Vehicle Repossessed During Military Service? Know Your SCRA Rights

Your military service should not cost you your vehicle, your credit, or your family’s transportation. Under the Servicemembers Civil Relief Act (SCRA), lenders generally cannot repossess a covered servicemember’s vehicle without a court order—and recent DOJ enforcement shows illegal repossessions remain a real problem. 

If your car, truck, or other vehicle was repossessed while you were serving in the military, contact Military Justice Attorneys today to discuss whether you’re entitled to relief. 

What the SCRA Says About Vehicle Repossessions

The SCRA provides specific protections for servicemembers who enter military service after entering into certain contracts, including contracts for the purchase, lease, or bailment of personal property such as a motor vehicle.

Under 50 U.S.C. § 3952(a), once you enter military service, a lender generally cannot cancel your vehicle contract or repossess your vehicle because of a missed payment or other contract issue without first getting a court order. This protection can apply whether the issue happened before or during your military service.

For you, that protection can be critical. If you made at least one payment before entering military service, the lender generally must go to court before repossessing your vehicle.

The statute also carries consequences for violations. Under 50 U.S.C. § 3952(b), a person who knowingly repossesses property in violation of the SCRA, or knowingly attempts to do so, may be fined, imprisoned for up to one year, or both.

Servicemembers also have civil remedies. The law allows harmed servicemembers to ask a court for relief, including money damages and other remedies to correct the violation. If you win, the court may also require the other side to pay your court costs and reasonable attorney’s fees.

Federal Regulators Have Long Warned Auto Finance Companies About SCRA Compliance

The Department of Justice (DOJ) and the Consumer Financial Protection Bureau (CFPB) have made clear that auto finance companies must recognize and honor SCRA protections.

In July 2022, the DOJ and CFPB issued a joint reminder to auto lenders and leasing companies about their legal obligations to servicemembers and their dependents under the SCRA. The agencies emphasized that servicemembers face unique financial challenges because of their military service and that federal law provides additional rights and protections in light of those challenges.

The DOJ’s Civil Rights Division stated that auto lenders and leasing companies across the country have an obligation to ensure the fair and lawful treatment of servicemembers. The CFPB likewise warned that it was closely monitoring the auto finance industry to make sure servicemembers and their families are treated fairly.

The message was straightforward: lenders and leasing companies cannot ignore SCRA protections, and companies that comply with the law should not be placed at a competitive disadvantage by companies that violate servicemembers’ rights.

Recent DOJ Settlement: CarMax to Pay Servicemembers for Alleged Illegal Repossessions

A recent Justice Department settlement with CarMax Inc., the nation’s largest used-car retailer, sends a clear message: unlawful vehicle repossessions against servicemembers are not minor paperwork mistakes—they are serious federal law violations.

According to the DOJ, CarMax agreed to resolve allegations that it violated the SCRA by illegally repossessing motor vehicles owned by members of the military. The settlement requires CarMax to pay at least $420,000 in damages to servicemembers and a $79,380 civil penalty to the United States.

The Justice Department alleged that CarMax repossessed servicemembers’ vehicles without first obtaining the court orders required by federal law. The DOJ also alleged that CarMax repossessed some vehicles even after owners told the company they were in military service, and that CarMax failed to extend SCRA protections to reservists who had received orders to report for active duty.

An Assistant Attorney General for the Justice Department’s Civil Rights Division put the rule plainly: “Federal law prohibits businesses from repossessing service members’ vehicles without a court order.”

The takeaway for servicemembers is simple: if your vehicle was repossessed during military service, the lender’s actions may not have been lawful just because the repossession already happened. The SCRA gives you rights, and a violation may entitle you to compensation and other relief.

What Servicemembers Should Know

If you are serving in the military and your vehicle was repossessed, the timing matters. Key questions may include:

• Did you purchase, finance, lease, or otherwise enter into the vehicle contract before or during military service?

• Did you make at least one payment before entering military service?

• Were you on active duty, or had you received orders to report for active duty, when the repossession occurred?

• Did the lender or repossession company obtain a court order before taking the vehicle?

• Did you notify the lender that you were in military service?

• Did the repossession affect your credit, employment, transportation, military duties, or family finances?

A repossession that violates the SCRA can cause serious harm. Servicemembers may lose access to reliable transportation, suffer credit damage, incur additional fees, miss career advancement opportunities, and face unnecessary stress during military service. Congress enacted the SCRA to help prevent exactly these kinds of harms.

Was Your Vehicle Repossessed While You Were in Military Service?

If your vehicle was repossessed while you were serving in the military, or after you received orders to report for active duty, you may have rights under the SCRA. Do not assume the repossession was legal simply because the lender or repossession company took the vehicle. Our attorneys can review whether the repossession complied with the SCRA and whether you may be entitled to damages, correction of credit reporting, attorney’s fees, or other relief.

Protecting Those Who Serve

Federal law is clear: when the SCRA applies, businesses cannot repossess a servicemember’s vehicle without first obtaining a court order. The DOJ and CFPB have warned the auto finance industry about these obligations, and recent enforcement actions show that violations can result in substantial consequences.

If your vehicle was repossessed while you were in military service—or after you received orders to report for active duty—contact Military Justice Attorneys for help with a potential SCRA repossession violation. You may be entitled to seek financial damages, correction of credit reporting, attorney’s fees, and other relief.

Servicemembers protect the country. The SCRA helps ensure that their legal and financial rights are protected in return.