During the ongoing government shutdown, active-duty service members are facing pay freezes (as of 10/07/25). The Servicemembers Civil Relief Act (SCRA), which usually provides financial protections for active-duty personnel during regular pay periods, can also serve as a legal safeguard during government shutdowns.
What is the SCRA?
The Servicemembers Civil Relief Act is a federal law designed to ease the financial and legal burdens on military personnel when they’re called to active duty. Some of the core protections include:
- Capping interest rates on pre-service debts at 6%
- Staying or postponing certain court judgments and proceedings (eviction, foreclosure, repossession)
- Protection against default judgments
- Restrictions on repossessing property (other than a mortgage) obtained prior to service without a court order
- Suspension or termination of certain leases (rental or auto) under qualifying conditions
- Special rules for mortgage foreclosures, and limits on enforcement actions while in service and for a period afterward
SCRA protections are not automatic. Service members sign up and and provide evidence (e.g. orders) to take advantage of many of these benefits.
Why SCRA Matters During the Current Government Shutdown
Active-duty service members are experiencing a delay in pay. Here’s how SCRA is relevant during the current shutdown:
- Shielding against eviction or foreclosure while payments are disrupted
If you were already behind or become unable to make a housing payment due to delayed funds, SCRA may allow a postponement of eviction or foreclosure proceedings by petitioning a court.
- Protecting repossession of personal property or vehicles
For installment contracts or lease agreements made before active duty, lenders generally can’t repossess the collateral (e.g. vehicle) without a court order, even if payments are late.
- Capping interest at 6% for qualifying pre-service debt
During your active duty, for debts that existed before you entered service, SCRA requires creditors to reduce interest to 6%, which can help reduce the financial burden when your cash flow is constrained.
- Preventing default judgments or attachments without proper notice
The act requires that courts or creditors verify a service member’s status before taking adverse actions like judgments or foreclosure.
- Extending protections even after military service ends
For some obligations (like mortgages), the protection against foreclosure extends up to 12 months after service; for many other debts, some protections extend up to 6 months post-service.
What SCRA Doesn’t Do (or Limitations to Be Aware Of)
While SCRA offers a large set of protections, it’s not a free pass. Here are some limitations:
- New debt incurred during service
Debts you take on after entering active duty generally do not qualify for the 6% rate cap or other protections.
- You must request or initiate protections
The law does not always act automatically. You often need to notify your creditor or the court and submit proof of your active duty status.
- Not all types of debt or obligations are covered
Some consumer, business, or statutory obligations may fall outside the scope of SCRA protections, especially if the debt was incurred after entering service.
- Court discretion and proof standards
Even when you ask for relief (stay, postponement, etc.), a court may require proof that the inability to pay is materially related to military service.
- Limited to certain time windows after service
Some protections expire after a set period post-service (e.g. 6 or 12 months).
- It doesn’t guarantee alternative income or replace lost pay
SCRA helps you manage liabilities, but it doesn’t compensate for missed wages or cover basic expenses directly.
Practical Steps You Can Take (Especially During Shutdowns)
To maximize the protections SCRA can offer during a shutdown (or any time while in active duty), here are some practical steps:
- Document and preserve proof of active duty orders
Keep a copy of your orders and any extensions in a safe place. You’ll often need them to assert SCRA rights.
- Notify creditors promptly
Send written notice of your service status to your mortgage company, auto lessor, credit card companies, and any relevant debt holders, along with a copy of orders. Ask them to apply your 6% interest cap and stay enforcement actions.
- Seek court stays early if facing eviction or foreclosure
If a landlord or lender begins proceedings, contact the court and request a stay or postponement under SCRA, asserting that service obligations are interfering with your ability to pay.
- Track all communications and responses
Keep records of letters, emails, and calls with creditors, courts, or agencies. If there’s a dispute later, documentation helps.
- Consult legal assistance or JAG office
Many military installations have Judge Advocate General (JAG) offices or legal assistance services that can help you assert SCRA protections.
- Plan ahead financially
Build an emergency fund, maintain lines of credit you could rely upon (ideally before entering active duty), and keep your finances as organized as possible so you’re less vulnerable during funding disruptions.
How Walters Financial Wellness can help you (Especially Under These Circumstances)
- Eligibility assessment
We’ll review your situation and determine which SCRA protections you’re eligible for, and which debts qualify.
- Letter and notification drafting
We can prepare formal notices or letters to creditors, lenders, or courts, properly invoking your SCRA rights.
- Debt mapping and prioritization
We’ll help you identify which obligations to prioritize (housing, auto, etc.) and outline a plan to minimize penalties.
- Communication support
If creditors or lenders contest your requests, we can help you respond and escalate appropriately.
- Budgeting under uncertainty
We’ll build or adjust your budget so you can weather cash flow disruptions (e.g. during a shutdown).
- Post-service transition assistance
After your service ends, we can guide you through the termination of SCRA protections, help with restoring conventional terms, and integrate your financial plan into civilian life.
If you’re a service member (or spouse/family) concerned about how a shutdown could affect your financial obligations, feel free to reach out. I’d be glad to walk you through your rights, options, and strategies.