FISHER'S LAW OFFICE NEWSLETTER
Welcome to the NEWSLETTER of Fisher’s Law Office, providing you with legal information you can use in your everyday life. In this issue of the Fishers Law office newsletter we discuss ways of surviving our difficult economic times. If you have any questions about any of the articles in this newsletter please don’t hesitate to contact us.
I. Is a bankruptcy in your future?
The right to bankruptcy is contained in the United States Constitution.
Bankruptcy is a process by which debts are rescheduled and eventually forgiven or forgiven outright. If your are unable to pay your bills as they come due, you may be eligible to file for bankruptcy. Here are some important points to remember about the bankruptcy process:
1) If you earn more than the median income in your state, you are required to file a “repayment plan”. In Florida the median income is $37,985 per year ($46,914 for married couples). Under the law, if you earn more than this, you must file under Chapter 13 of the bankruptcy code. A typical Chapter 13 plan might call for payments on your debts over a three to five year period, and then the balance is forgiven.
2) If you have an auto loan the bankruptcy judge has the right to change the interest rate on the car loan and in some cases to reduce the balance of the car loan to make it more affordable. (However, if you have owned your car for less than 910 days before filling for bankruptcy, the amount of the car loan can not be reduced even if the car is worth less than you owe.)
3) If you file for bankruptcy and are willing to give up your home, your mortgage can be forgiven. However, the bankruptcy court doesn’t have the right to change your home mortgage terms to make the mortgage more affordable or to reduce the balance of the mortgage, even if you owe more on the home than it is worth. (There is a pending legislation before the U.S. Congress to change this law.) If the law changes, expect to see more bankruptcies filed in the United States because the market value of residential real estate has declined nationwide.
II. Inflation is back.
The rate of consumer inflation in the United States is well over 3%. (For example, according the Economist magazine, U.S. food costs are up over 75% over the last 5 years.)
The Federal Reserve has claimed for years that it does not want “core-inflation” to exceed 2% but because the economy is teetering on the edge of recession, the Federal Reserve lowered interest rates dramatically in 2007 causing inflation to get even worse and the U.S. dollar to decline in value.
What can you do? You can buy gold, foreign currencies or shares of companies that sell goods overseas. Some investment advisors recommend the purchase of agricultural commodities as a hedge against inflation but it is very difficult for the average investor to make such purchases.
If the U.S. enters a recession and inflation persists, expect the “misery index” (the inflation rate plus the unemployment rate) to increase.
III. Are you a driver in the streets in Hillsborough County? Watch out for traffic tickets!
If you drive in Hillsborough County, Florida, you have a 1 in 4 chance in receiving a traffic citation in 2008. There are approximately 1.2 million people in Hillsborough County, Florida. The Hillsborough county sheriff’s office is on track to issue almost 300,000 traffic citations in 2007. It is expected that even more traffic citations will be issued in 2008, so don’t speed or run red lights.
Traffic tickets cause your insurance premiums to increase and cost a lot of money. You can lose your license if you get too many tickets. Also, 7,500 people were charged with “DUI” (driving under the influence) in 2007 in Hillsborough County. It is expected that this trend will continue. Moral to the story? Drive carefully and don’t drink and drive.
IV. Are you thinking about relocating from Florida with your children?
Watch out for the new law contained in the Florida Statute section 61.13001 dealing with Parental Relocation with a child. Under this new statute a parent who is the legal custodian of a child who wishes to move more than 50 miles must give notice to the other parent of intention to relocate. If a parent who receives a notice objects to the relocation and files a written objection within 30 days of receiving the notice then the court must decide the matter.
The law gives the court a number of factors to consider in deciding whether or not relocation will be allowed. The factors include:
The moral to the story?: If you receive a notice of intention to relocate you should see an attorney immediately. If you wait more then 30 days after receiving a notice the relocation will be allowed because you waited too long!
V. Have you experienced a wage garnishment recently?
Fishers Law Office has noticed a trend in which creditors are becoming more and more aggressive in garnishing monies owed on final judgments.
There are strict rules on what monies can be garnished. For example, a creditor must obtain a final judgment for the amount due before attempting to garnish property or earnings. Also, a garnishment may not occur if you are supporting a child or a spouse. The procedure for stopping a garnishment is fairly simple, so see a lawyer right away if your wages are garnished by one of your creditors.
The current law tends to benefit people who bought a home 15 years ago and causes people who recently purchased a home to pay more property tax, even if the two homes have the same current market value.
Under a proposed change to the Florida Constitution, the Florida property tax exemption will increase by $25,000, but the exemption only applies to the value of property between $50,000 and $75,000.
If you are registered to vote you should become knowledgeable of what changes are proposed in Florida’s tax system. The election to decide on the new tax system is set for January 29th, 2008.
Use tax is a tax of 6% that is due on items brought into the state of Florida. An example of such goods would be items ordered over the Internet from out of state.
Unfortunately, the State of Florida does not receive a lot of revenue from people who voluntarily pay this tax. If you order an expensive item over the Internet be aware that the State of Florida has the right to bill you for 6% of the value of the item purchased and brought into the state. Also, local taxes might apply to the item.
Fishers Law Office has recently seen a situation in which the Florida Department of Revenue sent a bill to a client who had ordered equipment from out of state but did not pay the tax. The client was subject to penalties and interest. You have been warned: Items ordered over the Internet are subject to Use Tax in the State of Florida.
VIII. What is the alternative minimum tax and how does it apply to most taxpayers?
The alternative minimum tax (AMT) is a parallel income tax system designed in the 1970’s to make the rich people pay income taxes.In the beginning, the AMT was meant to apply to a very small number of “rich” people. The problem is that the AMT was not indexed to inflation and as a result 23 million “middle class” taxpayers will have to pay the AMT for the 2007 tax year.
When you prepare your United States Federal income tax return for 2007, make sure that your accountant prepares an AMT calculation so that you don’t receive an unexpected tax bill from the IRS.
Remember: If you are an upper middle class wage earner who itemizes deductions for things such as mortgage interest expense and real estate taxes paid on your residence, or if you have municipal bond interest or other tax-free income, be aware the AMT is out to get you!
IX. Watch out for D.U.I.’s in Hillsborough County!
Fishers Law Office has noticed a disturbing trend in the area of drunken driving law. Several of our clients have been pulled over without probable cause by the police and arrested for DUI. One client was followed after pulling out of a bar parking lot. When you are charged with DUI, you face charges in two separate judicial systems: State of Florida criminal court and State of Florida Department of Motor Vehicle “administrative” proceedings.
Under the law, an administrative suspension of a driving license for D.U.I. cannot be challenged on the basis of a “bad stop” whereas such stops can be challenged in criminal court. We have found recently that prosecutors are more willing to “work a deal” and reduce the charges from D.U.I. to reckless driving if there were problems in the initial stop by the police.
Unfortunately, even if criminal charges are reduced to “Reckless Driving”, administrative sanctions such as driving license suspensions still apply.
Almost all police departments in the Tampa Bay area utilize movie cameras to film the stop and/or the field sobriety test. If your are stopped in the city of Tampa, for example, the police have a film record of the driving behavior that forms the basis for the stop.
X. Income Tax traps in inherited IRAs.
A 69-year-old man died owning an IRA account. He had three beneficiaries, his spouse and two sons. After he died his spouse came to Fishers Law Office and wanted to know if she could “roll over” her share the IRA into her own IRA and pay no tax. This is very important because generally if a beneficiary receives money from an inherited IRA, income tax is due on the amount received. The widow was allowed to roll her share of the IRA into her existing IRA tax-free.
We advised the widow to do a “Trustee to Trustee” transfer, which means that the assets are transferred from one IRA to another. (Alternatively, the spouse can receive the money from the IRA and then redeposit the funds within 60 days into the spouse’s own IRA. We recommend direct rollovers however, so that there is no chance that income tax is due on the entire amount should the 60-day deadline pass.)
XI. Do you need a will?
Many clients want to know if they need a will. We recommend that anyone who has children or is in a second marriage write a will. You should also have a will if you have any financial assets or own property, land, or other investments. In order to write a simple will, you must know three things:
There are special rules for writing and signing wills. For example, you must give 30% of your assets to your wife and there are restrictions on gifting of homesteads, so see a professional.