Skip to main content

Search

Collection Actions: 7.5.3.1 Automatic Stay of at Least Ninety Days

The SCRA gives a servicemember who has received actual notice of a civil action or proceeding other than an eviction87 the right to an automatic, non-discretionary stay of at least ninety days upon request.88 The stay under section 3932 is applicable regardless of the servicemember’s status as defendant or plaintiff.89

Collection Actions: 7.5.5 Deferring Enforcement of Obligations During Active Duty

Servicemembers have the right to apply to a court to stay enforcement of an obligation for the period of active duty, plus a period of time after the servicemember is released from military service.112 In the case of a contract to purchase real estate or a contract secured by a mortgage on real estate, the post-military service stay may last for a period equal to the remaining loan term plus the length of the military service, and the balance must be paid in equal installments at the contract interest rate during this combined period.

Collection Actions: 7.5.6 Tolling of Statutes of Limitations

Section 3936 of the SCRA prohibits counting the period of active duty toward any time limit for bringing any action or proceeding in a court, board, bureau, commission, department, or other agency of a state, a political subdivision of a state, or the federal government.129 Thus, the statute of limitations is tolled not only for lawsuits but also for zoning appeals, unemployment compensation appeals, and similar administrative matters while the servicemember is on active duty.130

Collection Actions: 7.6.6 Protections Against Execution Upon Judgments

The SCRA gives courts the authority to stay execution of any judgment against a servicemember and to vacate or stay any prejudgment or postjudgment attachment or garnishment of property.219 In addition, the personal assets of a servicemember are not available for satisfaction of a trade or business debt for which the servicemember is personally liable.220

Collection Actions: 7.6.7 Automobile Leases

Section 3955 of the SCRA gives the servicemember the option of terminating a vehicle lease, without penalty, upon entering active duty.221 This right also applies if, after executing the lease, the lessee enters active duty under a call or order for 180 days or more.222 Termination of a lease under section 3955 also terminates the obligations of a servicemember’s dependent under the lease.223

Collection Actions: 7.6.8 Termination of Telephone Service Contracts

Servicemembers may request the termination of telephone service contracts—including those for cellular service—any time after they receive orders that require relocation for a period of ninety days or more, if the new location does not support the contract.233 This right applies to contracts entered into prior to receiving military orders to relocate. The servicemember’s written or electronic request to terminate must include a copy of the orders.234

Collection Actions: 7.6.9.1 Eviction

The pre-2003 version of the SCRA prohibited non-judicial eviction of servicemembers or their dependents from rental property if the rent did not exceed $1200 per month and allowed the court to stay such an eviction up to ninety days.237 As revised in 2003, the law covered leases up to $2400 per month and includes an annual inflation adjustment.238 It also allows the court to “adjust the obligation under the lease to preserve the interests of all parties,” presumably meaning that the court ca

Collection Actions: 7.6.9.2 Right to Terminate a Lease

Servicemembers also have the right to terminate a lease of premises that they or their dependents occupy or intend to occupy for residential, professional, business, agricultural, or similar purposes.241 This right applies to leases signed before the servicemember enters active duty.242 In addition, it applies to leases signed after entering active duty if the servicemember executes the lease and thereafter receives military orders for a permanent change of station or to deploy with a milita

Collection Actions: 7.7 Prohibitions Against Retaliation and Waivers

The Servicemembers Civil Relief Act (SCRA) prohibits issuing an adverse credit report, denying, revoking, or changing the terms of a credit transaction, or taking certain other specified adverse actions because of the assertion of rights under the Act.247 While the SCRA allows servicemembers to waive any and all rights provided under the Act,248 it restricts waivers of the protections relating to modification, termination, or cancellation of contracts, leases, bailments, or mortgage debts, o

Collection Actions: 7.8 Remedies for Violations

The 2010 amendments to the Servicemembers Civil Relief Act (SCRA) clarified the private cause of action, provided explicit authority for the attorney general to prosecute civil cases, and established a fee-shifting provision for self-enforcement.256 The statute also allows a servicemember to recover “any appropriate equitable or declaratory relief” and “all other appropriate relief, including money damages.”257

Collection Actions: 14.3.8.3 Bank Accounts

While it is clear that to execute upon tangible property, such as land or a vehicle, the creditor must use the courts of the state where the property is located, the issue becomes more complicated with a bank account. Creditors may argue that the location of the branch bank where the debtor maintains the bank account is not dispositive. Instead, they may argue that execution can issue in any state where any branch or office of the debtor’s bank is located, and that the bank then must restrain all the debtor’s accounts even if they are located in other states (or countries).

Collection Actions: 14.3.8.4 Wages

Earned but unpaid wages, like bank accounts, are not clearly “located” in a specific state like tangible property is. The question then is whether a court can issue a wage garnishment order that affects wages the consumer earns in a different state.

Collection Actions: 14.3.8.5 Application of the FDCPA’s Venue Abuse Prohibition

The Fair Debt Collection Practices Act (FDCPA) may provide a remedy in some cases in which a creditor files a garnishment action in a judicial district other than where the consumer resides or entered into the contract. The FDCPA provides that, in the case of an action that does not involve enforcing a security interest in real property, “[a]ny debt collector who brings any legal action on a debt against any consumer shall . . .

Collection Actions: 14.3.9.2 FTC Prohibition of Waiver of Exemptions

The FTC’s Credit Practices Rule prohibits lenders and retail installment sellers from including waiver of exemption clauses in their consumer contracts.201 The rule prohibits a clause that “[c]onstitutes or contains an executory waiver or a limitation of exemption from attachment, execution, or other process on real or personal property held, owned by, or due to the consumer.” There is an exception that makes it clear that this provision does not prohibit security interests in exempt property, but the effect of this exception is limited by

Collection Actions: 14.5.3 Prompt Post-Garnishment Notice Is Required

Courts applying the Matthews analysis have almost uniformly ruled that state laws violate due process when they allow garnishment without any notice (other than the actual notice the debtor gets upon, for example, receiving a smaller paycheck).252 The reason for this is fairly clear: a notice requirement places little burden on a creditor and gives the debtor an opportunity to challenge any improper garnishment.