Special Civil Part in New Jersey: What to do when Goldman & Warshaw send you a complaint, or service of a wage garnishment demand!

Everyone, here is a New Jersey post. I get enough hits and actually a few questions about this that it pays just to make it a post.

As I mentioned a while back, in the mid to late 1990′s, I had some dealings with the Goldman & Warshaw firm. So I feel I have some insight into their “business model” of practicing law.

If you are hitting Hoofin to You! based on a Google search, it might be becuase you have received in the mail either a creditor’s complaint, or alternatively, a wage garnishment request, with Goldman & Warshaw representing the other side.

Elsewhere on my blog, I point out that I am an attorney in New Jersey. But what I am giving out here is not legal advice. You need to find someone “back home” (not in Japan) to give you that. What I am discussing here is more everyday advice about our state court system and just life in general. It is “life advice”.

1. “Oh my God! Oh my God! I just got a notice from the county Special Civil Part that my creditor is taking me to court!!! Goldman & Warshaw are the attorneys!”

This is going on a couple hundred times a month, at least, all over our great state. And has been for at least 15 years.

First some history:

What used to be, is that if you fell behind on some bill (like a credit card bill), you dealt with the collections department of whoever lent you the money. You made arrangements and you got the thing taken care of. What used to be the “dirty little secret” is that you sometimes didn’t have to come up with one dollar for every dollar you owed. The company might take 70 cents or 50 cents on the dollar just to even it out and be done with you. (And you with them.)

Sometimes the original creditor would utilize a “third party debt collector” who might be a little more aggressive. This was a collection firm who was going to be paid a cut of whatever they got from you. So if they could collect the full bill, they would keep a piece and send the rest to the original creditor.

In the 1970′s—which was another time in America when the country overall was seeing a tough economy, ’74 especially—these third party debt collectors got out of hand. Early in the Carter Administration (1977), Congress passed a law to regulate these agents, called the “Fair Debt Collections Practices Act” (FDCPA). The FDCPA, if you knew about it, could really put the hammer to collection agent abuses. It restricted what the debt collector could do with you, and to you, to try and get you to pay up.

In 30+ years, practically nothing has been done to update the law, by the way.

About a year later (1978 or ’79) began both this massive boom in consumer lending, and a revision to the bankruptcy code making it easier to go under.

Throughout the 1980′s, more people started to have trouble being overextended. But the use of the bankruptcy court was not as popular as it was to become in the 1990′s and 2000′s. I think nowadays 40,000 people go under a year. Which in a state of 8,500,000 means 1/2% go to bankruptcy every year.

So when you get that letter from Stanley D. Goldman or his firm, or you get the notice to show up in Special Civil Part, the first thing you do is take a deep breath. Cry if you want, but don’t panic.

2. The Goldman & Warshaw (and their copycat law firms) special edge

Stanley D. Goldman exploited the loophole in the Fair Debt Collection Practices Act that it doesn’t cover attorneys when they aren’t acting as third-party debt collectors. (In 1986, Congress covered attorneys acting as debt collectors. BUT NOT attorneys acting as attorneys.)

So that aggression that previously had been associated with the collection agency industry was simply moved one step down the line, to our Special Civil Court system and what you might call New Jersey’s “Collection Bar”—attorneys who specialize in collecting small-to-mid-size debts.

3. New Jersey Superior Court, Law Division, Special Civil Part (a/k/a “Special Civ”)

The Special Civil Part acts as, among other things, a turbocharged small claims court. Anyone can bring suit for things like contract damages (which not paying a credit card or other debt is), up to $15,000 last I checked.

If people have higher damage[s], they have to go up to regular Law Division, or accept $15,000 as the most they can recover. (I think you can also get lawyer fees outside the $15,000).

As a small claims-style court, Special Civil is meant to be a one-day affair where the complainant (the person suing you) brings their facts, you bring your defenses, and the judge decides. Like “The People’s Court” on TV years ago. In most counties, they try to get you to do the mediation or arbitration program. (In some counties this might be a mandatory first step). But you always have the right to talk to the judge in the end.

Depending on your situation, if this is debt that you actually owe, you are probably not going to have much success winning. If the debt isn’t yours, then yes, you better make your case! In New Jersey, if the debt is older than six years (meaning you haven’t done anything with it like pay it or even reaffirm the obligation), then you have likely met the “statute of limitations” for it [still] to be valid. [This is to say, if the debt is older than six years in New Jersey, it might still be debt, but the creditor cannot come after you in court and collect anything.]

Debt goes bad and at some point it is not enforceable anymore. Yes, it is still debt, but the court won’t do anything about it because the creditor “sat on their rights”—waited too long to sue you.

What will likely happen is that if it is your debt, and it is within the statute of limitations, you might be able to argue any crazy tacked-on fees the creditor is seeking. But otherwise, you are going to get a judgment against you.

There are some internet posters out there who will list all these ways to try and get around a debt. But my feeling is, if it really is yours, then you need to do what people who get behind have done for ages: pay or make arrangements.

The worst that happens on court date is that you walk out with a judgment against you, where before you had an overdue debt against you. You maybe owed someone $7,000 that you couldn’t pay. Now the State of New Jersey is saying, yes, you do owe that $7,000.

It was no mystery the day before Special Civil Part, right? And none afterward. Except afterwards, the creditor (judgment creditor) gets extra tools to try and get money from you. The one that Goldman & Warshaw have rigged throughout the state since the 1990′s is the wage garnishment.

4. How wage garnishment is supposed to work, and how it actually has worked, in New Jersey.

New Jersey law, at NJSA 2a: 17-50 provides that if a judgment creditor asks for a wage garnishment, which is like a special “tax” on your wages in favor of the creditor, then the judge shall grant one. It’s been the law since about 1904 in the state—over 100 years.

Where this has been abused by Collection Bar firms like Goldman & Warshaw is that they have misled the courts and/or judgment debtors that the maximum garnishment (10% of your wages up to about $27,000, and then higher above that) is the ONLY garnishment amount a judge can grant.

Goldman & Warshaw goes in asking for the 10%. Back in the 1990′s firms like that used a case out of Atlantic City that said a garnishment must issue to mean that a garnishment for the maximum must issue. And in places like Somerville, which had a real dumb-ass for a judge sitting in Special Civil Part around 1996-1998, this falsehood was bought hook, line and sinker.

Although, I have recently been told by the judge who is the chief administrator of the New Jersey courts (Judge Glenn Grant) that the Special Civil Part courts are aware that they have flexibility on this garnishment, for me, proof is in the pudding. I have to hear back about that.

The little nugget of wisdom I can hopefully impart to you is that if you are dealing with Goldman & Warshaw (or that Pressler firm), is just be aware that the state does not mandate a 10% garnishment! There is supposed to be a finding of fact, as part of what’s called “due process”, to determine what it is you can afford. And it’s the judge’s job—that’s what the judge is there for.

You borrowed the money under a promise, but someone lent it to you. And if you are stuck and can’t pay back, yes, you have a problem. And you kind-of did it to you. But somebody lent it to you and so it’s not that the problem is 100% your fault. It may be 99.999% you. But there was some other actor in it.

So if the Special Civil Part courts are as “progressive” now as Judge Grant led me to believe, tell the judge in your Special Civil Part matter what you can afford to pay. Goldman tries to get you pay some big number after they can wave the judgment in your face. But if you can’t pay it, let the judge know when Goldman tries for the garnishment.

My own feeling is that when Special Civil Parts start ordering $5 a week garnishments, it will do a lot to shut down the Goldman & Warshaw aggression tactics, or at least make them think through their “business model”. If you can only pay $5 a week (and there are federal laws that would limit even that, if you are making very little money), that’s all the court system of our state should be ordering as relief to the creditor.

Some states, like neighboring Pennsylvania, don’t even have wage garnishment on contract debts. For taxes, yes, but taxes are always a special case ’cause your stiffing the public, not a private company.

So as “life advice”, that’s what I think. Own up to it, but ask the court for any help it can give you.

5. Bankruptcy as the very, very last option.

This is part where I think Goldman and his ilk really smell. Using the court system to scare people into paying up. But in fact sending any number running to the bankruptcy court house.

The idea of collections is to get money back. Not to play the law or large numbers with a state population and scare 20% of the down-and-out into bankruptcy (nobody gets anything back) in order to squeeze the other 80% who don’t want to do a bankruptcy. It’s like the creditors who don’t employ Goldman get wiped out because Goldman is acting overly aggressive on behalf of his client.

Now, to me, if you get a judgment against you, it’s not the end of the world. Pay, or make arrangements. If you get a wage garnishment order against you, it’s a little embarrassing, but again, not the end of the world. In fact, in New Jersey, it’s a bit of breathing room if you have other creditors also chasing after you—since they would have to wait in line. Which may be years. And they would be much more likely to try and get any small amount they could from you instead.

But my advice is that bankruptcy is always the last option, after you’ve tried everything else. It’s basically saying, “I can’t pay it, and under no foreseeable circumstance in the future, will I be able to.” And yeah, some people hit that, you know. There are these people buried by or torn up with these huge number debts (like six figure). Plus an “underwater” mortgage on their house. Can they get out from under? Probably, over time.

But it is a lot of energy and frustration. The people have to sit and negotiate, deal with it week-after-week. It’s doable in the sense that people do do it–they do get out from under even the big numbers– and it goes on all the time. But it’s a lot of grief, and usually you need a creditor who is going to work with you.

Small beans collecting, like Special Civil Part, should not send you to the bankruptcy court! It is a tragedy in our state that it has in the past, and firms like Goldman & Warshaw should be somewhat ashamed that they pushed small debts through a sort-of mass production system like that.

In earlier eras, this sort of consumer lending at high interest and excessive litigation by those same lenders would have been seen as scandal and a disruption to the community. This was why there was (and still is actually!) a usury law (30% in NJ, but not on out-of-state lenders like Delaware banks). It’s why some states only allow judgments to be collected off specific assets, not income.

New Jersey has sometimes been in the forefront of good law. But sadly to admit, it’s also sometimes been so far behind the curve that we look silly as a state.

This whole small beans debt collection is probably one of the latter.

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10 thoughts on “Special Civil Part in New Jersey: What to do when Goldman & Warshaw send you a complaint, or service of a wage garnishment demand!

  1. Thank you for taking the time to write this reassuring & informative “life advice”.

    I am on social security disability, so I am not dealing with a wage garnishment. Today, while I was at a doctor appointment, a sheriff presented a “Affidavit of Service” from Pressler & Pressler to my daughter, at my home, for me. It was a personal property levy to satisfy $4464 debt, sold by the original creditor to a financial services company.

    The sheriff requested that my daughter grant access to my home so that he could inventory my personal property to sell. She declined, and under remarks in the service data area of the affidavit he wrote, “inventory denied”.

    Could you please tell me what happens next in this process, and/or where to find out what options I may have at this point?

    I did try to contact Pressler once to make payment arrangements, and left a voicemail detailing account # & contact info. They called back weeks later, but I was sick and unable to reply at the time.

    I have been on disability for 6 years. Part of my disability is due to encepholapathy & neurologic disorder, and I missed the court date unintentionally.

    My husband of 33 yrs went on ss disability last year and our combined income is so low we aren’t even close to making ends meet. I don”t know what to do.

    Any suggestions you might have would be greatly appreciated. Thank you for your compassion, and for sharing your knowledge to help others through the gift of your “life advice”.

  2. A question about liens on bank accounts.

    Having a judgment against me, G&S filed to attach my checking and savings accounts. If the account holds money received from sources other than wages (i.e. pensions or unemployment) can they take the entire amount?

    If after taking any money in the account at the time the lien is filed, can they continue to take money if a check is deposited, or a direct deposit made?

    Thank you for your time.

    • How it works is here:

      http://www.judiciary.state.nj.us/prose-1.htm#BANK

      There is first a levy, which freezes the account. Then the collector has to file a “Motion to Turn Over Funds”. A judge must sign off on the motion.

      Pretty clearly, you need to dialogue with the judge’s chambers to make clear that some of the money hitting the checking account is exempt under the court rule. Ideally, you ask the judge to exempt all of it if you need it to live on.

      The biggest mistake I think judgment debtors make is that they don’t open up a dialogue with the court. The bank isn’t going to know what’s exempt, and the sheriff’s men won’t either. And they don’t care. That’s why the collectors use this as a pressure tactic.

      And obviously, if your account gets frozen, you don’t ever have another direct deposit put into it!

  3. Thank you for your reply.

    First,I have heard from a court officer. He sent a letter telling me what the accounts were frozen and asked if any of the money was exempt.

    I wrote back telling him that yes, part is from a pension. I also sent him info about the pension, how much I earn, and told him what I could afford to pay.

    When I wrote my original post here, the entire amount of my account was being held. I did received a notice from the bank saying how much the lien was for and how much they were holding. The bank also charged me a fee of $100 to do put the hold on the money…

    On 12/1 my pension was direct deposited (future payments will be by check, but I could not stop that one) but the money was available, so I withdrew it.

    • The advice I give everyone—not as legal advice but as friendly advice—is to have a dialogue with the judge’s chambers about anything that seems against the rules. Knowledge is power, so of course first know the rule.

      The court officer is not the judge. It is the judge that ultimately has the power over your money. People either don’t know this or they never find out. The court officer is “just” the person TAKING your actual cash. But the judge has the power to control the whole situation. Judges, like the one I criticized on my blog several years ago, try and pretend that they don’t. As a lawyer, I think that when they do that it’s unethical. But they have the robe and the title, not me.

  4. if you feel that goldman&warshow did you wrong and comitted fraud go to the NEAREST FBI OFFICE AND FILE A COMPLAIN no reson to go to nj superior courts where the judges will not give you due process and just rubber stamp the fraud for them

    • If you are being sued by a lender using Goldman & Warshaw, you definitely want to dialogue with the judge if you have issues. Another avenue is the new federal Consumer Financial Protection Board. I would only go to the FBI if you had hard evidence of an indictable crime. The FBI is busy enough with crimes of physical violence, drug dealing, and multi-million dollar theft.

  5. You are great and thank for all postings and suggestions and importand information.
    I am credit card fraud victim and I can relay all that. Currently I have motion for re-consideration in Supreme court for a case that a third party purchased a credit card dept that was opened under my business name and my name back in 2003 and I was sued in 2007 Actually was many things wrong with the application such as mother maiden name was missing my name was used as nick name instead my acutal name. The financial institution was Atdvanta Credit Card from Utah and the third party was Federated Financial Copr of USA. At the trial in 2008 I lost the case since I represent myself as a pro se later I apped at the cost of $6,000.00 and was overturn in 2010 I represent once again myself due to financial dificulties and economic crises. The judge was partial and I can say she was horable person. I appealed again myself and I settled on appreciated transcripts because did have the $1,000.00 for a full transcript. Appelate court ruled without full transcript not must can be done so they affirm lower court desicision. So I appealed to Supreme Court my petition of certification was denied just recently and I am waiting the motion for re-consideration (Not much chances) but I have done everything in my power. Now the ruthless lawyers for Federated Financial they allready served with papers demanding drive license number bank accounts and copy of deeds. They are serious about the $6100.00 judgment plus interest cost for all these years collecting them. In short they will put me out of my house I am 65 years old guy without any disorderly activity not even a driving violation for the passed 40 years. There are some good people that they want to help but there are so many greedy lawyers and unfair judges who do not step in and to them is another day at work. Ofcourse it is impossible to give every detail and merit of the case at this posting. But I will try the Federal Consumer Financial Fraud Board insted FBI as I read above.

    • Mr. Markoglu, you definitely should let the Consumer Financial Protection Bureau know about your story. Here is the link. There must be some support groups in your state who work with victims of fraud.

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