New York City Debt Collection Defense Attorney

Military Personnel Given Extra Protection Against Default Judgments

If you've served our country at any time and find yourself of the wrong end on a frozen bank account, wage garnishment, or debt lawsuit, you should investigate your rights aimed at seeking extra relief against the lawsuit or judgment.

The Servicemembers Civil Relief Act (SCRA) gives members of the armed forces extra protection against judgments arising from debt-collection lawsuits. Armed forces include the Army, Navy, Air Force, Marine Corps, and Coast Guard.

SCRA distinguishes cases when the servicemember made an appearance in the case and when she did not. This blog entry focuses on the latter: when the servicemember does not make an appearance and thereby suffers a default judgment. With every application for a default judgment, a creditor must file an affidavit of non-military service. Creditors who fail to file this affidavit can be sanctioned, and the default judgment is voidable (deemed unenforceable).

Since the majority of our clients approach us under a threatened garnishment or bank restraint, we pay special attention to the courts' power to stay (temporarily stop) and vacate (overturn) those judgments under 50 U.S.C. § 524.[1]

Aside from the procedural protections of staying or vacating default judgments, under 50 U.S.C. § 527[2] the courts are required to limit the interest rate to six percent on any obligation or liability incurred by any servicemember before active duty.

Contact us right away. My experience shows that collection attorneys and courts pay special attention to these rights. Our law firm sure does.

[1] § 524. Stay or vacation of execution of judgments, attachments, and garnishments

(a) Court action upon material affect determination

If a servicemember, in the opinion of the court, is materially affected by reason of military service in complying with a court judgment or order, the court may on its own motion and shall on application by the servicemember--

(1) stay the execution of any judgment or order entered against the servicemember; and

(2) vacate or stay an attachment or garnishment of property, money, or debts in the possession of the servicemember or a third party, whether before or after judgment.

(b) Applicability: This section applies to an action or proceeding commenced in a court against a servicemember before or during the period of the servicemember's military service or within 90 days after such service terminates.

[2] (a) Interest rate limitation

(1) Limitation to 6 percent

An obligation or liability bearing interest at a rate in excess of 6 percent per year that is incurred by a servicemember, or the servicemember and the servicemember's spouse jointly, before the servicemember enters military service shall not bear interest at a rate in excess of 6 percent--

(A) during the period of military service and one year thereafter, in the case of an obligation or liability consisting of a mortgage, trust deed, or other security in the nature of a mortgage; or

(B) during the period of military service, in the case of any other obligation or liability.

(2) Forgiveness of interest in excess of 6 percent

Interest at a rate in excess of 6 percent per year that would otherwise be incurred but for the prohibition in paragraph (1) is forgiven. 50 App. U.S.C.A. § 527