Bankruptcy Reform Signed Into Law

Earlier this week, President Bush signed into law the most extensive revisions made in U.S. bankruptcy laws in the last 25 years after 8 years of lobbying efforts by banks and credit card companies. Most of the important changes will take place in 6 months. The American Bankruptcy Institute estimates that 30,000 to 210,000 people per year will be affected by this legislation. Many bankruptcy attorneys are anticipating a rush to the courthouse as debtors seek to avoid the consequences of the new law.

The new law sets up an income-based test for measuring a debtor's ability to repay debts. Those with insufficient assets or income could still file a Chapter 7 bankruptcy, which, if approved by a judge, erases debts entirely after certain assets are forfeited. Those with income above the state's median income who can pay at least $6,000 over five years - $100 a month - would be forced into Chapter 13, where a judge would then order a repayment plan. The legislation also requires people in bankruptcy to pay for credit counseling.

The homestead exemption will now be capped at $100,000.00 if the home was acquired during the two year period preceding the filing of the bankruptcy. In essence, bankruptcy filers with incomes above their state’s median income and who have the ability to repay $100 a month over five years — a total of $6,000 — would have to file under Chapter 13.

The bill shields retirement benefits up to $1 million, but it also states that child support, alimony, student loans and most tax obligations cannot be wiped out by bankruptcy.

New personal bankruptcy filings edged down from 1,613,097 in the year ending June 30, 2003, to 1,599,986 in the year ending last June 30, breaking an upward trend of recent years. Under the current system, a federal bankruptcy judge determines whether individuals must repay some or all of their debt.

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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 and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection. e a bankruptcy and debt relief agency. We help people file for bankruptcy.

Ending Creditor Harassment

Under the Federal Fair Debt Collection Practices Act, creditors cannot "harass, oppress, or abuse any person in connection with the collection of a debt". Common examples of illegal harassment are:

• The use or threat of use of violence or other criminal means to harm the physical person, reputation, or property of any person
• The use of obscene or profane language or language, the natural consequence of which is to abuse the hearer or reader
• The publication of a list of consumers who allegedly refuse to pay debts, except to a creditor
• The advertisement for sale of any debt to coerce payment of the debt
• Causing a telephone to ring or engaging any person in telephone conversation repeatedly or continuously with intent to annoy, abuse, or harass any person at the called number
• The placement of telephone calls without meaningful disclosure of the caller's identity.

Debtors have two basic options when dealing with creditor harassment. First, the debtor can attempt to end creditor harassment by attempting to reason with the by yourself. You can talk with creditors when they call and honestly explain why you are in default. You can try to reason with creditors and ask for payment extensions or alternative payment arrangements. Unfortunately, debt collectors can be unreasonable and this method will often prove insufficient.

If the creditor will not listen reason, you can send the creditor a "cease & desist" letter instructing them not to contact you. Once the creditor receives this letter, the creditor cannot contact you except under very limited circumstances. Violation of the Fair Debt Collection Practices can result in substantial penalties against the creditor.

Another option is for bankruptcy. Under bankruptcy law, creditors and debt collectors must stop virtually all debt collection activities, including contacting you about a delinquent account. As soon as you file for bankruptcy, all creditors and bill collectors must immediately stop their collection efforts. Once you file the bankruptcy petition, both the Bankruptcy Court and your attorney will notify all of your creditors of your bankruptcy through the mail. While it might take a week or so for your creditors to receive this notice, creditors must also stop calling if you inform them that you filed a bankruptcy petition. In order to ensure creditors stop harassing you, the law provides penalties and fines for debt collectors that continue to contact you after you have filed for bankruptcy.

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IMPORTANT DISCLAIMER
This publication is NOT INTENDED TO SERVE AS A SUBSTITUTE FOR LEGAL ADVICE. Please consult with a licensed attorney if you require legal advice.

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 and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

Trademarks, Service Marks and Trade Names in California

That is the difference between a Trademark, Service Mark, and Trade Name?

Trademark - A word, name, symbol, or device, or any combination thereof adopted and used by a person to identify goods made or sold by him/her and to distinguish them from goods made or sold by others. Business & Professions Code § 14207.

Service Mark - A mark used in the sale or advertising of services to identify the services of one person and distinguish them from the services of others. Business & Professions Code § 14206.

Trade Name - A word, name, symbol, or device, or any combination thereof used by a person to identify his business, vocation, or occupation, and distinguish it from the business, vocation, or occupation of others. Business & Professions Code § 14208.

Where is a trade name filed?

California law does not provide for the filing of trade names or fictitious business names at the state level. A trade name or fictitious business name (often called a d.b.a.) should be filed with the clerk of the county in which the company is doing business. Business & Professions Code §§ 14400 & 17910.

What is a specimen?

A specimen demonstrates how the mark is being presented to the public. Specimens can be in a wide variety of forms.

For a trademark, the specimen can be a label of the product sold or a photograph of the mark on the product itself, if the product is too big or bulky to send through the mail. For example, if the mark is printed on the front of t-shirts, three photographs of the mark on the t-shirt could be sent rather than sending three t-shirts.

For a service mark, the specimen can be a sample of how the services are being advertised. A "yellow page" advertisement, a flyer, a business card, or a photograph of a billboard advertising the services could be submitted. The specimen for a service mark must demonstrate the nature of the services rendered. The specimen must be something that could be handed to any average member of the public and that person would immediately know what services are being provided by the company using the mark.

Can photocopies or drawings of the actual specimen be submitted if the business has not started operating?

Photocopies, drawings, computer printouts, or camera ready layouts are not accepted as specimens. The company must have gone into production and have released the product or service into the market prior to registration of the trademark or service mark with the Secretary of State.

If I am just starting and have no specimens, what do I do?

You must either be advertising your services and provide us with the advertisement, or you must have tags, labels, or photographs of your products bearing the mark you wish to register. You cannot register a trademark or service mark until you have provided your services or sold your product with the mark you wish to register. In order to register your mark with the Secretary of State, you must have specimens. The Secretary of State uses the specimens to make sure the mark is being used in commerce and to make sure the word or phrase that is being registered functions properly as a trademark or service mark. If you do not have specimens, you must wait until you have proper specimens before you may register the mark.

How long is a trademark or service mark registration active?

The registration is active for ten years. At the end of ten years, the mark may be renewed for another ten years. The mark may be renewed every ten years as long as the mark is in continual use.

Can a trademark and service mark be filed on the same application?

Trademarks and service marks must be filed on separate applications. They require separate fees and submittal of separate specimens. The fee for filing a trademark or a service mark is $70.00 per mark. An application may be downloaded from the California Secretary of State or requested via telephone or written request to the Trademark Unit of the Secretary of State. Please see contact information for the correct address and telephone number.


Can a name and a design be filed on the same application?

If a name and design are used together and constitute one complete mark, they may be filed on the same application. If a name and design are used separately, as two separate marks, then two separate applications with two fees and two sets of specimens must be submitted.

If a trademark or service mark is registered at the federal level, does it have to be registered at the state level?

No, however it is highly recommended that the mark be registered at the state level as well to have a record of the mark.

Does registering a trademark or service mark give exclusive rights to the mark?

Registration in and of itself does not guarantee exclusive ownership of a mark. A trademark attorney should be consulted should this be an issue for you.

What is the federal patents/trademarks office address?
Commission of Patents and Trademarks
Washington, DC 20023

IMPORTANT DISCLAIMER
This publication is NOT INTENDED TO SERVE AS A SUBSTITUTE FOR LEGAL ADVICE. Please consult with a licensed attorney if you require legal advice.

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

Tax Problems? Consider an Offer in Compromise

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 delinquent tax debt. Every taxpayer's factual situation is different and you should seek independent advice from an attorney or tax professional familiar with the applicable codes and statutes.

What is an Offer in Compromise?

The IRS will often enter into installment agreements with taxpayers who have tax debt of less than $25,000. Installment agreements for tax debts over $25,000 are more difficult to obtain.

If the tax payer does not qualify for an installment agreement or if the taxpayer does not want to file for bankruptcy, then they may be able to take advantage of the offer in compromise (OIC) program. Generally, the OIC program should be viewed as a last resort, after taxpayers have explored all other available payment options. The IRS resolves less than one percent of all balance due accounts through the OIC program.

An offer in compromise is an agreement between a taxpayer and the IRS that resolves the taxpayer's tax debt. The IRS has the authority to settle, or "compromise," federal tax liabilities by accepting less than full payment under certain circumstances. A tax debt can be legally compromised for one of the following reasons:

• Doubt as to Liability - Doubt exists that the assessed tax is correct.
• Doubt as to Collectibility - Doubt exists that you could ever pay the full amount of tax owed.
• Effective Tax Administration - There is no doubt the tax is correct, and no doubt that the amount owed could be collected, but an exceptional circumstance exists that allows the IRS to consider a taxpayer's OIC. To be eligible for a compromise on this basis, the taxpayer must demonstrate that collection of the tax would create an economic hardship or would be unfair and inequitable.

Taxpayers should beware of promoters' claims that tax debts can be settled for "pennies on the dollar" through the Offer in Compromise Program. Check with a qualified tax professional to see if any offer in compromise is right for you.

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 and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.

California Debt Collection Tips

The best way to avoid debt collection problems is to address delinquent accounts early, firmly and aggressively. The following tips should help you avoid the most common collection problems.

1. Keep photocopies of checks. Perhaps the single most important tip you can remember to help collect on deliquent accounts is to make photocopies of checks used by customers in payment on any invoice or bill. If you cannot feasibly keep copies of the checks, you should do it for all new customers, and then verify that this information is still accurate when subsequent payments come in.

Bank information (as well as other asset information) is crucial to enforcement of judgments. This small investment of time, to record information which is in your hands for only a short period of time, can pay great dividends later. If you are trying to perform a bank garnishment in California, you need to tell the levying officer (usually the County Sheriff) the exact branch where the account is held in order to complete the levy.

2. Turn over delinquent accounts for outside collection quickly - after the first broken promise or refused or unreturned telephone call. There is a significant drop-off in the collectability of accounts after 90 days past due, and then again after 180 days . While it is true that turning over your accounts comes at the expense of a fee, you should view this step as a necessary one, where you hire experienced professionals to do something for you, in order that you may spend your valuable time and resources on more profitable customers. Not only are successful collections like "found money," they also serve as a message that your business is not an "easy mark," and will hopefully deter future delinquencies, not only from the customer in question, but also from all of your current and prospective customers.

Also, there are practical concerns about being able to successfully document and prove a collection case after significant time has elapsed (i.e., your staff may change, your record- keeping may call for the purging of accounts, the customer could relocate). Most important of all, the statute of limitations may bar a collection action after the passage of too much time from the date of breach of the contract.

3. Always credit customers’ payments to their oldest invoice or bill (unless they specify otherwise in writing).

This goes directly to the statute of limitations issue. Let’s assume that you have a relationship with customer which goes back over ten years, and that this customer was never current in payment, yet made consistent late payments so that the size of the past due balance remained relatively constant, on average, through time. If you credit payments to the newest invoices, you will have a delinquency which is over ten years old, and thus, time-barred by the statute of limitations. If, however, you credit payments to the oldest invoices, you will technically have a zero balance (even after adding finance charges on a monthly basis) as of approximately the date where the total of most recent purchases, when added together from most recent to oldest, equals the total balance due. This will invariably produce a more recent date for the start of the delinquency, which is to your advantage.

4. Get delinquent customers’ promises to pay in writing.

If your customer promises now to pay at some point in the future, this can only be viewed as an attempt to "buy time." While it may be true that your customer does not have the money at this time, use this situation to your advantage, by agreeing to wait a short time (no more than 30 days), but only if the customer puts this promise to pay in writing. Remember, each stage of conducting business consists of exchanging something of value; when a customer becomes delinquent, this temporarily upsets that balance of exchange. In order to avoid being at the mercy of this customer, you should set out to continue the "give and take," rather than pleading for payment. Remember, you can always say "enough is enough" and file suit - you are doing your customer a favor by not doing so, and you should be rewarded with a favor in exchange.

5. Consider sending a survey to customers after you have completed your work, but before payment is due.

First of all, this is good customer service. You may want to include a business reply envelope, and perhaps even offer a gift certificate on the customer’s next purchase in exchange for sending back a contemplated survey. This survey is especially useful for the first-time customers, or existing customers who suddenly purchase a "big ticket" item. Beyond the customer service aspect, you will learn early on if there are any perceived problems from the customer’s point of view, and you may be able to utilize a favorable survey or even lack of a response as evidence of customer satisfaction if a dispute occurs later.

The information provided in this article is general information only and is not intended as legal advice. DO NOT use this information as a substitute for obtaining qualified legal advice or other professional help. Please contact us at (619) 448-2129 or e-mail us for a consultation.

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 and the San Diego County Bar Association. Mr. Starrett practices in the areas of bankruptcy, business litigation, construction, corporate planning and debt collection.