Randy B Birch – Attorney at Law

Utah law is quite clear on this issue.  Unless the document specifically states interest is compounded, it is simple.    Here is a blurb from case law on the issue, Mountain States Broadcasting Co. v Neale 783 P.2d 551

INTEREST

Mountain States next contends the trial court erred in awarding compound interest to NBA on the unpaid interest installments. See generally 45 Am.Jur.2d Interest and Usury § 76 (1969) (“Compound interest means interest on interest, in that accrued interest is added periodically to the principal, and interest is computed upon the new principal thus formed; it is to be distinguished from the mere allowance of interest on overdue installments of interest, which is not strictly compound interest.”). The court relied on the following provision in the promissory note as the basis for its award:

“This Note shall bear interest upon the unpaid principal balance hereof from the date hereof until paid, at a rate of ten percent (10%) per annum. Should interest not be paid when due, it shall thereafter bear like interest as the principal.”

In Utah, compound interest is not favored by the law. Watkins & Faber v. Whiteley, 592 P.2d 613, 616 (Utah 1979) (per curiam). The court’s award here can be affirmed only if we conclude the parties expressly agreed to compound interest by the terms of the above provision. In this regard, we observe that the note does not explicitly provide that interest on unpaid interest should be compounded monthly.(fn4) Instead, it provides that unpaid interest will bear interest “as the principal,” which bears simple interest. Therefore, we hold NBA is only entitled to simple interest at a rate of 10% per annum on the unpaid interest installments, and we remand to the trial court to recalculate the interest due.(fn5)

As I read this decision and others similarly worded in Utah it is clear that unless the document states “Compounded,”  the Courts will not find it to be compounded.

Question:  A collection agency has a judgment against me, I don’t have any money to pay them so they want to take my personal property. Can they take the children’s computers and tv their dad bought them for them?

Reply: These are general comments, but: 1) they cannot take anyone else’s property to satisfy your debt; 2) most of your property is “exempt” meaning that they cannot take that either; but to preserve it you MUST fill out the form objecting and requesting a hearing when they serve you with the paperwork; 3) if you will agree to make any payments at all, they will not waste their energy o$ selling your personal property. The following is a partial list of exempt property and money, but some of these exemptions might not apply to judgments for alimony or child support. (A) A burial plot for you and your family. (B) Health aids. (C) Benefits because of disability, illness or unemployment. (D) Medical care benefits. (E) Veteran?s benefits. (F) Social security benefits. (G) Supplemental security income benefits (SSI). (H) Workers? compensation benefits. (I) Certain retirement benefits. (J) Public assistance. (K) Money or property for child support, alimony or separate maintenance. (L) Certain furnishings, appliances, carpets, animals, books, musical instruments, and heirlooms. (M) Provisions for 12 months. (N) Wearing apparel, not including jewelry or furs. (O) Beds and bedding. (P) Certain works of art. (Q) Compensatory damages from bodily injury or wrongful death. (R) The proceeds of certain life insurance contracts and trusts. (S) Books, implements and tools of a trade. (T) A personal motor vehicle. (U) A motor vehicle used in trade or business. (V) Part of your wages. (W) Property of a person who did not have a judgment entered against him or her, such as the co-owner of the property being held. You should consult Utah Code Title 78B, Chapter 5, Part 5, Utah Exemptions Act for full information about exemptions.

There is no exemption solely because you are having difficulty paying your debts. You may want to consider consulting with a bankruptcy lawyer.

Question: My son has been employed by the same company for the last three years. The company has fallen on hard times and has not been paying their employees. During the last three months he has not been on time once. They are suppose to pay each week and at the moment they owe him for 6 weeks. He recently found a different job and quit his job. But they still owe him for the 6 weeks plus 3 weeks paid vacation. What is the best course of action for him to take to get the money that is owed him?

Your Reply: Contact the Wage and Hour division of the Utah Labor Commission. They will walk him through the process and help him collect without charging him. CONTACTING THE DIVISION Mail Address: P.O. Box 146600, Salt Lake City, UT, 84114-6600 Street Address: 160 East 300 South, 3rd Floor, Salt Lake City, UT 84111 801-530-6800

In 1999 President Clinton signed into law the Gramm-Leach-Bliley Act. That Act authorized the Federal Trade Commission to regulate the disclosure of nonpublic personal information of customers. The Federal Trade Commission has now promulgated final rules that go into effect on August 1, 2009 for the protection of nonpublic personal information of customers. The FTC announced July 29, 2009 that they would delay enforcement until November 1, 2009. This act applies to any entity that regularly extends, renews or continues credit. Creditors include employers and businesses that provide services and bill later, including many professionals. In short, if you acquire nonpublic personal information from customers you are probably going to have to comply with these regulations. Accepting credit cards as a form of payment does not in and of itself make an entity a creditor.

Under the Commissions new “Red Flags Rules” you must develop a written program that identifies and detects the relevant warning signs (red flags) of identity theft. These may include unusual account activity, fraud alerts on a consumer report or attempted use of suspicious account application documents.

The program must describe appropriate responses that would prevent and mitigate the crime and detail a plan to update the program. The program must be managed by the Board of Directors or senior employees of the company, include appropriate staff training and provide for oversight of any providers of credit information that you use in the business.

Disposal of information contained in consumer reports or information derived from consumer reports is now also regulated by the FTC. Reports that businesses or individuals receive with information relating to employment background, check writing history, insurance claims, residential or tenant history or medical history are consumer reports. The FTC Disposal Rule requires disposal practices that are reasonable and appropriate to prevent the unauthorized access to or the use of information in a consumer report. For example, reasonable measures for disposing of consumer report information could include establishing and complying with policies to burn, pulverize or shred papers containing consumer report information so that the information cannot be read or reconstructed; destroy or erase electronic files or media containing consumer report information so that the information cannot be read or reconstructed; conduct due diligence and hire a document destruction contract to dispose of material specifically identified as consumer report information.

By Bruce W. Shand, guest writer
Bruce’s practice focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.

Q: We provided equipment and services for a hotel. The hotel was foreclosed on by the private money lenders that were lending the money. The hotel owed us $5000. The hotel is now refusing to pay the bill saying it is not their problem even though they are using the same equipment that the money is owed on? How is the best way of going about collecting our money? If the private money lenders foreclose on the borrower don’t they assume all liabilities etc. from the property?

A: Usually when the lenders foreclose, the foreclosure wipes out any debt attributed to the property from the prior owners. Do you have a signed contract? Do you have any personal guarantees? I suspect your remedy is to pursue your claims against those that hired you – probably best in small claims court as that is quickest and the limit is $10,000. Good luck!

There have also been changes to the laws of the state of Utah. On January 1, 2008 Utah changed the living will statute. The previous statute provided for the appointment of a healthcare agent through a Special Power of Attorney to carry out your final wishes regarding end of life decisions. The statute then required the execution of a second document which actually spelled out your final wishes with regard to end of life decisions. The statute presented several practical problems, the chief of which was that emergency medical providers refused to recognize the document.

Under the new act, emergency medical providers have agreed that they will recognize the new living will form. Although living wills that were executed prior to January 1, 2008 are still valid, it is highly recommended that you update it to conform to the new statute. This will provide you a living will that will be honored by EMT’s and ER doctors in emergency situations.

By Bruce W. Shand, guest writer
Bruce’s practices focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.

Health Insurance Portability and Privacy Act (HIPPA) final regulations were instituted in 2006. According to these regulations every person over the age of 18 is entitled to a right to privacy of their health records. Medical providers cannot speak to anyone about a patient’s condition unless they have been given authority to do so. To avoid unnecessary confusion when you become ill, it is highly recommend that you sign HIPPA waivers now, allowing as many or as few people as you wish to speak to doctors, nurses or hospital staff regarding your health condition.

By Bruce W. Shand, guest writer
Bruce’s practices focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.

The 2001 Estate Tax reform has been implemented and currently allows persons to shield approximately $3,500,000 from estate tax and gift tax. If the 2001 Estate Tax reform were allowed to go forward, in 2010 the estate tax would be abolished. Congress must confirm the abolishing of estate tax this year. If Congress fails to act this year, in 2011 the estate tax will come back with the Unified Credit sheltering an estate of only $1,000,000. The Obama administration supports keeping the estate tax with a $3,500,000 Unified Credit and a 45% tax rate. The New York Times has indicated that repeal of the Estate Tax would eliminate approximately $100 billion in tax revenue. Given the size of the deficit, the elimination of estate tax may not happen. Even though the exact form of the estate tax is still quite murky I believe that a wait and see approach could be a mistake. A review will allow you to use tax-planning tools that Congress may soon curtail or eliminate.

By Bruce W. Shand, guest writer
Bruce’s practices focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.

New Medicaid rule revisions have made it very difficult to protect assets for future generations. Medicaid generally covers persons 65 and older, disabled persons and blind persons whose income and available resources do not exceed certain amounts. The Utah available resource amount is $2,000.00.

Under the old rules, states were allowed to include assets transferred by the applicant within 36 months of the application for Medicaid. The new Medicaid rules allow the states to include transfers made by the applicant within 60 months preceding the date of the Medicaid application.

Additionally, under the old Medicaid rules if the state found that the applicant’s assets exceed the minimum, it could impose a penalty period where the applicant would not be eligible for Medicaid and would be required to spend their own assets to pay for their medical services. This period was applied before the applicant could file for Medicaid. This would allow the applicant to make a gift to future generations while retaining sufficient assets to pay for their medical care until Medicaid would take over without a gap in coverage.

Under the new rules, this penalty period is applied after the application to Medicaid has been made. This may result in a gap in coverage where the applicant has no resources to pay for the services and they are also ineligible for Medicaid. This means that the new rules effect gifts made before the Medicaid application. Notwithstanding this change, there remain other methods to protect assets for future generations. They do require extremely careful planning.

By Bruce W. Shand, guest writer
Bruce’s practices focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.

It is recommended that estate plans and documents be reviewed at least every five years. Review should also be made more frequently whenever your personal circumstances change. Estate Plans created earlier than 2004 should absolutely be reviewed. The following is a summary of the changes to both tajavascript:void(0)x and non-tax laws over the last five years that may require changes to your estate plan.

By Bruce W. Shand, guest writer
Bruce’s practices focuses on estate planning and tax related issues. He can be contacted at bwshand@earthlink.net.