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Glossary of Bankruptcy Terms – Terms you should know

A

adversary proceeding

A lawsuit arising in or related to a bankruptcy case that is commenced by filing a complaint with the court. A nonexclusive list of adversary proceedings is set forth in Fed. R. Bankr. P. 7001.

assume

An agreement to continue performing duties under a contract or lease.

automatic stay

An injunction that automatically stops lawsuits, foreclosures, garnishments, and all collection activity against the debtor the moment a bankruptcy petition is filed.

B

bankruptcy

A legal procedure for dealing with debt problems of individuals and businesses; specifically, a case filed under one of the chapters of title 11 of the United States Code (the Bankruptcy Code).

bankruptcy administrator

An officer of the judiciary serving in the judicial districts of Alabama and North Carolina who, like the U.S. trustee, is responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and disclosure statements; monitoring creditors’ committees; monitoring fee applications; and performing other statutory duties. Compare U.S. trustee.

Bankruptcy Code

The informal name for title 11 of the United States Code (11 U.S.C. §§ 101-1330), the federal bankruptcy law.

bankruptcy court

The bankruptcy judges in regular active service in each district; a unit of the district court.

bankruptcy estate

All legal or equitable interests of the debtor in property at the time of the bankruptcy filing. (The estate includes all property in which the debtor has an interest, even if it is owned or held by another person.)

bankruptcy judge

A judicial officer of the United States district court who is the court official with decision-making power over federal bankruptcy cases.

bankruptcy petition

The document filed by the debtor (in a voluntary case) or by creditors (in an involuntary case) by which opens the bankruptcy case. (There are official forms for bankruptcy petitions.)

C

chapter 7

The chapter of the Bankruptcy Code providing for “liquidation,”(i.e., the sale of a debtor’s nonexempt property and the distribution of the proceeds to creditors.)

chapter 9

The chapter of the Bankruptcy Code providing for reorganization of municipalities (which includes cities and towns, as well as villages, counties, taxing districts, municipal utilities, and school districts).

chapter 11

The chapter of the Bankruptcy Code providing (generally) for reorganization, usually involving a corporation or partnership. (A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. People in business or individuals can also seek relief in chapter 11.)

chapter 12

The chapter of the Bankruptcy Code providing for adjustment of debts of a “family farmer,” or a “family fisherman” as those terms are defined in the Bankruptcy Code.

chapter 13

The chapter of the Bankruptcy Code providing for adjustment of debts of an individual with regular income. (Chapter 13 allows a debtor to keep property and pay debts over time, usually three to five years.)

chapter 15

The chapter of the Bankruptcy Code dealing with cases of cross-border insolvency.

claim

A creditor’s assertion of a right to payment from the debtor or the debtor’s property.

confirmation

Bankruptcy judges’s approval of a plan of reorganization or liquidation in chapter 11, or payment plan in chapter 12 or 13.

consumer debtor

A debtor whose debts are primarily consumer debts.

consumer debts

Debts incurred for personal, as opposed to business, needs.

contested matter

Those matters, other than objections to claims, that are disputed but are not within the definition of adversary proceeding contained in Rule 7001.

contingent claim

A claim that may be owed by the debtor under certain circumstances, e.g., where the debtor is a cosigner on another person’s loan and that person fails to pay.

creditor

One to whom the debtor owes money or who claims to be owed money by the debtor.

credit counseling

Generally refers to two events in individual bankruptcy cases: (1) the “individual or group briefing” from a nonprofit budget and credit counseling agency that individual debtors must attend prior to filing under any chapter of the Bankruptcy Code; and (2) the “instructional course in personal financial management” in chapters 7 and 13 that an individual debtor must complete before a discharge is entered. There are exceptions to both requirements for certain categories of debtors, exigent circumstances, or if the U.S. trustee or bankruptcy administrator have determined that there are insufficient approved credit counseling agencies available to provide the necessary counseling.

creditors’ meeting

see 341 meeting

current monthly income

The average monthly income received by the debtor over the six calendar months before commencement of the bankruptcy case, including regular contributions to household expenses from nondebtors and income from the debtor’s spouse if the petition is a joint petition, but not including social security income and certain other payments made because the debtor is the victim of certain crimes. 11 U.S.C. § 101(10A).

D

debtor

A person who has filed a petition for relief under the Bankruptcy Code.

debtor education

see credit counseling

defendant

An individual (or business) against whom a lawsuit is filed.

discharge

A release of a debtor from personal liability for certain dischargeable debts set forth in the Bankruptcy Code. (A discharge releases a debtor from personal liability for certain debts known as dischargeable debts and prevents the creditors owed those debts from taking any action against the debtor to collect the debts. The discharge also prohibits creditors from communicating with the debtor regarding the debt, including telephone calls, letters, and personal contact.)

dischargeable debt

A debt for which the Bankruptcy Code allows the debtor’s personal liability to be eliminated.

disclosure statement

A written document prepared by the chapter 11 debtor or other plan proponent that is designed to provide “adequate information” to creditors to enable them to evaluate the chapter 11 plan of reorganization.

E

equity

The value of a debtor’s interest in property that remains after liens and other creditors’ interests are considered. (Example: If a house valued at $100,000 is subject to a $80,000 mortgage, there is $20,000 of equity.)

executory contract or lease

Generally includes contracts or leases under which both parties to the agreement have duties remaining to be performed. (If a contract or lease is executory, a debtor may assume it or reject it.)

exemptions, exempt property

Certain property owned by an individual debtor that the Bankruptcy Code or applicable state law permits the debtor to keep from unsecured creditors. For example, in some states the debtor may be able to exempt all or a portion of the equity in the debtor’s primary residence (homestead exemption), or some or all “tools of the trade” used by the debtor to make a living (i.e., auto tools for an auto mechanic or dental tools for a dentist). The availability and amount of property the debtor may exempt depends on the state the debtor lives in.

F

G

H

I

insider (of individual debtor)

Any relative of the debtor or of a general partner of the debtor; partnership in which the debtor is a general partner; general partner of the debtor; or a corporation of which the debtor is a director, officer, or person in control.

insider (of corporate debtor)

A director, officer, or person in control of the debtor; a partnership in which the debtor is a general partner; a general partner of the debtor; or a relative of a general partner, director, officer, or person in control of the debtor.

J

joint administration

A court-approved mechanism under which two or more cases can be administered together. (Assuming no conflicts of interest, these separate businesses or individuals can pool their resources, hire the same professionals, etc.)

joint petition

One bankruptcy petition filed by a husband and wife together.

K

L

lien

The right to take and hold or sell the property of a debtor as security or payment for a debt or duty.

liquidation

A sale of a debtor’s property with the proceeds to be used for the benefit of creditors.

liquidated claim

A creditor’s claim for a fixed amount of money.

M

means test

Section 707(b)(2) of the Bankruptcy Code applies a “means test” to determine whether an individual debtor’s chapter 7 filing is presumed to be an abuse of the Bankruptcy Code requiring dismissal or conversion of the case (generally to chapter 13). Abuse is presumed if the debtor’s aggregate current monthly income (see definition above) over 5 years, net of certain statutorily allowed expenses is more than (i) $10,950, or (ii) 25% of the debtor’s nonpriority unsecured debt, as long as that amount is at least $6,575. The debtor may rebut a presumption of abuse only by a showing of special circumstances that justify additional expenses or adjustments of current monthly income.

motion to lift the automatic stay

A request by a creditor to allow the creditor to take action against the debtor or the debtor’s property that would otherwise be prohibited by the automatic stay.

N

no-asset case

A chapter 7 case where there are no assets available to satisfy any portion of the creditors’ unsecured claims.

nondischargeable debt

A debt that cannot be eliminated in bankruptcy. Examples include a home mortgage, debts for alimony or child support, certain taxes, debts for most government funded or guaranteed educational loans or benefit overpayments, debts arising from death or personal injury caused by driving while intoxicated or under the influence of drugs, and debts for restitution or a criminal fine included in a sentence on the debtor’s conviction of a crime. Some debts, such as debts for money or property obtained by false pretenses and debts for fraud or defalcation while acting in a fiduciary capacity may be declared nondischargeable only if a creditor timely files and prevails in a nondischargeability action.

O

objection to dischargeability

A trustee’s or creditor’s objection to the debtor being released from personal liability for certain dischargeable debts. Common reasons include allegations that the debt to be discharged was incurred by false pretenses or that debt arose because of the debtor’s fraud while acting as a fiduciary.

objection to exemptions

A trustee’s or creditor’s objection to the debtor’s attempt to claim certain property as exempt from liquidation by the trustee to creditors.

P

party in interest

A party who has standing to be heard by the court in a matter to be decided in the bankruptcy case. The debtor, the U.S. trustee or bankruptcy administrator, the case trustee and creditors are parties in interest for most matters.

petition preparer

A business not authorized to practice law that prepares bankruptcy petitions.

plan

A debtor’s detailed description of how the debtor proposes to pay creditors’ claims over a fixed period of time.

plaintiff

A person or business that files a formal complaint with the court.

postpetition transfer

A transfer of the debtor’s property made after the commencement of the case.

prebankruptcy planning

The arrangement (or rearrangement) of a debtor’s property to allow the debtor to take maximum advantage of exemptions. (Prebankruptcy planning typically includes converting nonexempt assets into exempt assets.)

preference or preferential debt payment

A debt payment made to a creditor in the 90-day period before a debtor files bankruptcy (or within one year if the creditor was an insider) that gives the creditor more than the creditor would receive in the debtor’s chapter 7 case.

presumption of abuse

see means test

priority

The Bankruptcy Code’s statutory ranking of unsecured claims that determines the order in which unsecured claims will be paid if there is not enough money to pay all unsecured claims in full. For example, under the Bankruptcy Code’s priority scheme, money owed to the case trustee or for prepetition alimony and/or child support must be paid in full before any general unsecured debt (i.e. trade debt or credit card debt) is paid.

priority claim

An unsecured claim that is entitled to be paid ahead of other unsecured claims that are not entitled to priority status. Priority refers to the order in which these unsecured claims are to be paid.

proof of claim

A written statement and verifying documentation filed by a creditor that describes the reason the debtor owes the creditor money. (There is an official form for this purpose.)

property of the estate

All legal or equitable interests of the debtor in property as of the commencement of the case.

Q

R

reaffirmation agreement

An agreement by a chapter 7 debtor to continue paying a dischargeable debt (such as an auto loan) after the bankruptcy, usually for the purpose of keeping collateral (i.e. the car) that would otherwise be subject to repossession.

S

schedules

Detailed lists filed by the debtor along with (or shortly after filing) the petition showing the debtor’s assets, liabilities, and other financial information. (There are official forms a debtor must use.)

secured creditor

A creditor holding a claim against the debtor who has the right to take and hold or sell certain property of the debtor in satisfaction of some or all of the claim.

secured debt

Debt backed by a mortgage, pledge of collateral, or other lien; debt for which the creditor has the right to pursue specific pledged property upon default. Examples include home mortgages, auto loans and tax liens.

small business case

A special type of chapter 11 case in which there is no creditors’ committee (or the creditors’ committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.

statement of financial affairs

A series of questions the debtor must answer in writing concerning sources of income, transfers of property, lawsuits by creditors, etc. (There is an official form a debtor must use.)

statement of intention

A declaration made by a chapter 7 debtor concerning plans for dealing with consumer debts that are secured by property of the estate.

substantive consolidation

Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors. (Courts are reluctant to allow substantive consolidation since the action must not only justify the benefit that one set of creditors receives, but also the harm that other creditors suffer as a result.)

341 meeting

The meeting of creditors required by section 341 of the Bankruptcy Code at which the debtor is questioned under oath by creditors, a trustee, examiner, or the U.S. trustee about his/her financial affairs. Also called creditors’ meeting.

T

transfer

Any mode or means by which a debtor disposes of or parts with his/her property.

trustee

The representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chapter 13 cases and some chapter 11 cases. The trustee’s responsibilities include reviewing the debtor’s petition and schedules and bringing actions against creditors or the debtor to recover property of the bankruptcy estate. In chapter 7, the trustee liquidates property of the estate, and makes distributions to creditors. Trustees in chapter 12 and 13 have similar duties to a chapter 7 trustee and the additional responsibilities of overseeing the debtor’s plan, receiving payments from debtors, and disbursing plan payments to creditors.

U

U.S. trustee

An officer of the Justice Department responsible for supervising the administration of bankruptcy cases, estates, and trustees; monitoring plans and disclosure statThe representative of the bankruptcy estate who exercises statutory powers, principally for the benefit of the unsecured creditors, under the general supervision of the court and the direct supervision of the U.S. trustee or bankruptcy administrator. The trustee is a private individual or corporation appointed in all chapter 7, chapter 12, and chaptements; monitoring creditors’ committees; monitoring fee applications; and performing other statutory duties. Compare, bankruptcy administrator.

undersecured claim

A debt secured by property that is worth less than the full amount of the debt.

unliquidated claim

A claim for which a specific value has not been determined.

unscheduled debt

A debt that should have been listed by the debtor in the schedules filed with the court but was not. (Depending on the circumstances, an unscheduled debt may or may not be discharged.)

unsecured claim

A claim or debt for which a creditor holds no special assurance of payment, such as a mortgage or lien; a debt for which credit was extended based solely upon the creditor’s assessment of the debtor’s future ability to pay.

V

Voluntary transfer

A transfer of a debtor’s property with the debtor’s consent.

W

X

Y

Z

Contact a Bankruptcy Attorney in New Jersey

Cops in Crosswalks Reinforces Stop and Stay Stopped Pedestrian Law

Police agencies throughout New Jersey will be participating this summer in a pedestrian safety enforcement and education program designed to increase awareness about safely sharing the road, according to Division of Highway Traffic Safety (HTS) Director Pam Fischer.

Known as “Cops in Crosswalks,” the federally funded initiative places undercover police officers, posing as pedestrians, in marked crosswalks. Motorists who fail to stop for the undercover officers are stopped and issued warnings or tickets by uniformed officers a short distance away. The Division will be providing federal grants of $8,000 each to 13 police departments for the program, which will run from mid-July to mid-September. In addition, towns receiving year-long pedestrian safety grants from the Division will also participate in this initiative, which has been run in towns throughout the state for the past two years.

Fischer noted that the initiative will also help to reinforce New Jersey’s pedestrian safety law, which was amended on April 1, to require motorists to stop and stay stopped for pedestrians in marked crosswalks. Prior to the change, motorists were required to yield.

“By changing the language in the state’s 50-year old pedestrian statute from yield to stop, motorists now know that when they approach a pedestrian in a marked crosswalk, they must stop and remain stopped to allow that pedestrian to cross safely,” Fischer stated. “The law also makes it unlawful for a vehicle to overtake or pass another vehicle that is stopped to allow a pedestrian to cross. It also infers that a motorist is at fault when there is a conflict between a vehicle and a pedestrian in a crosswalk.”

Pedestrians must also do their part under the amended law. “It’s a pedestrian’s responsibility to take due care when crossing the street,” she said. “That means that a pedestrian should never suddenly leave a curb or other place of safety and walk or run into the roadway, where it is impossible for a motorist to stop. Pedestrians must also obey all traffic signs and signals, including ‘walk/don’t walk.’ If a pedestrian does enter the roadway at any point other than within a marked crosswalk or at an unmarked crosswalk at an intersection, he or she must yield the right of way to all motor vehicles.”

Motorists violating the law face a $200 fine, plus court costs, and 2 points on their license. They can also be subject to 15 days of community service and insurance surcharges. Pedestrians failing to comply with the law face a $54 fine, plus court costs.

The towns and townships participating in the Cops in Crosswalks program are:

Linwood, Northfield, Burlington City, Medford Twp, Cherry Hill, Collingswood, Vineland, Monroe Twp, New Brunswick, Piscataway, Red Bank.

Contact a traffic ticket attorney in New Jersey

Division on Civil Rights finds Probable Cause against Royal Aluminum Company, Inc.

The Division on Civil Rights announced July 7 it has issued a Finding of Probable Cause against an Essex County manufacturing firm in connection with the discharge of an employee shortly after her hand was severely injured in an industrial accident on company premises.

Named as Respondent in the Finding of Probable Cause is the Royal Aluminum Company, Inc., which manufactures insulated glass units at a factory in Newark.

In a complaint filed by former employee Nereira Berrospi Juares and joined by Division on Civil Rights Director Chinh Q. Le, Royal Aluminum is charged with terminating Juares shortly after her left hand was crushed in a machine and she was restricted by a physician to light duty.

According to the Finding of Probable Cause, Juares was injured on October 30, 2009 – her third day on the job — when her work glove became caught in a machine. She was treated for a crush injury and directed by the physician to avoid work until November 2, when she would be re-evaluated. On that date, she was told the severe swelling and bruising of her left hand necessitated further rest. On November 4, Juares was cleared to return to work on a “light duty” basis and provided Royal Aluminum a physician’s note documenting that restriction. Two days later she was terminated.

“The Law Against Discrimination was designed precisely to address the kind of conduct alleged here – a complete disregard of the civil rights of someone injured on the job,” said Division Director Le. “We simply cannot tolerate employers who exploit our most vulnerable workers – people who are just trying to earn an honest living.”

According to the Finding of Probable Cause, Royal Aluminum Vice-President Jeff Papa told State Investigators Juares was slated for discharge before her accident because of poor job performance. However, Papa acknowledged that Juares had only worked at Royal Aluminum for two full days at that point, and that no one at the company had raised a concern with her about her performance. Royal Aluminum was also unable to provide any documentation to support its claim.

Papa also maintained that Royal Aluminum was not in violation of the LAD because Juares did not belong to a protected class at the time of her discharge. Specifically, Papa contended that Juares could not be classified as “disabled” because of her hand injury.

However, according to the Finding of Probable Cause, the term “disability” is broadly construed within the meaning of the LAD, and is not limited to “severe” or “immutable” disabilities. The LAD definition of disability includes a “physical disability, infirmity, malformation or disfigurement which is caused by bodily injury.”

A Finding of Probable Cause does not resolve a civil rights complaint. Rather, it means the state has concluded its preliminary investigation and determined there is sufficient evidence to support a reasonable suspicion the LAD has been violated.

The LAD provides that each Respondent found to have committed a violation is subject to a penalty of up to $10,000. The LAD also provides for other remedies, including compensatory damages and injunctive relief, such as changes in the employer’s policies and management/staff training.

Now that the Division has issued a Finding of Probable Cause, the Royal Aluminum case will be referred for a process known as Conciliation. If Conciliation is not successful, the matter will be referred for a non-jury trial before an Administrative Law Judge. Once the trial is completed, the presiding Administrative Law Judge will issue a written Initial Decision.

Director Le thanked Division on Civil Rights Investigator Elbia Concepcion, Newark Office Manager Lorraine LeSter and Legal Specialist Benn Meistrich for their work on the Royal Aluminum case.

Happy and Safe 4th of July Weekend

Garces & Grabler, P.C. would like to wish everyone a happy and safe 4th of July weekend.

We understand this is a weekend of celebrations. If you are choosing to drink alcohol this weekend, we encourage you to have a designated driver with you to ensure you make it home safely and to ensure that you do not endanger other people’s lives who are on the roads.

If there is no designated driver, we encourage you to spend the night within walking distance of where you are celebrating.

More information about DWI/DUI in New Jersey can be found at our website.

However, if you have had the misfortune of getting pulled over and are charged with drunk driving, contact a DWI/DUI defense attorney in New Jersey immediately. Seven convenient law offices: Trenton, New Brunswick, Newark, Elizabeth, Perth Amboy, Freehold, Plainfield.

Cops in Shops — Combatting Underage Drinking “Down the Shore”

It’s summer, and time for the Cops in Shops program to take effect.

Cops in Shops is a program designed by the Century Council, a national not-for-profit organization funded by distillers. Under the program, local police officers work undercover in participating retail locations. Law enforcement officials either pose as store employees or are positioned outside the establishment to apprehend adults who attempt to purchase alcohol for underage drinkers.

Last summer, 211 people were arrested through the Cops in Shops summer program. This summer, 31 Shore police departments are participating in the Cops in Shops program, with approximately $61,000 in funding provided by the Division of Highway Traffic Safety.

In addition, 27 police departments, as well as the Gloucester County Prosecutors’ Office, are running year-round Cops in Shops programs and/or Undercover Operations beginning this summer, using funding provided by the federal Office of Juvenile Justice and Delinquency Prevention.

Penalties for underage drinking include stiff fines and the loss of a driver’s license for six months.

If you have been affected by a lapse of judgment and need an attorney, contact the attorneys at Garces & Grabler for an experienced defense attorney in New Jersey. Seven convenient law offices: Trenton, New Brunswick, Newark, Elizabeth, Perth Amboy, Freehold, Plainfield.

Warning Regarding Mortgage Loan Modification Activity

A recent development in the ongoing mortgage and foreclosure crisis is the emergence of a new type of business which purports to offer “loss mitigation consulting,” “foreclosure prevention,” “mortgage loan modification,” and similar services.  The Department of Banking and Insurance has seen an increasing number of advertisements, direct-mail solicitations and other marketing materials offering New Jersey consumers assistance in negotiating resolutions of their delinquent residential mortgage loans with lenders and servicers in exchange for up-front fees.

The Department has also seen solicitations to licensees and to attorneys to partner with companies that purport to offer such services.  These marketing materials suggest that these businesses will help delinquent borrowers obtain payment plans, loan modifications, short sales and deeds in lieu of foreclosure.  Mortgage bankers, brokers and solicitors have been targeted by these businesses in hopes of obtaining referrals.

The Department has begun to receive consumer complaints regarding fees paid to parties providing these services.  The Department has also received inquiries from persons interested in entering such a business.  As a result, the Department is providing answers to some of the most frequently asked questions below:

What is a Loan Modification?

A loan modification involves modifying the terms of an existing loan, typically to make it more immediately affordable for a borrower in default or in imminent danger of default, for instance because of a scheduled rate increase.  The terms commonly modified are the interest rate and/or the term of loan.  A loan modification is not a form of mortgage loan refinance or second mortgage activity.

Typically, loan modification activity falls into the category of “debt adjustment” as defined in New Jersey’s Debt Adjuster Act.

A “debt adjuster” is a person who either (a) acts or offers to act for a consideration as an intermediary between a debtor and his creditors for the purpose of settling, compounding, or otherwise altering the terms of payment of any debts of the debtor, or (b) who, to that end, receives money or other property from the debtor, or on behalf of the debtor, for payment to, or distribution among, the creditors of the debtor. [N.J.S.A. 17:16G-1c(1)].

What businesses may legally engage in loan modification activity that involves debt adjustment?

a) The lender or owner of the loan;

b) The mortgage servicing company, acting as an agent for the loan’s owner;

c) An entity licensed by the Department as a Debt Adjuster under the Debt Adjuster Act; and

d) Other entities that are exempt from Debt Adjuster licensure, as set forth at N.J.S.A. 17:16G-1c(2):

The following persons shall not be deemed debt adjusters: (a) an attorney-at-law of this State who is not principally engaged as a debt adjuster; (b) a person who is a regular, full-time employee of a debtor, and who acts as an adjuster of his employer’s debts; (c) a person acting pursuant to any order or judgment of court, or pursuant to authority conferred by any law of this State or the United States; (d) a person who is a creditor of the debtor, or an agent of one or more creditors of the debtor, and whose services in adjusting the debtor’s debts are rendered without cost to the debtor; or (e) a person who, at the request of a debtor, arranges for or makes a loan to the debtor, and who, at the authorization of the debtor, acts as an adjuster of the debtor’s debts in the disbursement of the proceeds of the loan, without compensation for the services rendered in adjusting those debts.

What businesses may not legally engage in loan modification activity that involves debt adjustment?

a) Any person or entity not exempt from the Debt Adjuster Act licensing requirement, and not licensed as a debt adjuster; and

b) Any mortgage banker, correspondent mortgage banker, mortgage broker, or mortgage solicitor licensed or registered under the Licensed Lenders Act, who is not the owner or agent of the owner of the loan being modified.

What do consumers risk by seeking help from entities offering loan modification services who do not have a debt adjuster license or exemption?

a) Payment of exorbitant upfront fees for services available from a proper source for free or at minimal cost;

b) Loss of fees paid, with no services rendered, and/or no protection from financial loss under a surety bond (Debt Adjuster licensees are required to be bonded in the minimum amount of $50,000.);

c) Loss of precious time in the midst of a default or foreclosure process;

d) Loss of title to the home without any real benefit, under certain scams; and

e) Further damage to credit profile.

The Department will investigate complaints relating to unlicensed persons offering loss mitigation consulting, foreclosure prevention, loan modification and similar services and will pursue appropriate remedies.

What business risks are involved in conducting loan modification activity without a license or exemption?

a) State of New Jersey enforcement action for fines and injunctive relief under the Debt Adjuster Act;

b) Criminal prosecution; and

c) Actions by individual consumers or the NJ Attorney General under the Consumer Fraud Act and other civil law suits for money damages sustained by consumers.

All persons who may provide or seek to provide loss mitigation consulting, foreclosure prevention, mortgage loan modification, or similar services are urged to carefully review the Debt Adjusters Act with their counsel to assure compliance.

More information about Mortgage Modification

Contact an attorney for help with your Mortgage Modification

College Dean Wins Discrimination Suit

TRENTON – The New Jersey Supreme Court has decided in favor of a college dean who sued Mercer County Community College for not extending her contract after 25 years of employment, and whose age discrimination lawsuit was supported in an amicus brief by the Division on Civil Rights.

In a 6-1 decision, the state Supreme Court held that an employer’s refusal to renew the contract of an employee who is over 70, when the basis for that non-renewal is age, is a prohibited discriminatory act under the Law Against Discrimination (LAD).

The decision upholds an earlier ruling by the Appellate Division that longtime dean Rose Nini could pursue a discrimination suit against Mercer County College over its refusal to renew her contract in 2005, when she was 73.

Despite Nini’s 25 consecutive years of employment with the college – including 23 years as Dean of the Division of Corporate and Community Programs – Mercer County College contended that its failure to renew her contract in 2005 was not a termination, but rather a refusal to hire. As such, the college contended in court, its non-renewal of Nini’s contract was protected by a 1985 amendment to the LAD that permits employers to refuse to hire job candidates over age 70.

In a Supreme Court amicus brief supporting Nini, however, the Division on Civil Rights maintained that the non-renewal of Nini’s contract was not protected by the so-called “over-70 exception” to the LAD. Rather, the Division contended, Mercer’s failure to renew Nini’s contract was tantamount to a firing on the basis of age, and was therefore subject to the LAD’s prohibitions on such actions.

“The Supreme Court decision confirms that the LAD’s age discrimination protections will apply even to those who are subject to renewable employment contracts, and that employers cannot avoid compliance with anti-discrimination laws simply by restructuring their relationships with their employees,” said Division on Civil Rights Director Chinh Q. Le.

In upholding the Appellate Division’s earlier ruling, the Supreme Court remanded Nini’s lawsuit for a trial on the merits of the case. However, Nini and Mercer County College have reportedly reached settlement in the matter.

Director Le, however, said the Supreme Court ruling remains significant. He noted that it would have seriously hindered the State’s ability to combat age discrimination in the future if the “overly broad interpretation” of the 1985 LAD amendment put forth by Mercer County College had been accepted by the court.

Nini was a member of the Mercer Community College Board of Trustees before she began working at the college as an executive assistant to the president in 1979. In 1982, she became Dean of the Division of Corporate and Community Programs, a position she held until her final contract expired on June 30, 2005.

Although Nini was provided three ostensibly performance-related reasons for the non-renewal of her contract, she maintained in her lawsuit that the reasons were pretexts, and that the actual reason was her age. Her civil complaint against the college, its board of trustees and President Robert Rose, filed in September 2005, charged age-based discrimination.

The trial court held, however, that state law permitted an employer to decline to renew the employment contract of any employee 70 years or age or older. Nini appealed, arguing that the non-renewal of her employment contract represented an unlawful termination or discharge. The Appellate Division agreed and reversed the trial court.

The college then petitioned the state Supreme Court for certification on the issue of the Appellate panel’s interpretation of the over-70 exception, and certification was granted. The case was argued in November 2009 and decided this past Tuesday, June 1.

Senior Deputy Attorney General Anne Marie Kelly and Assistant Attorney General Andrea M. Silkowitz handled the Nini amicus brief on behalf of the State.

Contact a New Jersey Civil Rights attorney

Finding of Probable Cause Issued Against Chiropractic Firm Over Alleged Hostile Work Environment

TRENTON — Division on Civil Rights Director Chinh Q. Le announced today that the Division has issued a Finding of Probable Cause against a chiropractic treatment center accused of subjecting a female employee to harassment in the form of sexual advances from a patient that went unaddressed. The Division also found probable cause that the center unlawfully discharged the worker as retaliation for complaining about being harassed.

Named as Respondent in the Finding of Probable Cause is the Wendel Family Wellness Center of Woodbridge, Middlesex County. The center is accused of allowing a male patient to repeatedly harass the alleged victim, former chiropractic assistant Giselle Ramsingh, by making numerous physical and verbal advances toward her while she treated him throughout an eight-month period in 2004.

Ramsingh, of Parlin, Middlesex County, was discharged from her job in early September 2004, approximately one month after she submitted a formal memorandum complaining about being sexually harassed by the patient — the second one she had submitted in a year regarding the same patient. Her dismissal also came less than two weeks after a meeting in which, Ramsingh told State Investigators, she advised her employer she did not feel her concerns had been dealt with appropriately, and that she was contemplating calling the police.

“The allegations in this case are disturbing,” said Director Le. “Employers have a duty under the law to ensure the workplace is harassment-free, and workers have a right under the law to report harassing conduct without fear of reprisals. When an employee reports that she or he has been subjected to harassment, the employer is obligated to investigate the matter and take the appropriate steps to address it and prevent such conduct from taking place in the future.”

According to the Finding of Probable Cause, Ramsingh was subjected to acts of sexual harassment by the same patient during numerous visits for treatment at Wendel Family Wellness Center during the months spanning January through August 2004. Among other things, Ramsingh reported that the patient smacked her on the buttocks with a clipboard during one visit. On other occasions, she charged, he grabbed her ankles and moaned her first name while undergoing a chiropractic massage, grabbed and twirled her hair and, in one instance, told her she was “very sexy” and that “you don’t know all the fun I can have with you if we go out.”

According to the Finding of Probable Cause, Ramsingh not only submitted her memorandums complaining about the patient’s conduct, but also complained directly to Dr. David Wendel and his office manager, Tara Montalvo, to little avail.

The Finding of Probable Cause refers to an anecdote provided by Montalvo in which she described filling in for Ramsingh and treating the harassing patient on one occasion in June 2004. Montalvo described entering the room and beginning to massage the patient without him realizing it was Montalvo, not Ramsingh, providing treatment. Montalvo told State Investigators the unwitting patient began to moan and groan Ramsingh’s first name, “Giselle,” which Montalvo said she found “very gross.”

According to the Finding of Probable Cause, Dr. Wendel confirmed to State Investigators that Ramsingh brought her situation to his attention, and that in response he had taken over treatment of the patient. However, the state’s investigation yielded “sufficient evidence to support a reasonable suspicion” that Ramsingh was, in fact, asked to continue treating the patient on at least a few occasions after submitting her August 2004 memorandum, and that she continued during these sessions to be sexually harassed.

A Finding of Probable Cause does not resolve a civil rights complaint. Rather, it means the state has concluded its preliminary investigation and determined there is sufficient evidence to support a reasonable suspicion the New Jersey Law Against Discrimination (LAD) has been violated. The LAD provides that each Respondent found to have committed a violation is subject to a penalty of up to $10,000, provided he or she has not been convicted of a previous violation within the past five years. The LAD also provides for other remedies, including compensatory damages and injunctive relief, such as changes in the employer’s policies and management/staff training. Now that the Division has issued a Finding of Probable Cause, the case will be referred for a process known as Conciliation. If Conciliation is not successful, the matter will be referred to an Administrative Law Judge (ALJ) for a hearing on the merits, which is a non-jury trial. The ALJ will then issue a written Initial Decision.

Director Le thanked State Investigator Elbia Concepcion and Division on Civil Rights managers Atley Tyler and Lorraine LeSter for their work on the Wendel matter.

Contact a New Jersey Civil Rights attorney

U.S. Supreme Court Amends Miranda Rights

In a 5-4 vote, the United States Supreme Court expanded its limits on the Miranda rights, despite the dissent of newly appointed U.S. Supreme Court Justice Sonia Sotomayor, according to an Associated Press article.

The June 1 majority ruling said that suspects must break their silence and tell police they are going to remain quiet to stop an interrogation, just as they must tell police that they want a lawyer.

“Criminal suspects must now unambiguously invoke their right to remain silent — which counterintuitively requires them to speak,” Sotomayor said. “At the same time, suspects will be legally presumed to have waived their rights even if they have given no clear expression of their intent to do so. Those results, in my view, find no basis in Miranda or our subsequent cases and are inconsistent with the fair-trial principles on which those precedents are grounded.”

The ruling comes in a case in which a suspect, Van Chester Thompkins, remained mostly silent for a three-hour police interrogation before implicating himself in a Jan. 10, 2000, murder in Southfield, Mich.

Information on Criminal Defense in NJ.

Contact a  New Jersey Criminal Defense Attorney.

Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress

The possibility of losing your home to foreclosure can be terrifying. The reality that scam artists are preying on the vulnerability of desperate homeowners is equally frightening. Many so-called foreclosure rescue companies or foreclosure assistance firms claim they can help you save your home. Some are brazen enough to offer a money-back guarantee. Unfortunately, once most of these foreclosure fraudsters take your money, they leave you much the worse for wear.

Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief and then fail to deliver. Their goal is to make a quick profit through fees or mortgage payments they collect from you, but do not pass on to the lender. Sometimes, they assume ownership of your property by deceiving you, the homeowner. Then, when it’s too late to save your home, they take the property or siphon off the equity. You’ve lost your home to foreclosure despite your best intentions.

If you think you may be facing foreclosure, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how to recognize a foreclosure rescue scam. And even if the foreclosure process has already begun, the FTC and its law enforcement partners want you to know that legitimate options are available to help you save your home.

How the Scams Work

Foreclosure rescue firms use a variety of tactics to find homeowners in distress: Some sift through public foreclosure notices in newspapers and on the Internet or through public files at local government offices, and then send personalized letters to homeowners. Others take a broader approach through ads on the Internet, on television, or in the newspaper, posters on telephone poles, median strips and at bus stops, or flyers or business cards at your front door. The scam artists use simple and straight-forward messages, like:

“Stop Foreclosure Now!”

“We guarantee to stop your foreclosure.”

“Keep Your Home. We know your home is scheduled to be sold. No Problem!”

“We have special relationships within many banks that can speed up case approvals.”

“We Can Save Your Home. Guaranteed. Free Consultation”

“We stop foreclosures everyday. Our team of professionals can stop yours this week!”

Once they have your attention, they use a variety of tactics to get your money:

Phony Counseling or Phantom Help

The scam artist tells you that he can negotiate a deal with your lender to save your house if you pay a fee first. You may be told not to contact your lender, lawyer, or credit counselor, and to let the scam artist handle all the details. Once you pay the fee, the scam artist takes off with your money.

Sometimes, the scam artist insists that you make all mortgage payments directly to him while he negotiates with the lender. In this instance, the scammer may collect a few months of payments before disappearing.

Bait-and-Switch

You think you’re signing documents for a new loan to make your existing mortgage current. This is a trick: you’ve signed documents that surrender the title of your house to the scam artist in exchange for a “rescue” loan.

Rent-to-Buy Scheme

You’re told to surrender the title as part of a deal that allows you to remain in your home as a renter, and to buy it back during the next few years. You may be told that surrendering the title will permit a borrower with a better credit rating to secure new financing – and prevent the loss of the home. But the terms of these deals usually are so burdensome that buying back your home becomes impossible. You lose the home, and the scam artist walks off with all or most of your home’s equity. Worse yet, when the new borrower defaults on the loan, you’re evicted.

In a variation, the scam artist raises the rent over time to the point that the former homeowner can’t afford it. After missing several rent payments, the renter – the former homeowner – is evicted, leaving the “rescuer” free to sell the house.

In a similar equity-skimming situation, the scam artist offers to find a buyer for your home, but only if you sign over the deed and move out. The scam artist promises to pay you a portion of the profit when the home sells. Once you transfer the deed, the scam artist simply rents out the home and pockets the proceeds while your lender proceeds with the foreclosure. In the end, you lose your home – and you’re still responsible for the unpaid mortgage. That’s because transferring the deed does nothing to transfer your mortgage obligation.

Fraudulent foreclosure “rescue” professionals use half truths and outright lies to sell services that promise relief and then fail to deliver.

Bankruptcy Foreclosure

The scam artist may promise to negotiate with your lender or to get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, though, the scam artist pockets the fee and files a bankruptcy case in your name – sometimes without your knowledge.

A bankruptcy filing often stops a home foreclosure, but only temporarily. What’s more, the bankruptcy process is complicated, expensive, and unforgiving. For example, if you fail to attend the first meeting with the creditors, the bankruptcy judge will dismiss the case and the foreclosure proceedings will continue.

If this happens, you could lose the money you paid to the scam artist as well as your home. Worse yet, a bankruptcy stays on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job.

Where to Find Legitimate Help

If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately. You may be able to negotiate a new repayment schedule. Remember that lenders generally don’t want to foreclose; it costs them money.

Other foreclosure prevention options, including reinstatement and forbearance, are explained in Mortgage Payments Sending You Reeling? Here’s What to Do, a publication from the FTC. Find it at www.ftc.gov.

You also may contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure. HPF is a member of the HOPE NOW Alliance of mortgage servicers, mortgage market participants and counselors. More information about HOPE NOW is at www.hopenow.com.

Red Flags

If you’re looking for foreclosure prevention help, avoid any business that:

• guarantees to stop the foreclosure process – no matter what your circumstances
• instructs you not to contact your lender, lawyer, or credit or housing counselor
• collects a fee before providing you with any services
• accepts payment only by cashier’s check or wire transfer
• encourages you to lease your home so you can buy it back over time
• tells you to make your mortgage payments directly to it, rather than your lender
• tells you to transfer your property deed or title to it
• offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
• offers to fill out paperwork for you
• pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.

If you’re having trouble paying your mortgage or you have gotten a foreclosure notice, contact your lender immediately.

Report Fraud

If you think you’ve been a victim of foreclosure fraud, contact:

• Federal Trade Commission
• Your state Attorney General
• Your local Better Business Bureau

For More Information

To learn more about mortgages and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government’s portal to financial education.

The FTC works to prevent fraudulent, deceptive and unfair business practices in the marketplace and to provide information to help consumers spot, stop and avoid them. To file a complaint or get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. Watch a new video, How to File a Complaint, at ftc.gov/video to learn more. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

If you are facing foreclosure or bankruptcy in New Jersey, it’s a good idea to contact a lawyer to ensure you are taking all the right steps to avoid foreclosure or bankruptcy.

Contact the bankruptcy lawyers at Garces & Grabler to find out how we can help you with your foreclosure modification or bankruptcy needs. Or call 800-923-3456