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Todd Murphy

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Can I File Bankruptcy In New Jersey During The Coronavirus Quarantine If I Can’t Leave My House?

Can I File Bankruptcy From Home?

Find out how to file bankruptcy in New Jersey during the Coronavirus quarantine while observing quarantine and social distancing rules during the COVID-19 outbreak.

Dealing with the uncertainty of the COVID-19 pandemic is especially challenging for those who need to file for bankruptcy during the coronavirus quarantine. Fortunately, courts in New Jersey have loosened rules temporarily, making it easier for bankruptcy lawyers to represent quarantined clients.

Our office can serve you virtually while we work from home so you can stay safe and still file bankruptcy. So, if you’re in isolation due to the coronavirus, we are ready to help you get out of debt.

Here are the temporary changes to bankruptcy procedures designed to curb the spread of COVID-19.

Representing yourself during the coronavirus outbreak will likely be difficult, especially if you have ongoing health problems, so your first challenge will be hiring a bankruptcy attorney.

Because conducting in-person interviews won’t be an option, you’ll want to consider asking friends, family, and other attorneys for referrals.

When contacting candidates, verify that the office can represent you while you’re in isolation, and provide necessary accommodations, such as:

  • phone or video conferencing for attorney/client meetings and document review
  • secure document portal for submitting and signing documents
  • the availability of a telephonic or video appearance at the 341 hearing (the one hearing all filers must attend).

Also, ask whether the office offers free initial phone consultations.

Todd Murphy Law Has All Virtual Options

Of course at Todd Murphy Law, we can do everything without a visit to the office and now that the trustee’s are conducting the 341 hearings by video conference, you’ll never have to leave your home.

Filing for Bankruptcy During the Coronavirus Outbreak

While in quarantine, you’ll rely on technology to communicate with your lawyer and paralegal as well as the court. You will need access to a computer, a printer, and a scanner or use one of the many scanner apps on your phone such as CamScanner.

Filing for bankruptcy is form-intensive work. We will ask you to complete a number of financial questionnaires. You’ll also need to gather together certain important financial documents that support your questionnaire answers (see a list here).

We have been working online without the need for an office visit for over five years so this isn’t new to us at all. We have developed secure systems that protect your private information and spend extra time on the phone with you so you know exactly what to do every step of the way.

For instance, we start the process by providing you with a link to a special page on our website where you can complete our proprietary questionnaires online and upload paycheck stubs, bank statements, and other documents needed when filing for bankruptcy.

Completing Required Bankruptcy Courses

You will also be required, as a prerequisite to filing bankruptcy, complete the two required courses online – one before you file for bankruptcy and one afterward. You can access the courses on the same web page where you will find our questionnaires

Meeting With the Bankruptcy Lawyer Virtually Due to COVID-19

You can easily consult with your lawyer and paralegal several times before we file your case. The office can set up meetings by phone or through video conferencing.

On our initial consultation, you’ll ask questions, listen to the attorney’s assessment, and determine whether you want to file bankruptcy and we will advise you of your options. \

Reviewing the final petition. Once the bankruptcy petition is complete, the lawyer will go over it with you for accuracy. After agreeing that all of the information contained in the petition is true and correct, you must sign it under penalty of perjury – before it can be filed.

“Wet Signatures” Waived by the Courts Due to Coronavirus Concerns

New Jersey Bankruptcy courts have temporarily relaxed a rule requiring a bankruptcy attorney to obtain an original or “wet signature” on the bankruptcy petition before filing it online with the court. The relaxing of this rule is very beneficial to lawyers and clients alike during the coronavirus pandemic. It limits the amount of contact required before filing a case.

Telephonic/Video Conference 341 Meeting of Creditors During the Coronavirus Outbreak

After filing the case, every bankruptcy filer must appear at a hearing called the 341 meeting of creditors. The bankruptcy trustee checks your identification and asks questions about the petition under oath.

Trustees have already been ordered to stop conducting in-person meetings during the coronavirus (COVID-19) pandemic, so the meeting requirement won’t be problematic for you. Hearings now take place by video conference.

We will give you the information you need to call into the meeting from home.


Court Closures During the COVID-19 Outbreak

Although courts in New Jersey, have closed physical locations as of the writing of this article, all have made provisions to continue operations.

See our other important notices on our CoronaVirus Resources page here.

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Bankruptcies in New Jersey Expected to Rise Following COVID-19 Unemployment

Ralph, an Uber driver who just filed bankruptcy to get out of debt after demand for rides dropped due to Coronavirus COVID-19

Ralph, an Uber driver warns bankruptcies in New Jersey expected to rise following COVID-19 unemployment

“I was getting my finances in order after divorcing my wife over a year ago. I was just about to start a consolidation program for approximately $30,000 in debt and I was bringing in income driving Uber and Lyft. “

“Then, the coronavirus pandemic hit and my income dropped to zero. Now, bankruptcy made more sense than consolidation.”

Ralph reduced his driving hours to protect himself from the infectious disease. It wasn’t like he was leaving money on the table. “There wasn’t any work anyway,” Ralph told me. 

Ralph filed for bankruptcy on April 1 to eliminate all of his debt and, after talking to friends who also drive for Uber, thinks there will be a lot more people doing the same thing soon.

For some, if you aren’t able to pay your rent for a few months, even though the landlord can’t evict you right now, you are still going to have to pay the missed rent which may add to the financial pressures. Bankruptcy may be a tool that helps here as well.

“It’s just logical. Anybody who was thinking about bankruptcy before but thought they could get out of debt over time through debt consolidation or settlement is more than likely going to consider bankruptcy given the uncertainty of their employment and income.,” Ralph said. 

I agree with Ralph, looking at a new spike in unemployment and remembering how the Great Recession caused a wave of bankruptcy cases from consumers seeking a reset after getting too far behind on debt.

Bankruptcy filings have dropped in recent years, but household debt has climbed. 

Bankruptcies in New Jersey Expected to Rise Following COVID-19 Unemployment

There were more than 770,000 bankruptcies filed last year, according to court statistics. That’s less than half of the nearly 1.6 million cases filed in 2010 during the Great Recession. In fact, bankruptcy filings hit a 10-year low in 2018.

Americans had $14.15 trillion in household debt as of 2019’s fourth quarter, according to Federal Reserve Bank of New York data. For context, the recession-era peak was $12.68 trillion during the third quarter of 2008.

Now, all of the sudden, millions of people are out of work as the coronavirus forces consumers to stay at home to slow the virus’s spread.

Americans filed first-time jobless claims the last few weeks, in staggering numbers.

The sudden choke on cash flow, despite the ability to get a 180 day forbearance on mortgage payments, could still force people into foreclosure.

Business filings could start as soon as April with consumer filings to surge in May and June. 

The increase could take a bit longer because in times of crisis, people don’t normally race off to file bankruptcy. But once reality hits, bankruptcy is going to be good option for many small businesses and individuals.

With all of this uncertainty, I agree with Ralph and believe Bankruptcies in New Jersey expected to rise following COVID-19 unemployment.

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CARES Act Small Business Loans – Summary of Emergency Loans

This is a brief summary of the CARES Act Small Business Loans relief program. Here are the very basic points to consider which will help you decide whether or not to pursue relief under this Act.

The Coronavirus Aid, Relief, and Economic Security (CARES)
Act allocated $350 billion to help small businesses keep
workers employed amid the pandemic and economic
downturn. Known as the Paycheck Protection Program,
the initiative provides 100% federally guaranteed loans
to small businesses.

Importantly, CARES Act Small Business Loans may be forgiven if borrowers
maintain their payrolls during the crisis or restore their
payrolls afterward.

Am I Eligible?

You are eligible if you are:

  • A small business with fewer than 500 employees.
  • A small business that otherwise meets the SBA’s size standard.
  • A 501(c)(3) with fewer than 500 employees.
  • An individual who operates as a sole proprietor.
  • An individual who operates as an independent contractor.
  • An individual who is self-employed who regularly carries on any trade or business.
  • A Tribal business concern that meets the SBA size standard
  • A 501(c)(19) Veterans Organization that meets the SBA size standard

What Will Lenders Be Looking For?

In evaluating eligibility for CARES Act Small Business Loans, lenders are directed to consider whether the borrower was in operation before February 15, 2020 and had employees for whom they paid salaries and payroll taxes or paid independent contractors.

Lenders will also ask you for a good faith certification that:

  • The uncertainty of current economic conditions makes the loan request necessary to support ongoing operations
  • The borrower will use the loan proceeds to retain workers and maintain payroll or make mortgage, lease, and utility payments
  • Borrower does not have an application pending for a loan duplicative of the purpose and amounts applied for here
  • From Feb. 15, 2020 to Dec. 31, 2020, the borrower has not received a loan duplicative of the purpose and amounts applied for here (Note: There is an opportunity to fold emergency loans made between Jan. 31, 2020 and the date this loan program becomes available into a new loan)

If you are an independent contractor, sole proprietor, or self-employed individual, lenders will also be looking for certain documents (final requirements will be announced by the government) such as payroll tax filings, Forms 1099-MISC, and income and expenses from the sole proprietorship.

How Much Can I Borrow?

Loans can be up to 2.5 x the borrower’s average monthly payroll costs, not to exceed $10 million.

Will This Loan Be Forgiven?

Borrowers Are Eligible To Have Loans Forgiven

A borrower is eligible for loan forgiveness equal to the amount the borrower spent on the following items during the 8-week period beginning on the date of the origination of the loan:

  • Payroll costs (using the same definition of payroll costs used to determine loan eligibility)
  • Interest on the mortgage obligation incurred in the ordinary course of business
  • Rent on a leasing agreement
  • Payments on utilities (electricity, gas, water, transportation, telephone, or internet)
  • For borrowers with tipped employees, additional wages paid to those employees

The loan forgiveness cannot exceed the principal

This is just a brief summary of the CARES Act Small Business Loans there is more detail available but this is the basic summary of what you need to know before you get started.

Feel free to contact us for more information.

Go to our CoronaVirus Resource page for more information on other programs that are available now and learn about others that are being discussed.

The US Chamber of Commerce has good information on what’s available for small businesses at their website here.

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What to do if you can’t pay rent because of coronavirus job loss

The first of the month is coming and you can’t pay rent because of coronavirus loss of job or income. What to do?

Last night, both the House and Senate passed a multi-faceted bail-out package. The package offers relief for homeowners, checks to some tax-payers, but not much for renters.

New Jersey’s Governor Phil Murphy put temporary moratoriums on evictions. The landlord is barred from evicting you while the moratorium is in effect. But, there is no relief for the rent payment that is due. What is going to happen when the moratorium has been lifted and you missed two rent payments?

What is going to happen right now if you miss a payment? Sure, the landlord can’t evict you, but what about the rental payment owed?

First, your landlord, under the Federal bail-out package that was just passed, may be able to seek some relief from his/her mortgage company. If a tenant can’t pay the rent, the landlord may be able to skip a mortgage payment.

Second, if it comes to landlord/tenant court and a landlord is looking to collect back rent, I would expect, at least in the immediate future, that Judges will encourage landlords to make long-term payment arrangements that allow tenants, once re-employed, to pay back-rent over time.

So, what should you do right now?

  • Be proactive and contact your landlord in advance to let he/she know you have lost your job. Discuss a plan to skip a payment now and offer a solution for how to catch-up later (see a sample letter you can use below).
  • If you can’t work this out on your own, or, the landlord is not being cooperative, contact my office for help.

UPDATE: Use this letter we drafted to contact your landlord.

Get the letter here

If you can’t pay rent because of coronavirus job loss and you need help, call our office.

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New laws to address New Jersey Foreclosure Crisis

Governor Phil Murphy signed on April 29, 2019 new laws to address New Jersey foreclosure Crisis. These new laws will help New Jerseyans struggling with the state’s highest-in-the-nation foreclosure rate. The new laws will assist homeowners facing the prospect of foreclosure and pave the way for community revival by addressing blight. Many of the measures were recommended in a September 2018 report by the Special Committee on Residential Foreclosures, which was created by Chief Justice Stuart Rabner.

“The foreclosure crisis has hurt our economy and jeopardized economic security of too many New Jersey families,” said Governor Murphy. “Our communities cannot succeed while vacant or foreclosed homes sit empty or while families live in limbo. I am proud to sign these bills into law today and get New Jersey closer to ending the foreclosure crisis.”

Among the new laws, Governor Murphy signed A664, which codifies the Judiciary’s Foreclosure Mediation Program into law, creating a long-term, permanent program that will not only increase the number of people entering mediation, but also ensure that homeowners receive housing counseling assistance to help provide them with the best possible outcomes in the foreclosure process.

“The foreclosure crisis hit the families of Atlantic County harder than almost any county in the nation. These bills offer a better path for the region and hope for families in despair,” said Special Counsel Jim Johnson. “It’s a vital and important step forward.”

Another important law is S3464 which requires the sheriff to conduct a foreclosure sale within 120 days of the sheriff’s receipt of a writ of execution, instead of scheduling a closing sale within that time frame, as currently provided by the act. The bill also allows the Office of Foreclosure within the Administrative Office of the Courts to issue an order to appoint a Special Master to hold foreclosure sales for one or more properties within a vicinage. The bill also clarifies that, to convey the foreclosed property to the purchaser from the sheriff’s sale, the plaintiff’s attorney is required to prepare, and the sheriff’s office is required to use, the standard form of deed that is set forth in the “Fair Foreclosure Act.”

Perhaps most important, the bill also revises the statute that governs the process for adjournments in connection with sales of real estate by virtue of an execution. The bill provides that a sheriff or other officer conducting the sale may make up to four adjournments, two at the request of the lender and two at the request of the debtor, instead of the total of two adjournments that the statute currently allows. The bill provides that these adjournments shall not exceed 30 calendar days each, instead of the 14 calendar days currently provided for in the statute. As currently provided in the statute, a court of competent jurisdiction may, for cause, make further adjournments.

The Governor signed the following nine bills into law:

  • A664 – Codifies the Judiciary’s Foreclosure Mediation Program; dedicates monies from foreclosure filing fees and fines.
  • A4997 – “Mortgage Servicers Licensing Act.”
  • A4999 – Requires filing of certain creditor contact information with residential mortgage foreclosure complaint and lis pendens.
  • A5001 – Revises statute of limitations for residential mortgage foreclosures.
  • A5002 – Permits certain planned real estate developments to file certain liens; concerns limited priority of certain liens.
  • S3411 – Requires receivership appointment application prior to certain foreclosure actions; requires notice of intention to foreclosure on residential mortgage to be filed within 180 days prior to commencing foreclosure; limits reinstatements of dismissed mortgage foreclosure actions.
  • S3413 – Makes certain changes to summary action foreclosure process under “Fair Foreclosure Act.”
  • S3416 – Clarifies that “New Jersey Residential Mortgage Lending Act” applies to certain out-of-state persons and involved in residential mortgage lending in the State.
  • S3464 – Revises certain procedures for real estate foreclosure sales; alters adjournment of sale process.

The change in the adjournment time from 14 to 30 for each of the two adjournments available to homeowners provides for additional time often vital to helping save their homes at the last minute prior to a sheriff sale.

For more information on adjourning a sheriff sale, see my article How to Stop or Adjourn A Sheriff Sale in New Jersey and for more information and other articles in my sheriff sale series see Sheriff Sale Help.