The SCRA and Bankruptcy

The Servicemembers Civil Relief Act is a federal law that provides active-duty members of the U.S. military with important protections in civil matters. Certain sections apply even to those who have not yet been officially inducted into military service as well as reservists who have received military orders but not commenced active duty yet. With over two million American citizens presently serving in the military, there is widespread use of the protections that the act affords.

The SCRA mandates the temporary suspension of judicial and administrative actions that could be detrimental to the person during their period of military service. The rationale is that these legal situations and their associated court appearances can detract from the person’s ability to protect the nation.

Does the SCRA apply to bankruptcy proceedings?

The principal safeguards that the SCRA provides to military personnel include:

  • Stay of proceedings when the person has received notice. The defendant must provide the court with a document (written by themselves or their commanding officer) stating that their active-duty status prevents them from appearing in court.
  • Protection from default judgments. Plaintiffs must provide an affidavit specifying whether the defendant is in the military. If the defendant is on active duty, there can be no default judgment until an attorney is appointed for them. If this attorney cannot reach them, any steps taken by the attorney are not binding on the servicemember.
  • Staying or vacating the execution of attachments, garnishments, and judgments.

The language of the SCRA (see 50 U.S.C. app. §§ 521, 522 and 524), the Federal Rules of Bankruptcy Procedure and the Federal Rules of Civil Procedure all indicate that the above protections extend to actions that originate in bankruptcy court.

Trying to force an active-duty servicemember into bankruptcy court for adversary proceedings or a contested matter without first providing an affidavit regarding military service is a serious offense under the SCRA, punishable by fines and criminal penalties. Once a debtor’s military status is confirmed, they are entitled to a 90-day stay of proceedings. If the person remains on active military status after this period, the court may opt to grant an appropriate extension of the stay.

If you have questions about how your military status will impact a Chapter 7 or Chapter 13 filing, contact consumer rights attorney Bryce Bell at Bell Law today. Attorney Bell is committed to protecting the rights of our servicemembers and will counsel you on the appropriate steps for all situations involving the SCRA and Bankruptcy. To schedule a case review, please call us at (816) 886-8206.

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