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COVID-19

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Landlords Evict Tenants During COVID-19 Against New Jersey Eviction Moratorium

Essex County Rent Court

Some New Jersey landlords have been evicting tenants during COVID-19 against the New Jersey Eviction Moratorium put in place by Governor Murphy in March.

Unscrupulous landlords have been getting away with intimidating tenants and evicting them from their homes at a time when they have nowhere to turn.

Many New Jersey residents have lost employment or have had their hours reduced due to the COVID-19 pandemic. New Jersey’s governor, knowing people would be effected by a loss of employment and then may not be able to pay rent, acted to prevent these evictions by putting into place a New Jersey Eviction Moratorium.

Some heartless landlords try to evict a tenant for non-payment anyway taking advantage of the tenent’s lack of knowledge of the moratorium.

Judges Should Step In

A typical landlord tenant hearing has the homeowner on one side and a aggressive lawyer on the other side bullying the tenant into agreeing to move out to avoid having to pay back-rent while judges stand by doing nothing to help the tenant when the judge knows full well there is a moratorium in place.

This should not be allowed to happen during this COVID pandemic with mass unemployment due to no fault of the tenants.

I blame judges for not putting a foot down when they know all too well there is a eviction moratorium in place. I understand Judges refrain from offering legal advice to a litigant, especially one who is not represented by counsel, but to allow an agressive landlord to throw someone out of their home during this very uncertain time just should not be allowed to happen.

Judges should take a stand and dismiss cases while the moratorium is in place.

The NJ State Assembly Should Act

If judges aren’t going to take a stand, the NJ State Assembly should enact legislation preventing landlords from filing eviction with heavy fines for doing so to give it teeth.

Any landlord that files for eviction while the moratorium is in place should be fined the equivalent of one month rent for filing the case and the case should automatically be dismissed by the clerk of court.

Governor Murphy Enacts Anti-Eviction Moratorium

In March, when the pandemic hit New Jersey hard, Governor Murphy put into place several Executive Orders starting with Executive Order 103 on March 9, 2020 in which he declared a State of Emergency and Public Health Emergency effective immediately on that day. On March 19, 2020, Governor Murphy signed Executive Order 106 enacting a moratorium on removal of people form their homes due to tenant evictions or foreclosures.

Murphy Extends to Anti-Eviction Moratorium

Every month starting April 1, the governor has extended the State of Emergency and Public Health Emergency. Once again On July 2, 2020, Governor Murphy extended The State of Emergency and Public Health Emergency through Executive Order 162.

Each of these Executive Orders extends the anti-eviction moratorium for “two months following the end of the Public Health Emergency or State of Emergency established by Executive Order No. 103 (2020), whichever ends later….”

With the July 2 Order extending the State of Emergency for 30 days, this extends the moratorium through September 30, 2020.

I expect the Governor to extend the Order at least once again in August but we will wait and see how things go. He is under a lot of pressure from Trump to get things back to normal although, thankfully, the Governor has taken a conservative approach to things.

Should you find yourself in this situation, you now know to tell the judge there is a moratorium in place and there can be no eviction.

Good luck

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Coronavirus government relief package doesn’t work for restaurants

Chefs and restaurant owners believe the coronavirus government relief package doesn’t work for restaurants. Restaurants have been the hardest hit by the coronavirus pandemic.

Celebrity chef and food advocate Tom Colicchio, owner of the restaurant and hospitality group Crafted Hospitality, was one of many restaurateurs who made the difficult decision to close his kitchens and lay off over 400 of employees due to the novel coronavirus, COVID-19.

Now, he’s helping to lead the charge to provide desperately needed aid through the Independent Restaurant Coalition to food service workers, small business owners and their communities.

“We started it about three or four weeks ago when we realized the enormity of the problem that we were facing and we knew there was a stimulus package that was going to help small businesses,” Colicchio said on ABC News’ “Pandemic: What You Need to Know.”

“We found groups in Chicago that were working on the same issue. We found groups throughout the South and we put all these coalitions together and very quickly we hired a lobbying team, a [communications] team, and we are having direct conversations with members of Congress to let them know the issues that we have in the restaurant industry,” Colicchio said. “And also — to let [Congress] know that the — CARES Act — doesn’t really work for the restaurant industry right now.”

He said he’s also trying to get the message to Congress that the Coronavirus Aid, Relief, and Economic Security Act (CARES) Act “doesn’t really work for the restaurant industry right now.”

The CARES Act provides the single largest economic relief package in U.S. history, and will include direct payments for qualifying individuals as well as loans and loan forgiveness for small businesses.

I couldn’t agree more with Chef Colicchio. Loans through the SBA are designed to keep people on the pay-roll temporarily but if your restaurant is closed, why not just let the employee file for unemployment. The SBA loans are promised to be forgiven but only if at least 80% of the funds are used to pay employees. What about rent, insurance, and so many other monthly expenses over and above wages?

Many restaurants are closed now and may never re-open. Others may re-open but look very different from how they looked in January. The restaurant business model is in need of a big change and this might just be the time to make that change.

For more information and links to other articles – go to our Restaurant COVID Relief page

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How to Get a Mortgage Forbearance in Chapter 13 Bankruptcy

Updated information on how to get a mortgage forbearance in Chapter 13 bankruptcy if you are suffering financial hardship due to COVID-19

By now you have heard about mortgage lenders offering a forbearance if you are having a financial hardship due to COVID-19 related loss or reduction of income. But, what can you do if you need a mortgage forbearance in chapter 13 bankruptcy?

Maybe you already tried calling your mortgage lender and haven’t had any luck. At first, there was a severe lack of information on whether or not a person in active bankruptcy could take advantage of this relief. This week, services and lenders clarified their position on getting a forbearance even if you are in active chapter 13 bankruptcy.

This relief is only for mortgage loans that are backed by the Federal Government Fannie Mae or Freddie Mac. This covers about 90% of home loans in existence today. However, there are some loans that are not backed by the Federal Government.

What If My Loan is Not Backed By Fannie or Freddie?

Many lenders are honoring this relief program even if your loan is not backed by Fannie or Freddie so try anyway.

How to Find Out if Your Loan is Backed by the Federal Government.

Go to Fannie Mae’s website or Freddie Mac’s website to look up your loan.

What Is Forbearance?

The first question most people have is: what is a forbearance. A forbearance is a temporary suspension of the requirement to make monthly mortgage payments. Under the CARES Act passed last week, a 180-day forbearance is available if you are having a financial hardship due to COVID-19 related loss of income. And, that 180-day forbearance can be extended one time for another 180 days if your financial hardship continues so long as you apply for the extension prior to the end of the first 180 days.

Mortgage loan servicers have set up applications on their websites to apply for the forbearance. The process is simple and streamlined without the need for documentation.

How to apply for the forbearance.

  • Don’t call your servicer. Call volumes are high and hold times are unbearably long.
  • Go to the website of your loan servicer. Servicers have set up applications on their websites streamlining the process.
  • In your application, state that you are having a financial hardship due to COVID-19 related loss of or reduction of income.
  • No documentation is required to apply for a forbearance (but documentation is required to determine the re-payment agreement).
  • Your servicer may ask you for an authorization from your bankruptcy attorney to allow them to speak directly with you which is normal but most are waiving that requirement temporarily. If you need an authorization, contact me and we will send you one.

How Do I Pay Back The Missed Payments?

During the 180-day period, lenders are required to reach an agreement with you on how to pay back the suspended mortgage payments.

How Do I Reach An Agreement To Repay the Suspended Payments?

Servicers are required to enter into a re-payment agreement with you prior to the end of the forbearance period (which may be extended for another 180 days if your financial hardship persists). Your servicer will contact you with a re-payment agreement.

Typical re-payment agreements might look something like:

  • Defer the missed payments to the end of the loan in either a balloon payment or by adding months to the loan term.
  • Enter into a loan modification agreement.
  • Payback the missed payments over some number of months by adding additional monies to your regular payment.
  • Add the suspended amount to a chapter 13 plan by formatting amending the chapter 13 plan.

Do I have to do anything formal with the Bankruptcy Court?

No, your servicer will file a notice with the Bankruptcy Court notifying the court of the suspended payments. When the re-payment agreement is executed, your servicer will again notify the Bankruptcy Court of the re-payment terms.

What Do I Do If I Can’t Make My Chapter 13 Plan Payments to the Bankruptcy Trustee?

Unfortunately, as of right now, there is no simple answer to this question. Typically, when chapter 13 plan payments are missed, a trustee files a motion to dismiss you entire bankruptcy case. This requires a formal written response by your attorney and a court appearance. Usually, missed chapter 13 plan payments are resolved by making a lump sum payment to catch up all or a portion of the missed payments and sometimes a the remaining portion of the missed payments may be added to the remainder of the chapter 13 plan at the trustee’s discretion.

After talking to trustees this past week, the trustees in New Jersey are informally not taking action to dismiss a case if chapter plan payments are missed. However, at some point in the future, any payments that are missed will have to be made up.

What Next?

If you are in need of a Mortgage Forbearance in Chapter 13 Bankruptcy, follow these steps and good luck.

For More Information on any COVID-19 related relief, see our special coronavirus resource page

For more information on relief programs and other important updates about the coronavirus COVOID-19, go to our Coronavirus Resource page.

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Beneficial Changes in the Bankruptcy Code under the CARES Act

Small Businesses and Consumers will benefit from the changes in the bankruptcy code under the CARES Act

A number of changes in the bankruptcy code will benefit Businesses and consumers under the CARES Act making it easier and more beneficial for some to avoid or reorganize debts. See the SBA website here.

How the changes in the bankruptcy code under the CARES Act will benefit consumers.

The CARES Act amends certain provisions under Chapters 7 and 13 of the U.S. Bankruptcy Code to help consumers who will be or have been financially harmed by the COVID-19 pandemic.

The key changes that consumers should be aware of are as follows:

  • Chapter 13 filers with existing confirmed plans who have suffered a “material financial hardship” due to COVID-19 will be allowed to seek plan modifications, including extending their payments for up to seven years after their first plan payment was due, thereby reducing their monthly payment obligation.
  • Payments received from the federal government will not be included in the definition of “income” when determining eligibility.
  • Payments will not be included in the calculation of “disposable income” for confirmation. This change is designed to permit consumers to receive the full benefit of stimulus payments.

The key changes that small businesses should be aware of are as follows:

The CARES Act amends the Small Business Reorganization Act of 2019 (the “SBRA”), which became effective February 19, 2020, to temporarily increase the debt threshold under the new Subchapter V of Chapter 11 of the Bankruptcy Code from $2,725,625 of debt to $7,500,000.

The SBRA is designed to enable small businesses to reorganize their financial affairs in a more efficient and cost-effective manner while also maintaining more control over their businesses. For small businesses, Chapter 11 reorganization has not been a viable option due to the length and high cost of the process.

Some of the key features of the SBRA are as follows:

  • Businesses or individuals with at least 50% of their debts being commercial debt totaling not more than $7.5 million are eligible.
  • The bankruptcy process will be quicker with shortened timelines. For example: the deadline for filing a plan is just 90 days shortened from 120 days.
  • Filers are not required to pay quarterly U.S. Trustee’s fees (often costly)
  • Creditors committees will not be appointed minimizing disputes and distractions.
  • A standing trustee will be appointed who will: (i) help to formulate a plan; (ii) report fraud or misconduct, and (iii) monitor plan distributions.
  • Unlike a trustee that might be appointed in a Chapter 11 case, a SBRA trustee does not take part in operating business. The trustee’s goal is to help resolve issues with creditors and move the case along.
  • Only the small business filing bankruptcy can file a plan of reorganization. This eliminates risk of competing plans filed by creditors.
  • A disclosure statement is not required, unless the Court orders otherwise.
  • The plan may be confirmed even if all impaired classes vote to reject the plan.
  • Payments of administrative expense claims may be stretched out over the term of the plan.
  • Equity holders may be able to keep their equity interests in the business without the need to contribute new value because there is no “absolute priority rule”. This means that business owners can keep their interests in the company even if unsecured creditors will not be paid in full under the plan.

See other important updates and resources on our Coronavirus Resource Page here.

For full text of the CARES Act go 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.