San Francisco Bankruptcy Lawyer Blog

yes! writer Dean Baker reported on January 15, 2010 in "Between Overworked and Out of Work" ideas on how to have 10 percent unemployment if people worked 10 percent fewer hours. He wrote that unemployment may be reduced through a reduction in average work hours by giving a tax credit to employers to give their workers paid time off, which can take the form of paid family leave, paid sick days, paid vacation, or a shorter work week.

During these depressed times, employers allows employees to sacrifice their own well being to keep a job to stay out of debt. In California, companies are already required to give nonexempt employees rest periods that must, insofar as practicable, be taken in the middle of each work period. The rest period is based on the total hours worked daily and must be at the minimum rate of a net ten consecutive minutes for each four hour work period.

A rest period is not required for nonexempt employees whose total daily work time is less than three and one-half hours. The rest period is counted as time worked and the employer pays for such periods. Since nonexempt employees are paid for their rest periods, the employer can require them to remain on the company's premises during such periods.

If the employer fails to provide a nonexempt employee a rest period, the employer must pay the nonexempt employee one additional hour at the nonexempt employee's regular rate of pay for each workday that the rest period is not provided. If the company does not provide all of the rest periods required in a workday, the nonexempt employee is entitled to one additional hour of pay for that workday, not one additional hour of pay for each rest period that was not provided during that workday.

Continue reading "Rest Periods" »

The Bureau of Labor Statistics released its Regional and State Employment and Unemployment Summary on January 22, 2010. In December 2009, nonfarm payroll employment increased in 11 states. The largest over-the-month decrease in employment occurred in California (-38,800), followed by Texas (-23,900), Ohio (-16,700), Illinois (-16,300), Michigan (-15,700), Wisconsin (-15,200), and Georgia (-15,100).

These statistics show California employers are holding off on hiring full-time workers. During these tough times, employees may sacrifice their own well being to keep a job to stay out of debt. Employees should stay in touch with their company's meal and rest period policies, and know the laws to prevent ill treatment.

In California, nonexempt employees are required to take a minimum 30 minutes meal period when the work period is more than five hours per day. This meal period is unpaid and is not to be used for calculating overtime.

A second meal period of not less than 30 minutes is required if a nonexempt employee works more than ten hours per day, except that if the total hours worked is no more than 12 hours, the second meal period may be waived by mutual consent of the direct manager and nonexempt employee only if the first meal period was not waived.

During the meal periods, the nonexempt employee is relieved of all duty. If during a meal period, the nonexempt employee is not relieved of all duty, the meal period shall be considered an on-duty meal period that is counted as hours worked which will be compensated at the nonexempt employee's regular pay rate. An on-duty meal period shall be permitted only when the nature of the work prevents a nonexempt employee from being relieved of all duty and when the direct manager and nonexempt employee agree to an on-the-job paid meal period by written agreement. A direct manager and nonexempt employee may not agree to an on-duty meal period unless, based on objective criteria, any nonexempt employee would be prevented from being relieved of all duty based on the necessary job duties. An example of a job that fits this category is a sole worker in a remote kiosk.

If an employer fails to provide a nonexempt employee a meal period in accordance with the above, the employer must pay one additional hour of pay at the nonexempt employee's regular rate of pay for each workday that the meal period is not provided. This additional hour is not counted as hours worked for purposes of overtime calculations.

Continue reading "Meal Periods " »

The Bureau of Labor Statistics released its Employment Situation Summary on February 5, 2010 reporting the unemployment rate fell from 10.0 to 9.7 percent in January, and nonfarm payroll employment was unchanged (-20,000). Employment fell in construction and in transportation and warehousing. Temporary help services and retail added jobs.

These statistics show employers are still holding off on hiring full-time workers. During these depressed times, employees may start to do whatever is asked of them, and work late in order to keep their jobs to stay out of debt. Employees should stay in touch with their company's overtime and compensatory time policies, and know the laws to prevent abuse.

In California, a normal full-time work day is eight (8) hours plus a half hour to one hour meal period. This meal period is unpaid and is not to be used for calculating overtime. A normal work week is five (5) consecutive work days for a total of forty (40) hours. Because employees should be paid overtime, whether approved by a manager or not, working overtime may be costly to an employer. Some companies state in their employee manuals that without prior direct manager authorization an employee may be terminated for working overtime.

Hours absent due to illness or injury, lateness, authorized time-off-without-pay, or unexcused absences are not credited as hours worked in overtime calculations. Make-up time will not be counted in the total number of hours worked when computing overtime compensation, unless the total hours worked exceed eleven (11) hours in a day or 40 in a week.

The employee should include in a timecard, hours actually performed at work, plus any hours absent due to paid sick leave, holidays, vacations, or any other time-off-with-pay authorized by the immediate supervisor.

Overtime pay is based on hours worked in excess of 8 hours during any normal work day, or in excess of 40 hours on any normal work week. Overtime is paid at:

• One and one-half times (1.5) the employee's regular rate of pay for all hours worked in excess of 8 hours up to and including twelve (12) hours in any workday.
• Double the employee's regular rate of pay for all hours worked in excess of twelve (12) hours in any workday; or for all work over 8 hours on the seventh consecutive day of work in a week.

Continue reading "Overtime Pay" »

Jobs creation remains a top concern for President Obama in 2010 according to Reuters article "Obama pushes jobs plan, but still warns on deficit" in February 2010, though the New Year has made some companies busy interviewing. Neophotonics, which gets its name from nano enabled optics, scheduled interviews for a Corporate Counsel opening in February 2010. With James D. Fay, a graduate of Harvard Law School, assuming the Chief Financial Officer role, a new attorney is needed at the company to take over the contract negotiations, securities, and corporate compliance.

With more consumers purchasing smart phones to access emails, videos, online games, and music, NeoPhotonics' future should remain promising with its modules and subsystems for telecommunications networks.

NeoPhotonics has offices in San Jose, CA and China. It supports hazardous waste and recycling of electronic goods initiatives. It was named one of the fastest growing companies by Golden Capital Network and Hamilton Lane in September 2009. On its Board of Directors are Steve Jurvetson of Draper Fisher Jurvetson, a well known venture capital firm, and Bandel L. Carano of Oak Investment Partners, which also invests in MobiTV, a privately-held company in Emeryville, CA that brings live TV to mobile devices.

The economy affects bankruptcies. Companies like NeoPhotonics are creating jobs and technology for a more productive standard of living.

Continue reading "NeoPhotonics" »

On the first episode, the Amazing Race teams also had to walk across a tightrope, 120 feet in the air, the length of a football field. After walking the tightrope, the teams had to go down stairs riding a furnicular. Instead of riding a furnicular, which was stated on their clue, Caite and Brent walked down stairs. They made it to the pit stop second, but had to wait thirty minutes as a penalty for their mistake. Other teams checked in, and Caite and Brent ended 7th place after the wait, still making it to the next leg. This was a lesson that people may be delayed when they make mistakes, but they still stay in the competition.

Bankruptcy may cause discomfort in financial needs, but it is not an end to someone's ability to save, find a job, or enjoy life. Filing bankruptcy will automatically stop most lawsuits and garnishments. A bankruptcy filing can temporarily worsen a good credit rating, but it will improve a bad rating. Some credit card companies solicit recently discharged consumer debtors because they are debt free and cannot file another Chapter 7 bankruptcy for a while.

The Amazing Race team that came in last on the first episode was Adrian and Dana. Dana walked across the tightrope, but Adrian could not finish. He fell on his first try and had to go back to the beginning. He tried to finish the task the second time, but failed again. Though Dana and Adrian were eliminated, the fact that Adrian tried, it showed he was someone who could overcome obstacles, and an actual winner.

Continue reading "Amazing Race Season 16" »

When you are the box in dealing with tough financial issues with your husband or wife, engage a bankruptcy attorney to assist in thinking outside the box:

• Cross out "BUT", use "AND"
• Cross out "VICTIM", replace with "VICTOR"
• Cross out "EXCUSES", ask "WHAT CAN BE DONE TO CHANGE THIS?"
• Cross out "TRY", replace with "COMMIT"

Husband and wife do not need to file bankruptcy together. If the debts are joint such as family or medical expenses, then both spouses may file a joint petition. If the debts are incurred by one spouse, such as before marriage, then a single bankruptcy filing should not affect the other spouse, unless the other spouse co-signs for debts.

If there divorce is expected, it may be best to file a joint petition before dissolution so there will be few debts to allocate.

Before filing for bankruptcy, each spouse should pay cash for purchases, not pay any money or transfer property, and not pay off unsecured creditors. Payments made before filing bankruptcy may be classified as preference payments, favoring one creditor over another. Preference payments may be retrieved by a bankruptcy court and divided among creditors. If a debtor wants to pay a creditor regardless of bankruptcy, pay the debt after the bankruptcy discharge, not before a petition.

Everything seems impossible until it is invented. Though it may seem more difficult to get out of debt these days because of the scarcity of jobs, think of how looking for a job is less taxing than the old days before email, social networking, and the Internet. For instance, with Talent Exchange, a person can create a Universal Profile to gain direct access to the Talent Exchange community containing more than 4000 of the world's leading employers, no head-hunters or agencies. By completing a Talent Exchange Universal Profile a job hunter's credentials becomes available to 46 of the Fortune 100 companies, 650 other large enterprises and over 3,300 other companies. These employers find the person's Universal Profile and seamlessly download it into their recruiting systems to quickly match a person to a job. Compare this with the old days of typing resumes on bond paper, and postal mailing them in expensive matching colored envelopes.

Do not worry about all wages being taken away during a bankruptcy filing. Portions of wages earned and owed on the date of a bankruptcy petition are exempt property. Along with wages, state and federal income tax debts assessed more than 3 years before filing bankruptcy may be discharged.

Wages earned may continue to be direct deposited to checking accounts after a bankruptcy filing. If a person does not owe overdraft check charges, a credit line, or a credit card, checking accounts may be used normally.

Continue reading "Bankruptcy Answers" »

On October 8, 2009 ZipRealty, Inc. announced that Larry Bercovich stepped down as General Counsel, with his replacement Samantha Harnett effective November 1, 2009. There was no in depth discussion on Bercovich's pursuit of other opportunities, but his LinkedIn profile in February 2009 had him as Owner - Attorney at Bercovich Business Services. Bercovich's transition was just one of the many changes ZipRealty, Inc. reported on its residential real estate community news and information site.

These days, people in debt follow sites like ZipRealty closely to keep updated on the real estate market because they wonder what happens to their property if they filed bankruptcy. On the date a person files bankruptcy, all personal property and real estate becomes the bankruptcy estate. Money earned or property acquired after the bankruptcy petition filing is not affected by bankruptcy. Non-exempt property may be sold by the bankruptcy trustee and the proceeds divided among creditors.

Exempt property is property needed for basic life necessities. Real estate, household goods, and IRA, 401(k), clothing, art, personal injury settlements may be exempt property that is not lost in bankruptcy.

Property worth may be determined by Kelly Blue Book, equity, and replacement value. Equity is the portion of property that someone does not owe any money on.

Someone once said: "While theoretically and technically television may be feasible, commercially and financially I consider it an impossibility, a development of which we need waste little time dreaming." And now look at the flat screen tvs...

Bankruptcy may assist in making the impossible possible in the moment, and after all, the present may be all you have. Because life is meant to be lived, to experience everything, whether good or bad, take a breath, to reach out for help when money problems are getting in the way of your dreams.

Though bankruptcy requires a listing of income, debts, assets, and financial information, there may be embarrassment from having financial affairs monitored. But, there is no shame in filing for bankruptcy when in the end, you lose everything anyway. After all, you cannot take anything with you when you die. So why not discharge debts you are not able to pay?

Bankruptcy allows a person who owes money, the debtor, to permanently release his debts or make debt payments over time according to an approved plan. In a Chapter 7, liquidation bankruptcy may be completed within 4 months. A bankruptcy trustee oversees the bankruptcy case. The bankruptcy court appoints the trustee who will sell non-essential luxury assets to pay some of the creditors.

Chapter 13 is a payment plan bankruptcy that allows the debtor to force creditors to accept adjusted payments over 3-5 years. The debtor pays the trustee a sum of money each month, and the trustee pays the creditors.

Marianne Williamson writes in "Our Deepest Fear": Our deepest fear is not that we are inadequate. Our deepest fear is that we are powerful beyond measure. It is our light, not our darkness, that most frightens us. We ask ourselves, who am I to be brilliant, gorgeous, talented and fabulous?

Continue reading "Dreaming the Impossible" »

When a business has dealings with a party that is in bankruptcy, it should be aware of executory contracts. It's a contract between a debtor and another party under which both sides have material performance remaining. If either side stopped performing, the non-performance would be a breach.

Real property and equipment leases are examples of executory contracts. In these agreements, the lessor has a duty to provide future possession of the property and the lessee has a duty to make the payments.

Executory contracts matter in bankruptcy because the debtor or a bankruptcy trustee decides whether to agree to perform or refuse to perform its obligations under an executory contract. The entire contract must be assumed or rejected. The debtor or trustee may not assume part of the contract and reject or modify the rest. In a Chapter 7 liquidation case, executory contracts must be assumed or rejected within 60 days of the filing of the bankruptcy petition. In Chapter 13 executory contracts must be assumed or rejected before confirmation of a plan unless the court provides another date.

Agreeing to perform translates to assumption of the contract and refusing to perform translates to rejection of the contract. Rejection is automatic if the contract is not assumed within a proscribed time. Rejection of an executory contract is treated as a pre-petition breach of the contract, with damages treated as an unsecured claim.

If a debtor assumes the executory contract, it has to cure any defaults, and show that it can actually perform in the future. Assumption requires court approval. If a debtor assumes and assigns the executory contract to someone else, commonly a buyer of its assets, at a minimum the debtor has to cure any defaults and the buyer has to show that it can actually perform under the contract in the future. An executory contract may generally be assigned even when it has an anti-assignment clause in the contract. This means that a debtor may assign its agreement to a third party to take over the performance even when the non-debtor party negotiated a requirement that its consent must be obtained prior to assignment.

As a follow up to discussions on identity theft on Rinne Legal's blog on October 12, 2009, users of web email services such as Gmail and social networks should take care to review privacy settings. According to a Financial Times article "Google backs down in Buzz privacy outcry" by Richard Waters in San Francisco, Google Buzz rolled out exposing personal information about users without their approval.

Google apparently treated a private email contacts list in February 2010 as a public friends list. This was two months after FaceBook decided to make more personal data public by default. Privacy advocates are lodging Federal Trade Commission complaints in this aggressive push of more personal information into the public.

Public exposure of a person's personal information could lead to identity theft and financial harm. Users of web mail and social networks should periodically delete their contacts lists, archived messages, and other user data to protect themselves against identity theft and other privacy invasions. Internet giants like Google may think all contacts on a person's contacts list are friends, but to the contrary. Some frequently contacted individuals are employers, clients, banks, and financial detriment may result if such information were leaked to the public.

The Arbitration Fairness Act of 2009, a Bill from the House, makes invalid and unenforceable any pre-dispute arbitration agreement for several categories of disputes. The Bill would limit the scope of the Federal Arbitration Act of 1925 (FAA) and exclude from its coverage three types of disputes: (1) Employment disputes between an employer and employee arising out of their employment relationship; (2) Consumer disputes between a person (other than an organization) who seeks or acquires real or personal property, services, money, or credit for personal, family, or household purposes, and the seller or provider of such property, services, money, or credit; (3) Franchise disputes between a franchisor and franchisee.

Arbitration may be a provision in a loan agreement. Borrowers should not view agreement terms as not negotiable. The arbitration is optional and the parties do not have to agree to arbitration, but if they do, a contract gives rise to an obligation or legal duty, enforceable in an action at law. California Civil Code Section 1549 defines a contract as an agreement to do or not do a certain thing. Once entered into, a contract is an agreement creating an obligation.

Arbitration is agreeing to use a private judge to decide a dispute. The arbitrator may be a retired judge from the bench, or an attorney in the subject of dispute. The arbitrator's decision is binding, with no right of appeal even if the arbitrator applies the law wrong. The parties forego a jury trial, and allow the arbitrator to decide on the facts and the law in the case.

Agreeing to arbitration with the lender may have disadvantages when a borrower wants to sue both the lender and a broker. The arbitration only applies to the lender when the loan modification agreement does not include the broker. When the broker is not a party to an agreement, the broker is not required to join the arbitration because he/she is not a party to the contract between the lender and the borrower. A third party to an agreement will not be able to bring an action under an agreement because the third party is not intended to receive any personal benefits from the agreement.

To some, arbitration may be less costly than litigation because the process reduces the discovery and motions that may arise in litigation. To enjoy the advantages of arbitration, it might be better to opt out of the arbitration provision at the time of agreement execution, and agree to it when a dispute arises.

Three Tesla Motors, Inc. employees died 2/16/2010. Tesla is an electric-car maker based in San Carlos, CA. Their small plane crashed in a residential neighborhood in Silicon Valley, causing a major power outage in of Palo Alto. No one on the ground was injured.

Tesla recently filed for an initial public offering. The plane, a twin-engine Cessna 310, crashed in East Palo Alto. According to Stu Woo of The Wall Street Journal, the plane is registered with a company that is owned by Tesla engineer Doug Bourn.

Woo reported the plane took off from an airport in Palo Alto before 8 a.m. hitting power wires. The wing crashed into an unoccupied day-care facility, and then slammed onto the street, skidding the length of a football field, hitting three cars before stopping.

Survivors of a parent, spouse, or child who dies in an accident may suffer emotional distress, loss of companionship, and financial losses. These losses may lead to bankruptcy when people accumulate insurmountable debts from trying to resolve the medical, depression, and pain and suffering that follows death of a loved one.

Continue reading "Plane Crash Kills 3 Tesla Employees" »

On January 25, 2010, Jay Jaffe, the president of a public relations firm, presented in San Francisco, CA on how to use social media to manage public relations. Businesses looking for ways to stay out of bankruptcy or otherwise get out from losses, should look to social media to manage client conversations.

Marketing these days is not just about reputation or pricing. Social media empowers company employees to market the company. Give alternatives to employees to become company ambassadors instead of violating their first amendment rights when make remarks on social media sites. Help people understand the consequences of their communications with guidelines rather than rules.

Like in-house attorneys who cannot be seen as roadblocks, but facilitators to business, social media builds relationships. The selfless generosity in sharing information democratizes knowledge.

Charging is not the purpose of social media. Don't take a web site bookmark as the highest compliment. Use interactive web tools engage and involve audiences in product and service discussions. Social media is a great place to listen to client needs and not be passed by. Jaffe points out in his presentation:

• If FaceBook were a country, it would be the 8th most populated in the world, ahead of Japan, Russia, Nigeria.
• As of October 14, 2009, LinkedIn had 50 million users worldwide.
• United States visitors to Twitter reached 4 million in February 2009.

Continue reading "Setting a Social Media Policy " »

When negotiating a loan modification, resolving a foreclosure issue with a creditor, or dealing with financial conflicts, there may be difficult communications on the concept of reality. Move from reality to interpretation, truth to perception, blame to perspective, and intent to contribution.

Webster's New Collegiate Dictionary defines a fact as:

• Something that has actual existence
• An actual occurrence, existing independent of mind
• A piece of information having objective reality

Then Webster's defines an interpretation as:

• To conceive in the light of individual belief, judgment, or circumstance.

On January 30, 2010 Kimberly Wiefling, Global Business Leadership Consultant, taught in her seminar "Creating a Vision for Your Future" in Redwood City, CA that generous listening is a method to open possibilities from conversation. Phrases for generous listening include:

• Tell me more
• What would that make possible
• Interesting! Say more about that
• Go on...What else
• Help me understand

When negotiating difficult situations, act "as if" to gain confidence in guaranteeing success. Impostersyndrome.com speaks about not getting distracted by daily tasks such as checking emails that takes the eye away from ultimate goals. The future cannot be reached by doing more of the routine.

Understand the problem to begin to partially solve it. Do not ask the other party "why" to challenge the other party and put it on the defense. Do not get stuck on meeting the practical. Create something discontinuous from the past like trying on a coat. Experience something new to have a choice, not necessarily buying it. In negotiations, let the other party speak in order for that party to clarify its ideas. It is not about actually listening or taking notes, but letting the other person have a chance at a prize. Even when the other person gets a prize, there are still plenty of prizes left to go around.

Continue reading "Fact versus Interpretation" »

The following is a story told on January 30, 2010 by Kimberly Wiefling, Global Business Leadership Consultant, during her seminar on "Creating a Vision for Your Future" in Redwood City, CA:

Once there was a little fish that lived in a fish bowl. The fish soon grew to the size of bowl, but one day someone put his hand into the bowl and grabbed the fish, flinging it into ocean. "Ugh!" The fish lost everything, all its little plastic plants, the security of being fed everyday without having to look for food itself.

What does being flung into an ocean make possible that was not possible before? Just like filing for bankruptcy, being flung into an ocean is not the same as being dead.

Old patterns limit perceptions. When paying too much attention and doing distracting things, a person can miss a gorilla dancing in front of his tv screen. Filing for bankruptcy is not necessarily about the past, but also the future. People might ask how practical or feasible is it to think that bankruptcy could allow for someone's dreams to come true when the press characterizes debtors as failures, but there could be something in what critical people do not know that makes it possible. Look at Donald Trump as someone who obtained a fresh start from bankruptcy. How can people who do not risk shame swim across a pool when they are holding to the side?

When contemplating bankruptcy, go to the future and create the steps backwards to get there. Be willing to risk drowning and be uncomfortable in order to celebrate goals. There are many paths connecting the present to the future. In most negative thinking, none of the statements are facts or situations that can be controlled. As Christopher Reeve, Actor, Director, Activist said: So many of our dreams at first seem impossible, then they seem improbable, and then when we summon the will, they soon become inevitable.

You are not living in eternity. You have only this moment. Many negative thoughts are just interpretations of situations. Wiefling's seminar points out: Life should not be a journey to the grave with the intention of arriving safely in a pretty and well preserved body, but rather to skid in broadside, thoroughly used up, totally worn out, and loudly proclaim - "WOW" - "What a Ride!""

Continue reading "Fish Bowl" »

In self-portraits, the artist looks at herself and sees her own beauty. She says she is worth painting. Filing for bankruptcy seems like the end of a book, but in accepting failure, do not reinforce old failures by doing things the same way. Take advantage of programs to save. Work more than one job to stay away from unproductive activities like depression.

Bankruptcy, though a serious situation, is a small thing compared to the rest of life. Do not let a small thing limit or intimidate. In bankruptcy, the petitioner has to declare all his assets and debts for the public to view. This may seem like giving part of the soul for people to judge. This may take away the fairy tale ending of growing up to own a house, have a family with two kids and a dog, and working a long term career. But, it is not that the story is not true. Like it is not that there is no Santa Claus, but a person can become Santa Clause by making the magic for himself.

Bankruptcy may seem like a fearful process, but fear is just false evidence appearing real. There are many people who go through bankruptcy and come out happy. Use optimism to choose happiness, rather than think it is something to accomplish. John Barefoot of Duke University reported in the May 1998 issue of Brain/Mind Bulletin: People with increased levels of suspiciousness, cynicism and hostility died sooner than all others.

Continue reading "Self Portraits" »

On January 30, 2010, Kimberly Wiefling, Global Business Leadership Consultant gave a seminar on "Creating a Vision for Your Future" in Redwood City, CA.

Wiefling discussed the brain and how the brain is not alert or aware of everything at once. There is the example of people who buy a new car and suddenly see everyone else driving the same car. The brain notices when something is important to someone. The brain filters things that are aligned with a dream. For example, when unemployed, be specific on the job sought in order for others to assist. People assist when they recognize patterns. If someone says he is looking for any job then that person will have a harder time finding a job rather than someone focused on a particular field.

It takes a longer time to find success when the brain spends too much time paying attention to the meaningless. This means when depressed about finances, spend less time reading other people's FaceBook pages and getting jealous of their families, friends, vacations, jobs. There is no need to compare with others because it is unknown the suffering others have gone through in order to achieve their goals, and it is unknown how the materials they exhibit on the outside actually affect their joy on the inside.

Wiefling's presentation pointed out that Shelly Taylor of UCLA and Jonathan Brown of SMU reported in Brain/Mind Bulletin in August 1988 that people who score high on mental health have the following illusions:

• Overly positive views of themselves
• Convenient "forgetting" of negative facts about themselves
• Illusory beliefs about having more control than they do have
• "Unrealistic" optimism about themselves
• "Unrealistic" optimism about the future in general
• "Abnormal" cheerfulness

Continue reading "Impossible is Only a Measure of Difficulty" »

In January 2010, the Federal Reserve announced new rules regulating credit cards that went into effect February 22, 2010. Credit card issuers will incur costs to modify existing billing and information systems to comply with the new card reform requirements likely resulting in reduced revenue. The new rules include the following provisions:

• Credit card companies must give 45 days' notice prior to any increase in or change to (a) a cardholder's interest rate, (b) certain fees associated with a credit card, or (c) a card's basic terms;
• Interest rates may not increase for the first year after a cardholder opens an account;
• Card issuers will not be allowed to establish minimum interest rates;
• Credit card fees may not exceed 25% of a cardholder's credit limit; but, this does not apply to penalty fees;
• Credit card companies may not automatically enroll cardholders in programs that charge regular fees for exceeding the credit limit;
• Monthly statements must indicate how long it will take a cardholder to pay off the balance while making only minimum payments;
• A card issuer must deliver a credit card bill to a cardholder at least 21 days prior to payment being due;
• Credit card issuers may only charge interest on balances in a cardholder's current billing cycle.

The rules seek to reform credit card issuers from opening card accounts or increasing credit limits for consumers without considering the ability of the consumer to make the required minimum payments under the account. A credit card issuer will need to have policies on reviewing information about a consumer's income, assets or current obligations, or to issue a credit card to a consumer who does not have any income or assets.

Cardholders will benefit from increased account disclosure requirements and the restriction or prohibition of historical credit card practices that cardholders. Credit card issuers may require higher interest rates or assess new or additional fees in connection with credit card accounts, and engage in greater up-front risk profiling of applicants to reduce credit availability to risky cardholders.

Continue reading "2010 Credit Card Rules" »

Review all estate planning documents to determine if any changes are needed as a result of the federal estate tax and the federal generation-skipping transfer (GST) tax repealed for estates of decedents dying in 2010, noting both taxes are scheduled to return in 2011. Married couples might want to divide assets to maximize federal basis increase.

In 2010, there is no increase in the cost basis of assets to market value at death in calculating capital gains tax on property inherited. The automatic "step-up" in basis for assets owned by a person who dies in 2010 has been eliminated and replaced with a "carryover basis" for capital gains tax purposes. With carryover basis, beneficiaries inherit property with the same property cost basis as the decedent. The executor of an estate can allocate up to $1,300,000 of basis increase (plus, unused built-in losses and loss carryovers) to any property in an estate and another $3,000,000 of basis increase to property passing to a surviving spouse outright or in qualifying trusts. In 2010 estates will escape federal estate tax, but potential capital gains liability for heirs could exceed what the estate tax would have been.

The federal gift tax remains with a reduced 35 percent tax rate, down from 45 percent. The repeal of the GST tax for 2010 creates an opportunity to make gifts in trust to children or grandchildren that may escape transfer taxes for future generations. Though, keep in mind the possibility of retroactive reinstatement of the GST tax.

Unless Congress provides otherwise, on January 1, 2011, the federal estate, GST and gift tax laws return to what they were in 2001 where there will be a federal estate and gift tax with an exemption of $1,000,000 and a top tax rate of 55 percent (plus a 5 percent surtax on estates from $10 million to $17 million), and a GST tax with an exemption of approximately $1,340,000 and a tax rate of 55 percent.

Continue reading "2010 Federal Estate and Gift Tax Laws" »

The Department of Labor issued, in January 2009, model notices for employers to use under the COBRA subsidy extension: http://www.dol.gov/ebsa/COBRAmodelnotice.html. Subscribe to DOL guidance on the COBRA premium subsidy program at www.dol.gov/COBRA. A summary of the types of notices:

1. General Notice: Covered employees who experience a qualifying event after December 19, 2009 and on or before February 28, 2010, the employer must provide to all qualified beneficiaries, within the normal timeframe for providing a COBRA election notice, an updated General Notice that describes the extended COBRA subsidy period.
2. Premium Assistance Extension Notice: Individuals who already received a General Notice, the employer must provide an additional notice describing the extended COBRA subsidy period. The following groups of individuals must receive the Premium Assistance Extension Notice:
A. Individuals receiving the premium subsidy as of October 31, 2009;
B. Individuals who became eligible to receive the subsidy or experienced a termination of employment qualifying event on or after October 31, 2009 and who were not provided a notice that explained the information about the subsidy and the subsidy extension; and
C. Individuals who received the full nine months of premium assistance required before the extension, including those who (i) did not make any payment for a subsequent period of coverage, (ii) made a payment of 35% of the full COBRA premium (or some other amount less than the full COBRA premium), or (iii) paid the full COBRA premium required to maintain the coverage without the subsidy.
3. Alternative Notice: Employers covered by state continuation coverage laws, rather than COBRA, must provide assistance eligible individuals with a copy of the Alternative Notice within the normal timeframe for providing notice under state law.

The Internal Revenue Service issued guidance for an employer claiming on its federal employment tax return (Form 941) the credit for 2009 retroactive coverage from the subsidy extension for individuals who otherwise exhausted the subsidy period. Any COBRA subsidy credit for premium payments received in 2010 relating to retroactive coverage for 2009 attributable to the subsidy extension may not be taken by the employer on its Form 941 for the quarter in 2009 in which the coverage was provided. The employer either may take the credit for the quarter in 2010 in which the 35% premium payment was received from the eligible individual or a later quarter in 2010. If an employer chooses to reduce its payroll tax deposits for a quarter in 2010 in which it receives the 35% premium payment, the employer must claim the credit for the same quarter.

Continue reading "COBRA Subsidy Extension" »

The Securities and Exchange Commission (SEC) issued interpretive guidance in February 2009 requiring publicly traded companies to consider climate change impacts, such as physical damage it could cause, economic impacts of domestic and international greenhouse gas emissions-reduction rules.

Companies will start to discuss climate in risk factors, description of the business, legal proceedings, management's discussion and analysis.

When considering disclosure obligations, companies will consider whether the impact of existing laws and regulations on climate is material such as international accords and treaties relating to climate change. For instance, a company may face decreased demand for products that produce significant greenhouse gas emissions, or increased demand for products that result in lower emissions.

Green concerns are gaining momentum. In February 2009, the Los Angeles Times reported Tesla Motors announced a planned $100-million Initial Public Offering. Tesla Motors also recently posted an ad on www.acc.com that it is searching for a General Counsel. Though in September 2009, it announced it hired Jon Sobel to lead the legal team, Sobel apparently left the company in December 2009 after 4 months with no public explanation as to the reasons for his departure.

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States with budget shortfalls are increasing revenues without increasing taxes by pursuing unclaimed property. In Delaware, for instance, unclaimed property collections are the state's third largest source of revenue. A case pending involves McKesson, incorporated in Delaware, pharmaceutical distributor in North America. McKesson was the subject of a Delaware unclaimed property audit. The auditor focused on inventory-related property and used extrapolation to determine McKesson owed Delaware over $4.5 million in unreported unclaimed property, not including any penalties or interest. McKesson filed a declaratory action (McKesson Corp. v. Cook, Delaware Chancery Court, No. 4920 (filed Sept. 25, 2009)), challenging the assessment Delaware's characterization of the inventory-related property as unclaimed property, the extrapolation methodologies used by Delaware, and the constitutionality of Delaware's actions on procedural and substantive due process and unlawful taking grounds.

Unclaimed property consists of property held by a business for a statutorily mandated holding period subject to escheat when there is no communications with the true owner.

Examples of unclaimed property:

• Uncashed travelers checks;
• Uncashed customer credits;
• Unused gift certificates;
• Uncashed employee payroll checks;
• Uncashed vendor checks;
• Uncashed dividend checks;
• Amounts distributable from employee benefit plans.

Businesses are responsible for reporting unclaimed property to the states annually. Some states require the business to communicate with the rightful owner prior to the filing of the report.

For a consumer to reduce the amount of unclaimed property, pay for services at the time of use instead of making pre-payments, such as purchasing gift cards.