It’s a stressful question for any member of the National Guard: “Can my car be repossessed while I’m serving?” The good news is that the Servicemembers Civil Relief Act (SCRA) offers significant protections to National Guard members and other service members to prevent vehicle repossession during periods of military service. Understanding your rights under the SCRA is crucial to safeguarding your assets while you focus on serving your country.
SCRA Protection Against Repossession
The SCRA is a federal law designed to ease financial and legal burdens on service members during periods of active duty. One key protection is related to vehicle repossession. Specifically, the SCRA may protect you from having your car repossessed if you meet certain conditions:
- Entering Active Duty: The protection generally applies when you enter active duty, which includes Title 10 and Title 32 orders for National Guard members, for a period of more than 30 days.
- Loan Origination Before Active Duty: The loan for the vehicle must have been originated before your period of active military service. Loans taken out after entering active duty are typically not covered by this specific SCRA protection against repossession.
- Installment Payments Made: You must have made at least one installment payment on the loan before entering active duty.
If you meet these conditions, a lender generally cannot repossess your vehicle without a court order. This crucial provision gives you time to address financial challenges without the immediate threat of losing your car while you are focused on your military duties.
Waivers and Your SCRA Rights
It’s important to be aware that your SCRA rights can be waived. According to the SCRA, any waiver must be in writing and signed by you during or after your period of military service. A waiver signed before entering military service is not considered valid.
Lenders might present you with documents that include waivers, and it’s essential to read them extremely carefully. Never sign a waiver without fully understanding its implications. Before signing any document that includes a waiver of your SCRA rights, it is strongly advised to seek advice from a qualified attorney who can explain your rights and the consequences of signing such a waiver.
Military Lending Act (MLA) and Financial Protections
Beyond the SCRA, the Military Lending Act (MLA) provides additional financial safeguards for active-duty service members, including National Guard members and reservists on active-duty orders for more than 30 days. The MLA focuses on protecting service members from predatory lending practices by setting a rate cap of 36% for the Military Annual Percentage Rate (MAPR) on many types of credit.
The MLA covers various forms of credit, including:
- Credit cards
- Vehicle title loans
- Unsecured open-end lines of credit
- Installment loans
It’s important to note that loans to purchase a home, vehicle loans secured by the vehicle itself, and loans secured by real property are generally not covered by the MAPR cap of the MLA.
The MLA also includes important lender restrictions:
- Lenders must disclose the MAPR both orally and in writing.
- Lenders cannot require you to waive your legal rights.
- Lenders cannot force you into arbitration in case of disputes.
- Lenders cannot demand repayment through a military allotment.
Seeking Financial Guidance
Navigating your financial rights as a member of the National Guard can be complex. It’s always a good idea to proactively manage your finances and understand the protections available to you.
For further information and personalized assistance, consider utilizing these resources:
- Installation Personal Financial Manager: Contact your installation’s personal financial manager for expert financial guidance.
- Personal Financial Counselor: Access free financial counseling services through Military OneSource or directly at personal financial counselor.
By understanding your rights under the SCRA and MLA, and by seeking professional financial counseling when needed, you can better protect your financial well-being while serving in the National Guard.
