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SCRA and the Coast Guard in the Shutdown

posted by Adam Levitin

The Coast Guard apparently briefly had some advice for furloughed guardsmen that included "Bankruptcy is a last option."  The leaped out at me as strange.  What about the Servicemembers Civil Relief Act, a special act that provides protection for active duty military members and their dependents against collection actions?  Shouldn't SCRA hold creditors at bay, such that they don't need to consider bankruptcy for the foreseeable future?

The answer is, I'm not sure.  We're in a weird statutory no-man's land, I think.  SCRA protects service members "in military service," which is defined as "active duty," which is in turn defined as "full time duty in the active military service of the United States."  SCRA protects service members "in military service" from default judgments when they don't have notice and stays proceedings for at least 90 days against service members "in military service" or who are "within 90 days of after termination of or release from military service," who get notice of actions. SCRA has even more powerful protections against eviction, repossession, and foreclosure for service members "in military service".  

I can't figure out the status of furloughed Coastguardsmen under SCRA.  They don't seem to be on "active duty," and yet they haven't been terminated or released from military service.  SCRA is a stand-alone statute without implementing regulation, so there's no agency interpretation to help with the answer.  I suspect as a practical matter it all turns on what the Department of Defense does with its SCRA database.  Creditors need to file SCRA-affidavits averring that the defendant is not in military service before attempting to collect through default judgments.  Creditors fulfill the factual content of these affidavits by checking against the Department of Defense SCRA database.  Thus, if the Department of Defense continues to list furloughed Coastguardsmen as being on active duty, they should probably be able to shelter in SCRA for default judgments and might be able to use that listing as evidence to support a claim of "military service" status against other actions.  I suspect courts will be sympathetic to furloughed Coastguardsmen.  What the Department of Defense (which does not administer the Coast Guard) is doing in this regard, however, I can't tell. The lack of clarity, however, suggests the need to assign an agency (CFPB or Defense or some combination thereof) rulemaking authority under SCRA.  


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