Dubiln Packard

New Jersey

by

Making Chapter 13 Plan Payments

Chapter 13 Plan Payments Are Due

It’s the first of the month immediately following the day your chapter 13 case was filed and it’s time to start making chapter 13 plan payments. Your chapter 13 plan payments are due to the trustee AND your monthly mortgage payment is due to your mortgage servicer. It is very important to make both the mortgage payment and the chapter 13 plan payments on time every month for the life of your chapter 13 bankruptcy case.

If for some reason, and it happens from time-to-time, you are unable to make either or both payments this month, please call me to discuss before you make any decisions. There are certain things to consider if you find yourself in a situation where you have a temporary loss of, or reduction in, income or if you had an unexpected expense recently.

Missing payments can have serious long-term effects on your chapter 13 plan so please avoid this if at all possible. Again, call me to discuss if this comes up for you.

The difference between missing payments before your case is confirmed and after your case is confirmed.

When your case is first filed, the chapter 13 plan that we submit is a “proposed” plan and will be reviewed by your creditors and the trustee before it is accepted and confirmed. During that process, there may be some back and forth between we as your lawyers and the trustee and creditors before the plan is in its final form for confirmation. This back and forth is usually done at confirmation hearings in court. There may be a number of confirmation hearings before the case is confirmed which can take place over a period of three to six months or sometimes more.

Before the case is confirmed and a few days prior to each confirmation hearing, the trustee checks to see that you are up-to-date on your chapter 13 plan payments. If you have not made one or more payments as of the day of the confirmation hearing, the trustee will move to dismiss your case right then and there. There is no separate motion – the case will just be dismissed. This differs significantly from the procedure for a missed payment after confirmation.

What Happens If You Have To Miss A Chapter 13 Plan Payment or a Mortgage Payment Once Your Case is Confirmed?

A missed payment to either the mortgage company or the chapter 13 trustee can have significant negative impacts. If a trustee payment is missed, the trustee may file a motion to dismiss the case. If a mortgage payment is missed, the lender’s counsel may file a motion to lift the automatic stay (which prevents the lender from proceeding with foreclosure) and could lead to a sheriff sale of your home,

In both cases, a formal written response must be filed by us on your behalf and a court appearance is required (lawyers only). The matter is usually resolved at the court appearance where an arrangement is agreed to by the trustee or lender to catch up on payments. Such an arrangement can take many forms but always involves you coming up with some lump sum of money to bring the default current. Adding missed payments to the remaining chapter 13 plan payments is sometimes possible at the discretion of the trustee or lender (or both) and sometimes requires updated documentation on your income and expenses.

Resolution of missed payments often, if not always, includes a 30-day default clause which gives the trustee or lender a great deal of power the next time you miss a payment.

Also, you will be required to pay attorney fees for the lender’s counsel as well as fees to us to file the written response and appear in court on your behalf so this tends to be an expensive event.

Links to Chapter 13 Trustee Websites

Below are links to the bankruptcy trustee website. Each website contains instructions and information for setting up and making monthly trustee payments as well as other important information.

Newark – Marie-Ann Greenberg

Trenton – Albert Russo

Camden – Isabel Balboa

Making Chapter 13 Plan Payments and Mortgage Payments is the Single Most Important Thing During the Chapter 13 Bankruptcy Case.

Both the trustee and the mortgage lender monitor your payments every month and are quick to take action if payments are missed. Sometimes the trustee or counsel for the lender will reach out to me before filing a formal motion, and sometimes they will not. Sometimes, they will overlook one missed payment and sometimes, they will not.

The best strategy for you, of course, is to avoid missing payments but sometimes, we know, it just isn’t possible.

by

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.

by

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.

by

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.

by

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.