The Service Members Civil Relief Act (SCRA) was designed with the intention to help and protect military service members and their families in times of financial hardship, especially during active duty deployment. It has its roots in similar Civil War era legislation. For most, the SCRA probably seems to be straightforward, but for me, as a debt collection professional, it represents the convergence of two different thought processes.
I grew up in San Diego, CA, one of America’s great military towns, in a family with numerous military connections. During those years, I spent a lot of time in running around the streets of Coronado’s military housing. A beach was right across the street. From my perspective at that time—post-cold war but pre Desert Storm—the military was just a job. The adults I knew went to their squadron offices or the ships they were assigned to and then came back home at the end of the day. However, that military dynamic could also be very emotional. Westpac, for example, was a roughly six-month tour of the Western Pacific. There was some pomp and circumstance when the ships deployed and returned, and the emotions displayed by the families were unforgettable. Returning ships were happier times, obviously, because I always knew there were going to be parties and celebrating. As a child, that was always my favorite part. And all of the emotional highs and the lows of deployment during peace time were clearly significantly different for a military family than deployment is now during a time of conflict.
We need to not only be appreciative of the dedication and commitment the members of our military make to our country, but to be empathetic to their families as well. The easiest way for the collection industry to show our appreciation and empathy is to pay special attention to the SCRA. If someone is willing to leave the comforts of home to protect hundreds of millions of people they don’t know, being proactive with SCRA compliance is the least we can do.
Many service member debts qualify for protection under the SCRA and therefore debt collectors must meet complex legal requirements. Active duty service members have additional protections. If a company violates them, there are significant penalties. Work with an attorney or compliance expert to ensure that you fully understand all of the regulations.
The SCRA provides significant protections against wrongful foreclosures, court judgments, improper repossessions of vehicles, and denial of the guaranteed six percent interest rate the SCRA grants to service members on qualified loans. SCRA protection extends beyond our industry. Some of the benefits are reduced interest rates; delay of court proceedings, termination of leases, evictions and foreclosures; default judgment protection; life insurance and seizure of property protection, among other benefits.
Attorney General Eric Holder has made it clear that the Department of Justice and the newly formed Consumer Financial Protection Bureau will be active in enforcing the regulations. “Every day, our brave men and women in uniform make tremendous sacrifices to protect the American people from a range of global threats – and my colleagues and I are determined to ensure that they receive our strongest support here at home.”
Currently, the Collection Industry is very in tune with SCRA. Reputable organizations are doing SCRA searches multiple times throughout the lifecycle of a file to ensure compliance. Depending on the firm’s geographical footprint, their hit rates for active duty service members can be quite high, or in the case of firms situated away from military installments, they are more likely to get very few hits on an active military search. So, what is the best way for a firm to manage its margins in order to stay in compliance? Those decisions range wildly, from manual higher-cost single searches to lower-cost batch methods offered by a number of vendors in the market place. Some have internal tools to accomplish same.
Having a reliable military scrub service can help eliminate the additional costs and regulatory burdens associated with the failure to follow SCRA guidelines. Our organization chooses to use an automation tool that is scalable and interfaces with our CRM. This allows us to reduce our labor costs and increase output, and it also helps us to reduce human data-entry errors. Additionally, we can systematically load military service affidavits to our system for future reference. Through this method, we are able to contain our costs for compliance. But more importantly, we are able to proactively protect service members and their families from unnecessarily stressful situations that should not occur.
If you have not implemented SCRA scrubs in your organization, I strongly encourage you to do so. Not only to mitigate risk, but because it’s the “right” thing to do.