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Here at Shenwick & Associates, an increasing part of our law practice involves workouts of loans for borrowers with taxi medallions as collateral for the loan. Over the past three months, we’ve noticed a trend in which the bank or secured lender repossesses the taxi medallion(s) when the loan is in default, instead of allowing the borrower to retain the medallions during workout negotiations.
Under New York law, the security agreement and other loan documents, lenders can repossess taxi medallions, which usually happens on nights or weekends when the cab is not in use. Typically, the Marshal will crowbar the medallion off the dashboard and take the rate card. Although the cab is not repossessed, if the cab is subject to a vehicle loan that is in default, the cab may also be repossessed.
Some borrowers have asked us why the lenders repossess the medallions without notice to the borrowers. New York law and the loan documents signed by the borrower provide that no notice is required for the lender to exercise its remedy of repossession. And if borrowers were noticed in advance of the repossession, lenders would run the risk of the collateral medallion(s) being hid from the lender! Accordingly, if you own a medallion and the loan is in default, you may want to park the taxi in a garage or in a location other than on the street.
For borrowers whose medallions are in default, many workouts will ultimately end with surrender or repossession of the medallion. In certain cases, surrender or repossession of the medallion can end litigation or other collection efforts by the lender.
Taxi medallion loan borrowers and guarantors whose medallion(s) were repossessed still run the risk of a deficiency judgment for the balance of the loan by the borrower or a judgment against the guarantor. Some lenders may forbear from seeking a deficiency judgment once the medallion is repossessed, but borrowers need to be aware that loan documents allow for that remedy until the statute of limitations has run. In New York, the statute of limitations for a lender to seek the deficiency balance from a borrower is six years. In many cases when a lender obtains a deficiency judgment, we negotiate a discounted settlement by threatening bankruptcy or by having the client file for bankruptcy.
Another factor that repossessed taxi medallion owners must consider is relief of indebtedness income pursuant to § 108 of the Internal Revenue Code. Simply stated, if a taxi medallion owner owes a bank $1,000,000 and only repays the bank $500,000, then the tax law provides that they must recognize $500,000 of income on their tax return. Borrowers need to discuss this potential issue with their accountant or tax advisor during settlement negotiations.
For more information about defaulted taxi medallion loans and repossessed medallions, please contact Jim Shenwick.
Nov. 21, 2018 by Seth Kaufman On the heels of the NYC Council passing (and the mayor signing into law) a bill requiring minimum payments for ride-sharing drivers and a one-year freeze on the number of ride-sharing vehicle licenses issued, the NYC Council just passed another six new bills aimed at protecting both taxi drivers and ride-sharing drivers. The bills, approved by the Council on November 14 and expected to soon be signed into law by Mayor DeBlasio, are focused not only on drivers’ pay, but also on the financial and mental well-being of drivers in the wake of a spate of recent driver suicides and some of the more macro-economic issues facing the taxi and ride-sharing industries in NYC.
Two Bills Focused on Drivers’ Pay
Int. No. 1062-A ensures that the risk of loss for a transaction that fails on a completed ride-sharing trip is placed on the ride-sharing service. If a transaction fails for a completed trip, the ride-sharing service must ensure that the driver still receives the entire amount owed for the completed trip. A ride-sharing service that violates the law is liable for a civil penalty of between $250 and $500 for each offense.
Int. No. 1096 requires that ride-sharing services will not make automatic deductions from driver earnings to make payments for the rental, lease, or purchase of a vehicle, unless the automatic deduction is optional and has been chosen by the driver.
Two Bills Focused on Drivers’ Financial and Mental Well-Being
In the last year, eight drivers have committed suicide, with large debt incurred from being a driver cited as the reason. In order to combat this growing crisis, the NYC Council passed two bills. The first would require the Taxi and Limousine Commission to engage in financial education and outreach for drivers concerning financial arrangements relating to taxi medallions and ride-sharing services (Int. No. 1068), and the second would provide financial counseling, mental health services, and referrals to non-profit organizations that could offer additional assistance (Int. No. 1081).
Two Bills Focused on Macro-Economic Issues in the Taxi and Ride-Sharing Industry and Diversity and Inclusiveness
Int. No. 0304 would establish a task force to study the sale prices of taxicab medallions by reviewing sale prices of taxicab medallions and their impact on NYC’s budget, and, within six months, recommending to the Council and Mayor changes to laws, rules, regulations, and policies related to medallions. Finally, Int. No. 1079 would establish an Office of Inclusion within the NYC Taxi and Limousine Commission, which would be responsible for promoting diversity, inclusion, and cultural sensitivity in the taxi and ride-sharing industry.
What’s Next?
These six new bills, along with the new laws passed by the NYC Council in August, demonstrate that NYC is determined to increase regulation of all aspects of the taxi and ride-sharing industry, from pay to economics to discrimination. NYC has often been at the forefront of employment regulation (for example, its Earned Sick and Safe Time Act), so It is important for businesses to monitor these developments as they could serve as a roadmap for other jurisdictions to regulate the ride-sharing industry, or even for NYC to regulate other gig businesses.
© 2018 Fisher & Phillips LLP. All rights reserved.
Three months later, Mike’s After Bankruptcy Credit Score is 681 Last Friday, Mike sent me this screenshot, showing his after bankruptcy credit score is 681. A 681 credit score is, barely, considered a “good” score by Experian and CreditKarma. Mike had filed bankruptcy with me in April and it was approved and done in September. […]
The post Three months later, Mike’s After Bankruptcy Credit Score is 681 by Robert Weed appeared first on Robert Weed.
Filing bankruptcy is a huge decision. And, there are a lot of smaller, yet extremely important choices to be made regarding the process. Should you file bankruptcy? What type of bankruptcy should you file? When should you file bankruptcy?
The post Benefits and Disadvantages of Filing Chapter 7 Bankruptcy appeared first on Tucson Bankruptcy Attorney.
Here at Shenwick & Associates, as an adjunct to our bankruptcy and debtor/creditor practices, we also offer credit repair services. Although the three major credit reporting agencies (Experian, Equifax and TransUnion) (“CRAs”) have received positive press recently for implementing the National Consumer Assistance Plan (NCAP) in March (which, among other things, prohibits reporting of medical debts until after a 180-day waiting period and prevents traffic and parking tickets or fines from appearing on credit reports), clients still complain about receiving credit reports that are riddled with errors, particularly after a bankruptcy filing.
The first step in the process is to obtain a copy of the credit report from each of the three CRAs. AnnualCreditReport.comallows you to request a free copy of your credit report every 12 months from each CRA. Credit Karma also provides individuals with free Equifax and TransUnion credit reports. Credit reports need to be carefully reviewed and any erroneous information marked with a clear explanation of what is incorrect.
Once we have copies of the credit reports, we can analyze them and prepare letters to the CRAs requiring that errors on credit reports be corrected pursuant to federal law and/or New York State law. CRAs are governed by the federal Fair Credit Reporting Act and the New York Fair Credit Reporting Act. These statutes detail the consumers’ rights to dispute information on their credit reports and how long negative information can remain on their reports.
Once we mail the CRAs a letter disputing the erroneous information, it usually takes about a month for the CRA to investigate the dispute and send the consumer the results of the investigation. We then advise the client to obtain another credit report and review that credit report for errors. We’ve often found that it takes two or more letters to fully correct erroneous information. Another option is to add a one hundred word personal statement to your credit report.
For more information about our credit repair services, please contact Jim Shenwick.
Here at Shenwick & Associates, our clients are both debtors and creditors. When a person or entity files for bankruptcy protection (such as in the recent Sears bankruptcy), we’re often contacted by creditors who are seeking to protect their claim against the debtor. Usually, this requires the filing of a proof of claim. In this post, we’ll examine some of the basics of filing proofs of claim.
1. In the context of a chapter 7 case, claims and proofs of claims are not usually a factor, since most chapter 7 cases are “no asset cases” (there will be no assets for the chapter 7 trustee to distribute from the debtor’s bankruptcy estate after the debtor’s personal property is exempted). However, if the chapter 7 trustee does find assets in the bankruptcy estate (so creditors can have some recovery on their claims), the chapter 7 trustee will file a notice of assets and request to set claims bar date (which will trigger the bankruptcy court to send a notice to all creditors listed in that bankruptcy case, and proofs of claim must be filed by the “bar date”).
2. In the context of a Chapter 11 case, § 1111(a) of the Bankruptcy Code provides that a proof of claim is deemed “filed” for any claim that appears in the schedules except if it is listed as disputed, contingent or unliquidated. Therefore, to know whether to file a proof of claim, an unsecured creditor must examine the debtor’s bankruptcy schedules to determine how their claim was scheduled, i.e., whether it was listed as disputed, contingent (the claim is dependent on another event) or unliquidated (the claim amount is uncertain). Many creditors will just file a proof of claim when they receive notice of a bankruptcy filing.
3. Therefore, unless a creditor’s attorney or a creditor can obtain the schedules by going to court or through PACER, the better practice is to file a proof of claim as soon as possible. The best practice may be to file a notice of appearance and a proof of claim as soon as an attorney is retained to represent a creditor in a chapter 11 case. If an attorney or a creditor does not file a proof of claim early in a case, then they must file the proof of claim on or before the “bar date.” If the proof of claim is not filed by the “bar date,” then that creditor is barred from receiving a distribution in the case, unless the creditor was listed in the debtor's schedules as not having a claim that’s disputed, contingent or unliquidated. Creditors should review the instructions for preparing a proof of claim.
4. Once the proof of claim is signed, and backup (which will evidence the amount of the claim, such as invoices, a spreadsheet or collateral for the claim if the claim is secured, such as a mortgage) is attached to the proof of claim, the proof of claim should be filed with the bankruptcy court. It can be uploaded to the claims register for the case via ECF (Electronic Case Filing) or sent to the bankruptcy court by Federal Express or another delivery service with a short letter of direction requesting that the clerk file the proof of claim. In cases with many creditors (“megacases”), the bankruptcy court may require that the debtor retain a claims agent to process the proofs of claim instead of the bankruptcy court.
Anyone who has questions regarding the filing of proofs of claims or creditors’ rights in bankruptcy cases should contact Jim Shenwick.
By Danielle Furfaro and Gabrielle Fonrouge
Another debt-burdened New York City cabbie has committed suicide — the eighth for-hire driver to kill himself in the past year, Taxi and Limousine Commission officials confirmed on Wednesday.
Roy Kim, 58, of Bayside, Queens, hanged himself with a belt in his home on Nov. 5, according to the city’s medical examiner’s office. There was no immediate sign of a suicide note.
Kim, who had just purchased his taxi medallion last year, was more than $500,000 in debt from the deal and struggling to stay afloat, say friends.
“He was in a lot of debt from that,” said fellow driver Young Lee, who made friends with Kim while picking up fares from airports. “For a while he was making money but then it just went slowly down and down and down. All drivers are really struggling.”
For-hire drivers have been in a freefall for the past few years, and many blame the epidemic on the unchecked growth of ride-share companies such as Uber and Lyft. The city enacted regulations this summer, but some critics called them too little too late.
TLC Commissioner Meera Joshi offered condolences to Kim’s friends and family and promised to look for more ways to help anguished drivers.
“This tragedy underscores the importance of finding new ways for government, the industry and lenders to work in unity to address the financial challenges that are weighing so heavily on our licensees,” she said. “Modifying, restructuring and lowering loans would go a long way in providing relief and keeping taxi services available to New Yorkers for years to come.”
Taxi driver advocates say the city and TLC need to do more to help.
“Owner-drivers have suffered a deep and vicious slide from the middle class into crushing poverty, in a just a few short years,” said NY Taxi Workers Alliance Executive Director Bhairavi Desai. “This crisis can be fixed. The struggle for owner-drivers is reminiscent of the 2008 housing crisis. In that crisis, the industry, government, advocates, and philanthropy came to the table to find solutions. Now, banks and lenders need to work with the city and philanthropy to write off 20 percent of outstanding debts, lower interest rates, and restructure contracts so that no owner-driver has to lose more than 20 percent of their monthly income to the mortgage.”
Kim is the fourth cabbie and eighth driver overall to commit suicide since November of last year.
In October, Uber driver Fausto Luna jumped in front of an oncoming A train.
In June, cash-strapped yellow cabbie Abdul Saleh, 59, hanged himself in his Brooklyn apartment.
In May, another yellow cab driver Yu Mein “Kenny” Chow flung himself in the East River off the Upper East Side.
In March, Nicanor Ochisor, 65 — another yellow cabbie — hanged himself in his garage in Maspeth, Queens.
Corporate black car driver Douglas Schifter, 61, killed himself with a shotgun outside City Hall on Feb. 5.
In December, livery hack Danilo Corporan Castillo, 57, wrote a suicide note on the back of a summons he received — and then jumped out the window of his Manhattan apartment.
And in November, livery driver Alfredo Perez hanged himself.
The news of the suicide comes on the same day that the city council passed a bill introduced by council member Ydanis Rodriguez that will create a commission to look at falling taxi medallion values and come up with ways to help struggling drivers.
© 2018 NYP Holdings, Inc. All Rights Reserved.
The news article headline in the Salt Lake Tribune this week says it all:
Average Utah payday loan interest rate rises to nearly 528% annually — double what Mafia loan sharks charged in the 1960s
And to think: It’s legal. Payday loans — avoid them. Do something else to tide you over to the next paycheck. If you take out a payday loan, you’ll only be making your problem worse. If you’re maxed out and struggling, talk to a lawyer and examine all your options before you make uninformed decisions and start rejecting effective solutions out of hand.
The recent rough economic times have placed millions of people under financial duress. Dealing with burdensome debt and the stress associated with it can certainly be hard. The situation can get worse when your house is on the line. However, bankruptcy can prove to be your best way to prevent foreclosure and protect your home. […]
The post Can You Declare Bankruptcy Without Losing Your House in California? appeared first on The Bankruptcy Group, P.C..
The October 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.
1. The volume of transfers rose dramatically from September. In October, there were 106 unrestricted taxi medallion sales.
2. However, 99 of the 106 sales were foreclosure sales, which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value). One transfer was an estate sale for no consideration and another transfer was from an individual to an LLC for no consideration, which also does not reflect fair market value and which we have also excluded from our analysis.
3. The large volume of foreclosure sales (approximately 94%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The five regular sales for consideration ranged from a low of $150,000 (one medallion), $160,000 (three medallions) and a high of $175,000 (one medallion).
5. Accordingly, the median value of a medallion in October was $160,000, down 8.5% from $175,000 in September.
In Jim Shenwick’s opinion, the new NYC law restricting the number of Uber, Via and Lyft licensesdoes not seem to have yet increased the value of taxi medallions.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at j[email protected].
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