Bankruptcy and Military Personnel


Members of the military facing bankruptcy have special protections. The Servicemembers Civil Relief Act, a federal law, is designed to help strengthen the nation’s defense and provide servicemembers with civil protections. Below is a summary of the Servicemembers Civil Relief Act, as well as the rights of military personnel under it.

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The Servicemembers Civil Relief Act

The SCRA allows servicemembers to concentrate their energies on defense of the United States by temporarily suspending judicial and administrative proceedings. The SCRA permits forbearance and reduced interest for certain obligations incurred before military service. It also restricts default judgments against servicemembers, as well as rental evictions for servicemembers and their dependents. The SCRA is applicable to all active-duty members of the United States Military and all U.S. citizens who are serving in the military or allies of the United States in the prosecution of wars or military actions. The SCRA’s provisions generally terminate when a servicemember is removed from active duty, within 90 days after discharge, or when the member dies. The SCRA also applies to reservists or inductees who are not yet reporting to active duty or induction.

Bankruptcy and the SCRA

The SCRA’s language states that it is applicable to all actions or proceedings that are brought before any court. The SCRA is applicable to any action or proceeding before a bankruptcy court. In bankruptcy cases, the default judgment protections provided by the SCRA are also applicable. Below are detailed descriptions of SCRA protections.

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  • Protections under the SCRA
  • The SCRA covers three areas:
  • Protection from default judgments being entered
  • If the servicemember is notified of the proceeding, the proceedings are stayed.
  • Stay or vacation for execution of attachments, judgments, and garnishments.
  • Protection against Entry of Default Judgments

To protect servicemember defendants from default judgments, the SCRA prescribes procedures for civil proceedings. A plaintiff must file an affidavit1 to the court if a defendant is not appearing in an action. The affidavit must indicate whether the defendant is serving in the military or whether the plaintiff was unable determine whether the defendant was in the military. If the defendant is serving in the military, the court cannot order the entry of judgment against him until the court has appointed an attorney to represent him. The court may grant a stay of proceedings for not less than 90 days to a defendant who is a servicemember. This can be requested by counsel or on its own motion. In its discretion, the court can make additional orders or enter judgments to protect defendant’s rights under the SCRA.

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When a Servicemember Notices, the Proceedings are to be stayed

A person who is covered by the SCRA and has been given notice of a proceeding can ask the court for a stay. A court can also order a stay of proceedings on its own motion. Id. Id. Additional stays may be granted by the court upon request.

Stay or vacation of execution of attachments, judges and garnishments

The court has the power to order stay proceedings and regulate default judgments. However, it can also stop execution of any court or order against a servicemember. It may also vacate or suspend any attachment or garnishment of a servicemember’s assets or property, regardless of whether or not the judgment was entered. A stay of execution can be granted for any portion of the military service of the servicemember, plus the 90-day period following discharge. The court can also order that the servicemember make installment payments during any stay.

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Additional Protections

In most cases, the SCRA provides that a landlord cannot expel a servicemember or their dependents from their primary residence without a court order. The court can also modify the lease obligations in an eviction proceeding to protect the rights of the parties. The court may order garnishment of some of the servicemember’s wages if it stops the eviction proceeding. The SCRA allows servicemembers to terminate residential leases if they are transferred after the lease has been made.