Bankruptcy and Members of the Military

Special protections exist for members of the military who are faced with bankruptcy. A federal law called the Servicemembers' Civil Relief Act is intended to strengthen national defense by giving servicemembers certain protections in civil actions. Following is an overview of the Servicemembers' Civil Relief Act and military members' rights under the Act.

The Servicemembers' Civil Relief Act


The SCRA and Bankruptcy

The language of the SCRA states that it is generally applicable in any action or proceeding commenced in any court. Therefore, the SCRA applies to all actions or proceedings before a bankruptcy court. The default judgment protections of the SCRA also clearly apply in bankruptcy cases. SCRA protections are described in-depth below.

Protections Under the SCRA

There are three primary areas of coverage under the SCRA:

  1. Protection against the entry of default judgments;
  2. Stay of proceedings where the servicemember has notice of the proceeding; and
  3. Stay or vacation of execution of judgments, attachments and garnishments.

Protection Against Entry of Default Judgments

The SCRA establishes certain procedures that must be followed in all civil proceedings in order to protect servicemember defendants against the entry of default judgements. If a defendant is in default for failure to appear in the action filed by the plaintiff, the plaintiff must file an affidavit1 with 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. 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 servicemember 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 SCRA.

Stay of Proceedings Where Servicemember has Notice


Stay or Vacation of Execution of Judgements, Attachments and Garnishments


Additional Protections: Evictions

The SCRA also provides in most instances that a landlord cannot evict a servicemember or dependents 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. If the court stay the eviction proceeding, it may provide equitable relief to the landlord by ordering garnishment of a portion of the servicemember's pay. Under the SCRA a servicemember may terminate residential leases if he or she is transferred after the lease is made.

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