If you are on active duty in the military, the Servicemembers' Civil Relief Act (“SCRA”) provides special protections to you in the event your lender tries to repossess your car. (Learn more about car repossession.)

• The lender may not repossess the car without a court order.
• If the court permits the repossession, the lender may be required to refund all of the payments you’ve made, or pay you the difference between the value of the car and the amount you owe.
• You can ask the court to stop the repossession for a period of time if your military service prevents you from making payments.

Who Qualifies for SCRA Protections?

To qualify for these protections, you must meet both of the following requirements:

• You purchased the car and made either a down payment or the first month’s payment before you began active duty.
• The loan is in your name alone, or in your name with another person. If the loan is in your spouse’s name only, these protections do not apply.

The Lender Must Get a Court Order Before Repossessing

Your lender may not repossess your car without a court order. This is an important protection. It means the lender must file a court case to get permission to take your car. You will receive notice of the lawsuit and an opportunity to respond.

It is essential that you respond to the lawsuit in order to preserve your rights. Doing nothing may result in the creditor receiving permission to repossess the car without having to offer you money that may be due to you under the SCRA.

A judge will decide whether or not the lender can repossess the car, and under what conditions.

The Lender May Be Required To Pay You

The judge has a great deal of discretion to decide whether your lender may repossess the car, and under what conditions.

If the judge does allow the repossession to go forward, the SCRA gives the judge full discretion to decide what is fair under the circumstances. The judge might do one of the following:

• Order the lender to pay you the difference between the value of the car and the amount you owe. Three independent appraisers appointed by the court will determine the car's value.
• Order the lender to refund any down payment, and any payments you have already made, before the lender can repossess the car.

You Can Request a Temporary Stop to the Repossession

You can ask the court to stop the repossession for a period of time if you can show that your military service prevents you from making payments. If you make the request, the court must grant it, but the length of the stay is up to the judge.

If you are making the request on your own, you should be very specific about why your military service prevents you from making payments. You should also explain how much time you need, and why you need it.

If the Lender Won’t Comply

Lenders who do not comply with the SCRA are subject to fines and imprisonment. If you think your lender is violating the law, you should contact your base’s JAG office or a private attorney

Other Protections Under the SCRA

The SCRA offers additional protections if you are unable to make your car payments while on active duty. If your car is leased, you may terminate the lease. You also may be able to reduce the interest rate on your car lease or car loan to 6%. See Reducing Interest Rates on Debts for Members of the Military to learn more.

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