Paychecks for California Employees Shrinking For The Rest of 2009

Paychex, a nationally known payroll service provider, is reporting that California employers must increase withholding for state taxes as a result of the recently passed California state budget.  The new withholding tables become effective on November 1, 2009.

The new withholding tables are designed to accelerate withholding for the remainder of 2009 by requiring employers to increase the amount of state income tax withheld from employee paychecks by 10%.  The new tables will be in effect from November 1 through December 31, 2009 only.

If you have any questions or need additional information, please call us now at (619) 448-2129

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar, the San Diego County Bar Association and the National Association of Consumer Bankruptcy Attorneys. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

California Increases Homestead Exemptions Limits for Debtors

Homestead exemption laws protect the amount of equity that a homeowner can shield from judgment creditors or from creditors while in bankruptcy.  Beginning on January 1, 2010, the limits on homestead exemptions in California will increase by as much as 50% for some homeowners.

Under current law, the base homestead exemption to protect home equity from judgment creditors will increase from $50,000 to $75,000.  A $75,000 exemption for certain family units will increase to $100,000.  A $150,000 exemption available to homeowners who are 65 years of age or older, disabled, or 55 years of age or older with a limited income will increase to $175,000.

As a debtor facing bankruptcy, you can choose from the homestead exemptions listed above or from a different set of exemptions only available to Californians in bankruptcy cases.  Often referred to as the "renter's exemptions" because they are used primarily by renters or homeowners with little or no home equity, these "bankruptcy only" exemptions can be used as a "wild card" to protect any type of property in bankruptcy.  The maximum "wild card" exemption in California is presently $21,825.  However, this amount might be increased based on any increase in the California Consumer Price Index since the exemption was last adjusted in 2007.

If you are in Southern California and want to talk to an attorney about your debt problems or how this new law might effect you, please call us now at (619) 448-2129 or contact us through our website for more information.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar, the San Diego County Bar Association and the National Association of Consumer Bankruptcy Attorneys. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Staying in Business While Filing For Chapter 7 Bankruptcy – Part II

In Part 1, I discussed bankruptcy options available for self-employed business owners (sole proprietors) in California with debt problems but who may not be good candidates for repayment plans under Chapter 11 or Chapter 13 of the Bankruptcy Code.  In Part 2, I will focus on the how owners of a corporation might be able file personal bankruptcy and form a new corporation in order to stay in business.  This article is intended primarily for debtors and business owners in California because it is based on my experience with California law and the bankruptcy exemptions available to California residents.

One of the most important duties for a bankruptcy attorney is to have an understanding of the value of the debtor’s assets.  When filing for bankruptcy, debtors must list all of their assets and property.  Some assets are “exempt”, meaning that the debtor can keep the assets despite the bankruptcy.  Other assets are “non-exempt”, meaning that the trustee could sell the assets to pay creditors.  Placing a business owner in a Chapter 7 bankruptcy is risky if the value of the business is not fully exempt.

If a business owner with an incorporated business wishes to file for Chapter 7 bankruptcy, I generally recommend obtaining two valuations of the business first.  One valuation would come from a business broker to demonstrate the value of the business if it were to be sold on the open market to a third party.  The other valuation would come from a Chapter 7 liquidation auctioneer to show the value of the business if it were shut down and the assets liquidated.  This provides a range of value that can be used by the attorney to determine if staying in business after file for Chapter 7 is a viable strategy.

If the value of the business exceeds the available exemption money, the debtor may need to negotiate a payment plan or settlement with the trustee to keep the business.  In most cases, however, the debtor’s corporation has its own debts to the point that it would have little or no value to a potential buyer.  In this type of case, the Chapter 7 trustee will typically have no interest in the day-to-day operations of the debtor’s business or selling it.

If the debtor’s existing corporation is totally exempt or the trustee abandon’s the business as an asset of the bankruptcy estate, the debtor will retain ownership of it.  The debtor then forms a new corporation which purchases the assets of the old corporation that it needs to conduct the activities of the business.  I recommend that the new corporation pay the higher of the 2 valuations obtained prior to the bankruptcy.  This will reduce the risk that creditors of the old corporation would attempt to sue the new entity to collect on the preexisting debts.  If all goes well, the debtors will be free of any dischargeable debt and also own a brand new corporation with no debts.

Disclaimer: The information contained in this article is provided for general information purposes only and is not intended to be a legal opinion, legal advice or a complete discussion of the issues related to the area of consumer bankruptcy. Every individual's factual situation is different and you should seek independent legal advice from an attorney familiar with the laws of your state for specific advice. State law generally determines how much property the debtor will be able to keep when filing for bankruptcy.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar, the San Diego County Bar Association and the National Association of Consumer Bankruptcy Attorneys. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Harassment of Debtor Allegations Against Patenaude & Felix Revealed

On September 24, 2009, a client reported to me that she was receiving phone calls at work from a gentleman claiming to be an attorney with the San Diego law firm of Patenaude & Felix, APC. She further reported to me that a coworker was receiving calls and messages from the same man made to a cell phone number obtained from their employer’s website. After I called the law firm to confirm that I represented this client, I was assured that no further contact would occur.

Under the California Rosenthal Fair Debt Collection Practices Act, creditors and their attorneys cannot legally contact consumer debtors that are represented by an attorney. The Federal Fair Debt Collection Practices Act similarly protects consumer debtors from collection agency harassment. I thought that the unwanted creditor contact with my client would end, but I was wrong.

On September 30, 2009, my client again reported contact from the law firm by a collection agent falsely claiming to be an attorney. The same collection agent called my office and spoke with a bankruptcy paralegal and the caller again identified himself as an attorney.

The law firm claims that there was simply a “misunderstanding” and that no violation of state or federal laws occurred. I happen to know this bankruptcy paralegal fairly well. Her name is Lisa Starrett and I married her in 1994. She has a paralegal certificate from the University of San Diego and has been working with me as a bankruptcy paralegal for over 3 years now. She knows the importance of precision when it comes to communication in our line of work. Her words carry a lot more weight than a collection agent trying to spin his way out of a lawsuit.

If you are in Southern California and have experienced unfair debt collection practices when dealing with Patenaude & Felix, please call me at (619) 448-2129. You may have grounds for legal action against the law firm and the creditors they represent.

About the Author: Carl H. Starrett II has been a licensed attorney since 1993 and is a member in good standing with the California State Bar, the San Diego County Bar Association and the National Association of Consumer Bankruptcy Attorneys. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.