Protection is not dependent on location, but service duty. If this person was called to active duty they may be protected under the SCRA. But they also have to request this protection and provide you with a copy of their orders.
The SCRA doesn't say they don't have to pay, nor does it restrict your right to offset. Personally, I'd take the money and apply it against the debt. If this paid it off I'd drag my feet on releasing the title or sending the paid note out until the last minute, in case they do scream through an attorney and you want to negotiate.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell