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Law Protects Servicemembers During Vehicle Repossession

 Posted on April 07,2018 in Auto Lenders

Law Protects Servicemembers During Vehicle RepossessionBefore repossessing a vehicle, an auto lender must confirm whether the owner is a U.S. military member on active duty. The Servicemembers Civil Relief Act includes a section protecting active servicemembers who default on their auto loans. The auto lender must obtain a court order to repossess the vehicle. The order may include forms of financial relief not normally given to vehicle owners. Failing to comply with the SCRA can be a criminal offense.


The SCRA applies to people who are away from home while serving as:

  • An active member of one of the branches of the U.S. military;
  • A reservist reporting for military service;
  • A National Guard member;
  • A commissioned officer of the Public Health Service or National Oceanic and Atmospheric Administration; or
  • A member of a foreign allied force.

The SCRA may protect immediate family members in some cases. The protection extends from the date the servicemember is notified of his or her deployment until 90 days after discharge from active duty.

Repossession Process

An auto lender should obtain an affidavit of military status if it believes that the owner of the vehicle it wants to repossess may be an active servicemember. When the auto lender requests a court order to repossess the vehicle, the court will put a stay of at least 90 days on the case, after which it will decide whether to grant the order. The court can allow the lender to repossess the vehicle but order the lender to compensate the servicemember by:

  • Returning the payments previously made on the auto loan; or
  • Giving an equity payment, which is the difference between the value of the vehicle and the remaining balance of the loan.


A servicemember does not qualify for SCRA protections if he or she was already on active duty when signing the loan agreement. The servicemember also must pay the deposit or first installment before starting active service. Servicemembers can sign a waiver at the beginning of the auto loan, foregoing SCRA protections. However, the auto lender must present a separate written document that clearly states the consequences of the waiver.


The U.S. Department of Justice has recently filed lawsuits against auto lenders who allegedly violated the SCRA by repossessing a servicemember’s vehicle without a court order. You can be compensated when an active servicemember defaults on his or her loan as long as you respect the legal process. A Chicago debt collection attorney at Dimand Walinski Law Offices, P.C., can advise you on how to pursue collection efforts against military members. To schedule a consultation, call 312-704-0771.


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