the court's ability to regulate default judgments and stay proceedings, the court may on its own motion and must upon application: (1) stay the execution of any judgment or order entered against a service member; and (2) vacate or stay any attachment or garnishment of the service member's property or assets, whether before or after judgment if it finds that the service member's ability to comply with the judgment or garnishment is materially affected by military service. 50 U.S.C. app. § 524. The stay of execution may be ordered for any part of the service member's military service plus 90 days after discharge from the service. The court may also order the service member to make installment payments during any stay ordered.
Additional Protections
Several additional rights are available under the SSCRA. For example, when an action for compliance with a contract is stayed under the SSCRA, contractual penalties do not accrue during the period of the stay. 50 U.S.C. app. § 523. The SSCRA also provides in most instances that a landlord cannot evict a service member or dependants from a primary residence without a court order. In an eviction proceeding, the court may also adjust the lease obligations to protect the interests of the parties. 50 U.S.C. app. § 531. If the court stays the eviction proceeding, it may provide equitable relief to the landlord by ordering garnishment of a portion of the service member's pay. 50 U.S.C. app. § 531. Under the SSCRA, a service member may terminate residential and automotive leases if he or she is transferred after the lease is made. 50 U.S.C. app. § 535. A court may also extend some of the protections afforded a service member under the SSCRA to persons co-liable or secondarily liable on the service member's obligation. 50 U.S.C. app. § 513.
Application of the SSCRA to Bankruptcy Proceedings
The language of the SSCRA states that it is generally applicable in any action or proceeding commenced in any court. 50 U.S.C. app. §§ 521, 522 and 524. Therefore, absent contravening language with respect to bankruptcy proceedings, the SSCRA applies to all actions or proceedings before a bankruptcy court.
The bankruptcy court clerk's office is aware of the requirement that the plaintiff must provide an affidavit stating whether the defendant is in the military before default may be entered against the defendant. Bankruptcy Procedural Forms B260, B261A, and B261B, and their accompanying instructions, may provide additional guidance concerning the applicability of the SSCRA to default judgments and related procedural requirements.
Creditors, along with the Chapter 13 Trustee, are still able to file claims and motions adverse to the debtor’s interests even when SSCRA protections are applicable. For debtors called to active military duty after their Chapter 13 plan has commenced, the Chapter 13 Trustee may be able to modify the plan to make a lesser payment to the Chapter 13 Trustee during the time of military service, or the debtor/service member may be able to postpone payments until such time that they are discharged from the military and are able to resume payments to the Chapter 13 Trustee. The Chapter 13 Trustee is not legally required to offer any additional protection to service members during the administration of their plan and may act adversely to the debtor/ service members’ interests and choose to move to dismiss cases for nonpayment of funds, failure to file or provide the Trustee with documents, and other failures to comply with the statutory requirements of a Chapter 13 plan. The SSCRA only provides protections that allow for the continuation of the actual hearings or judgments that could effectuate actions by creditors or the Chapter 13 Trustee. The debtor/service member must also show their military status inhibits or prevents them from preparing, maintaining or presenting an adequate defense to the pending action. The action may then be suspended until the debtor/ service member can appear and adequately defend the claim or claims against them.
Finally, the Chapter 13 Trustee cannot provide individual legal advice. It is in your best interest to consult legal representation on whether or not there are certain protections for you under the SSCRA during the pendency of your bankruptcy case.