Two federal laws provide specific financial protections for active duty servicemembers and their families: the Servicemembers Civil Relief Act (SCRA) and the Military Lending Act (MLA). Understanding both is essential before deployment and during any transition period involving debt, housing, or new credit.

The Servicemembers Civil Relief Act (SCRA)

The SCRA (50 U.S.C. § 3901 et seq.) provides a range of financial and legal protections for active duty servicemembers. Per the Department of Justice, the SCRA's key protections include:

Interest rate cap: Debts incurred before entering active duty can be capped at 6% annual interest during the period of active duty service. This includes credit cards, mortgages, car loans, and student loans. To exercise this right, you must submit a written request to each creditor along with a copy of your military orders. The creditor must reduce the rate to 6% and cannot charge retroactive interest above that amount.

Eviction protection: Landlords cannot evict a servicemember or their dependents from a residence that rents for at or below a specific monthly threshold (adjusted annually per DOJ) without a court order. The court may grant a stay of the eviction for up to 3 months if the servicemember cannot appear due to military duties.

Lease termination: Servicemembers may terminate a housing or vehicle lease early without penalty when they receive deployment orders for 90 days or more, or when they receive PCS orders. Written notice and a copy of orders must be provided to the landlord or lessor.

Foreclosure protection: A court must be involved before a lender can foreclose on a servicemember's home if the mortgage was signed before active duty began. Courts have discretion to stay foreclosure proceedings during active duty and up to one year afterward.

Court proceedings: If a civil court case is filed against a servicemember who cannot appear due to military duties, the court must grant at least a 90-day stay of proceedings.

Storage liens: A storage company cannot enforce a lien on a servicemember's stored property during active duty and for 90 days afterward.

How to Invoke SCRA Protections

SCRA protections are not automatic for most benefits — you must assert them. To claim the 6% interest rate cap, send written notice to each creditor identifying the debt and requesting the rate reduction, include a copy of your military orders, and send the notice within the required timeframe. The Department of Defense maintains a website where servicemembers can download their own SCRA eligibility letter confirming active duty status.

The Military Lending Act (MLA)

While the SCRA addresses pre-existing obligations, the MLA governs new credit products offered to active-duty servicemembers, their spouses, and certain dependents. Per the CFPB, the MLA imposes specific requirements on lenders offering credit to covered borrowers.

MAPR cap: The MLA caps the total cost of credit — including interest, fees, and add-on products — at 36% MAPR for covered credit products. This cap applies to payday loans, vehicle title loans, installment loans, and credit cards offered to servicemembers.

Prohibited practices: Under the MLA, lenders cannot require servicemembers to submit to mandatory arbitration for covered loans, cannot require a waiver of legal rights, and cannot condition a loan on a military allotment as the repayment method.

Required disclosures: Lenders must disclose the MAPR, a description of payment obligations, and the servicemember's right to legal protections before closing on a covered loan.

Who Is Covered by the MLA?

The MLA covers active-duty servicemembers, their spouses, and certain dependents. It does not cover veterans who have separated from service. The MLA is a protection for current servicemembers, not a permanent benefit that follows you after separation.

After Separation

SCRA protections that applied during active duty generally end at separation, though some provisions extend for a period after discharge. The MLA does not apply to veterans once they separate. File complaints about SCRA or MLA violations with the CFPB's Office of Servicemember Affairs at consumerfinance.gov.

KEY TAKEAWAYS:

  • The SCRA caps interest on pre-service debts at 6% during active duty and provides eviction, foreclosure, lease termination, and court proceeding protections — but you must assert them in writing
  • The MLA caps the total cost of new credit products at 36% MAPR for active-duty servicemembers, spouses, and certain dependents
  • SCRA protections require written notice to creditors with a copy of orders — they are not automatic
  • The MLA does not protect veterans after separation from service — it applies only to active-duty members and covered dependents
  • File SCRA or MLA complaints with the CFPB's Office of Servicemember Affairs at consumerfinance.gov

End of StewardWise.io KB Content Library — 25 Articles All sources: .gov or verified government-backed institutions only Each article includes educational disclaimer as required by StewardWise editorial policy These articles are ready for admin import into the StewardWise KB database