SCRA rights: the 6% interest cap, ending a lease or phone contract, and foreclosure protection

What is the SCRA?

The Servicemembers Civil Relief Act is a federal law that eases the money and legal pressures of military service. Veterans Day is Wednesday, November 11, and it's a good moment for servicemembers and their families to check they're using it. Its protections can save thousands of dollars.

At a glance

• 6% interest cap on debts taken out before active duty, including credit cards, car loans, student loans and mortgages.
• Interest above 6% is forgiven, not just postponed, and fees count as interest.
• Leases: you can end a qualifying home or car lease early without an early termination charge.
• Phone, internet and gym contracts: can be ended without an early termination fee if your orders move you for 90 days or more to a place the service doesn't cover.
• Foreclosure: a pre-service mortgage can't be foreclosed without a court order during service and for one year after.

The 6% interest cap

Under 50 U.S.C. 3937, a debt you took on before military service, alone or with your spouse, can't carry more than 6% a year while you serve. For mortgages the cap lasts for your service and one year after. The law says interest above 6% is "forgiven," and your monthly payment must drop to match. It also counts "service charges, renewal charges, fees, or any other charges" as interest, so a lender can't swap interest for fees.

To use it, send the lender a written notice with a copy of your orders, or a letter from your commanding officer. You can do this while on active duty or up to 180 days after you're released. Once the lender has your notice, the cap applies back to the date you were called to service.

Leases and phone contracts

Under 50 U.S.C. 3955, you can end a home lease you signed before entering service. If you signed while serving, you can end it after orders for a permanent change of station or a deployment of at least 90 days. Car leases qualify after orders of 180 days or more, a move from the continental US to an overseas post, or a deployment of 180 days or more. You give written notice with your orders. For a monthly-rent lease, it ends 30 days after the next rent due date. The landlord can't charge an early termination fee and must refund rent paid in advance within 30 days.

Under 50 U.S.C. 3956, you can end a cell phone, home phone, internet, TV, gym or home security contract signed before you got orders, if the orders move you for at least 90 days to a place that doesn't support the service. There's no early termination charge, and the provider must refund advance payments within 60 days. If the move is three years or less, you can keep your phone number when you sign back up within 90 days of returning.

Foreclosure and eviction

Under 50 U.S.C. 3953, a sale or foreclosure on a pre-service mortgage during service, or within one year after, isn't valid without a court order. For rented homes, a landlord needs a court order to evict a servicemember or their dependents when rent is below a yearly limit. The Defense Department adjusts that monthly limit for inflation each year and publishes it in the Federal Register.

A worked example

This is an illustration, not a real case.

Jordan has a $9,000 credit card balance at 24% APR when called to active duty. At 24%, interest costs about $180 a month. At 6%, it's about $45. Over a 12-month deployment, that's roughly $1,620 in interest forgiven. If Jordan also leaves a $1,500-a-month apartment with ten months still to run, the lease ends 30 days after the next rent date instead of running to its end.

What to do now

1. List debts you had before service: cards, car loans, student loans and mortgages.
2. Write to each lender asking for the SCRA rate, with a copy of your orders. Keep proof of sending.
3. Check the 180-day deadline if you've recently left active duty.
4. Give written notice with orders to end a lease or phone contract, and return any provider equipment.
5. Get free help from your base legal assistance office before signing any waiver.
6. Report problems to the CFPB or the Justice Department's servicemembers unit.

Questions

Does the cap cover debts taken out during service?

No. The 6% cap only covers debts from before active duty. Other rules, such as the Military Lending Act, cover some later borrowing.

Can a lender report me for using the SCRA?

The Consumer Financial Protection Bureau (CFPB) says a lender can't send negative information to a credit bureau because you're using your SCRA rights.

Ways to save

If you've ended a phone contract before a move, a no-contract plan can be simpler. Promo Magpie lists offers from Twigby and Boost Mobile. For kit and gear, see current deals at JDM Military.

Sources: CFPB: The Servicemembers Civil Relief Act, 50 U.S.C. 3937: maximum rate of interest, 50 U.S.C. 3955: termination of leases, 50 U.S.C. 3956: termination of telephone and other service contracts, 50 U.S.C. 3953: mortgages and foreclosure, Federal Register, March 10, 2026: housing price inflation adjustment, Justice Department: SCRA