In In re: Tyrone A. Conard & Joyce L. Conard, Debtors. Tyrone A. Conard & Joyce L. Conard, Plaintiffs, v. Internal Revenue Serv., Defendant., No. 14-10093-KHK, 2018 WL 3339607, (Bankr. E.D. Va. July 6, 2018) the chapter 7 debtors filed an adversary proceeding to determine that tax liabilities for joint tax returns owed for 2003 through 2009 were discharged as to Mrs. Conard.  The court had granted summary judgment to the IRS as to Mr. Conard's liability.  Mr. Conard was the director for the Virginia/Maryland/D.C. region for American Income Life Insurance Company.  The debtors maintained a strict division of responsibility for family finances, with Mrs. Conard responsible solely for managing household expenses.  When additional funds were needed for the household, she asked her spouse for money, which was either supplied or payment on bills was delayed.   While worked at his firm for several years, she had no role in tracking the finances of the business, acting solely as a receptionist.  She ceased employment in 2006.  Prior to Mr. Conard opening the business, Mrs. Conard was responsible for gathering materials and hiring a professional to insure all tax returns were filed.  When Mr. Conard went into business for himself, he undertook all responsibility for their taxes and his spouse was not capable of handling the more complicated business transactions.  Mrs. Conard solely gathered  statements regarding household expenses for such returns.      Mrs. Conard was aware returns were not being filed on time, but as she was signing requests for extensions.  She did not read the returns when filed, and did not know how long extensions could last.  She also was aware of problems with the IRS, but was assured by her spouse that he was seeking professional help to resolve the issues.  She was not aware of the amount owed, and believed his assertion that they were on a payment plan.  She received the 30 or so notices sent by the IRS between 2004 and 2009 but gave them to her spouse without reading them, again taking her spouse at his word that he was handing the taxes.   The IRS asserted a liability of $337,513.87 for 2004-2009 (excluding interest and penalties).   None of the returns were filed on time, and no estimated tax payments were made, with only $4,932 total paid on the liability as of the date the bankruptcy was filed.  The IRS complained of discretionary, non-essential purchases during the period including an $86,281 Mercendex SL500, a $49,590 2012 BMW 640i, a $50,613 Buick Lacross owned simultaneously with the BMW, a Harley motorcylke purchased in 2008 or 09 for $4,000, $48,000 in tuition for their son, membership in a bot club, $4,210 expenditures at Saks Fifth Avenue, Whole life policies with a $7,932.67 cash surrender value, weekly golf trips,  a vacation to the Bahamas (partially paid by American Income), two large screen televisions for $3,130, and $6,900 of new furniture for the home.  Under section 523(a)(1)(C) of the Bankruptcy Code, a discharge in bankruptcy “does not discharge an individual debtor from any debt for a tax or customs duty with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax.” 11 U.S.C. § 523(a)(1)(C).   This encompasses both a conduct requirement (that debtor sought to evade or defeat the tax liability) and a mental state requirement (that such conduct was done willfully).  The IRS is required to prove by a preponderance of the evidence that Mrs. Conard knew taxes were due and not paid, and that she chose not to pay them.   Mrs. Conard admitted knowing that the taxes were not filed on time for the years in question, and admitted that they made the expenditures described above during and after the years the taxes were incurred.  Therefore the IRS has satisfied the conduct requirement of §523(a)(1)(C).     In order to satisfy the mental state requirement, the IRS must prove that the debtor (1) had a duty to file income tax returns; (2) knew that they had such a duty; and (3) voluntarily and intentionally violated that duty. 1  Lavish spending coupled with knowledge of tax debts is an indicated that the debtor acted willfully in evasion of tax liabilities.  Payment of discretionary expenses instead of paying tax debts known to be old amounts to the voluntary and intentional violation of the debtor's duty to pay taxes.  However, Mrs. Conard presented credible testimony that she believed her husband's assertions that he was paying the taxes.  Her testimony established both that she had no control over her husband's expenditures, and that she did not know the the taxes were not being paid.  Finding that the IRS presented no evidence to show Mrs. Conard intended not to meet her tax obligations, the court found that the IRS failed to meet it's burden of proof on the mental state requirement, and that the taxes were discharged as to Mrs. Conard.  1 United States v Clayton, 468 B.R. 763, 771 (M.D.N.C. 2012) quoting United Sate v. Fretz (In re Fretz), 244 F.3d 1223, 11330 (11) Cir. 2001)↩Michael Barnett www.hillsboroughbankruptcy.com

The June 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are James Shenwick’s comments about those sales results.1. The volume of transfers rose from May. In June, there were 41 taxi medallion sales.2. 36 of the 41 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).  Another transfer was due to a partnership split, which also does not reflect fair market value and which we have also excluded from our analysis.3. However the large volume of foreclosure sales (approximately 88%) is in our opinion evidence of the continued weakness in the taxi medallion market. 4. The four regular sales ranged from a low of $172,000 (one medallion), another at $175,000, another at $180,000 and a high of $200,000.5.  Accordingly, the median value of a medallion in June was $177,500.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 [email protected].

An individual who incurred excessive debt due to a failed business and divorce came to us for a consultation.  He was concerned not only with the amount of debt he had, but also about how that debt would impact his credit rating and ability to borrow money in the future.   We asked him to prepare the following information for the initial consultation: (1) the amount of money he owed creditors, including any pending lawsuits; (2) the property or assets that he owned; and (3) an after tax monthly budget, starting with the amount of money he made each month after taxes less his ordinary and necessary living and work expenses.His initial consultation took about an hour, and we discussed how he should deal with the debt from the failed business and divorce. His choices were either workouts with creditors or a Chapter 7 bankruptcy filing.  After reviewing the information supplied by the client, we agreed that workouts with creditors was a better way to proceed then a Chapter 7 bankruptcy filing. He made a list of all his creditors, and after reviewing his budget, determined how much of his monthly cash flow he could dedicate to paying his creditors. He contacted each of his creditors, and with advice from James Shenwick, he was able to enter into workouts with all of them.These workouts generally involve either a single payment of a discounted lump sum to the creditor or payments of money over time against the monies due to the creditor (installment payments). The timeline for these payments to creditors ranged from six months to 18 months.Another factor that must be considered in doing workouts with creditors (also known as out-of-court settlements) is the issue of  “relief of indebtedness income” under § 108 of the Internal Revenue Code(IRC).  Section 108 of the IRC provides that if an individual borrows money and does not fully repay a creditor, then he or she is enriched by the amount of debt not repaid to the creditor, which is considered taxable income. In round numbers, the IRC provides that if an individual borrows $100,000 and repays $50,000, then he or she must report $50,000 of income to the IRS and pay tax on that income. Generally, institutional creditors like credit card companies will report this relief of indebtedness income to the IRS via a 1099-R.This client’s story continues with more good news! After repaying his creditors, he was concerned about his credit score (FICO score) and his ability to borrow money in the future to buy real estate or to lease or buy a car.  He obtained a credit report from Credit Karma, and upon review, we noticed several errors. Using a federal and state law known as The Fair Credit Reporting Act, he retained us to contact those creditors and the credit reporting agencies to correct the errors. It took some time and effort, but in approximately three months we were able to correct those errors, and the good news is that he reported to us that he applied for and obtained a new credit card, which showed that he was now creditworthy!  He was very excited about this news and thrilled to have reduced his debt and maintained his ability to obtain credit. Individuals with similar issues should contact Jim Shenwick at (212) 541-6224 or [email protected] a consultation regarding their options for dealing with debt. Jim

Bankruptcy Cases            During the first quarter of 2018, the Fifth Circuit’s bankruptcy opinions gave a break for Chapter 7 trustees on their fees, resolved important issues on exemptions and explored the interplay between valuation and the elusive Section 1111(b) election among others.Trustee’s Compensation; Appellate Procedure (Section 326)LeJeune v. JFK Capital Holdings, LLC (In re JFK Capital Holdings, LLC), 880 F.3d 747 (5th Cir. 1/26/18)A trustee sought compensation under 11 U.S.C. §326.   Although no objection was filed, the bankruptcy court substantially reduced the trustee’s commission.   The district court reversed and remanded because the bankruptcy court had failed to give a reason for its action.   The trustee argued that certain creditors in another bankruptcy estate lacked standing to participate in the appeal.    The Fifth Circuit found that because those creditors had claimed an interest in the estate at issue, they had standing to participate in the appeal.   The Court of Appeals then found that the statutory formula under11 U.S.C. §326 was not only the maximum for trustee compensation but was also “a baseline presumption for reasonableness in each case.”     Sale Free and Clear of Interest of a Co-Owner; Claims (Sections 363(h) and 502)UTSA Apartments, LLC v. UTSA Apartments 8, LLC (In re UTSA Apartments 8, LLC), 886 F.3d 473 (5th Cir. 3/27/18)A student housing complex was owned by multiple tenants-in-common.   The tenants-in-common had multiple disagreements with Woodlark, the management company for the complex.  Some but not all of the tenants-in-common filed bankruptcy.    While the bankruptcy was pending, several non-bankrupt co-tenants assigned their interests to UTSA, an affiliate of the management company.    The property was sold free and clear of the interests of the co-owners pursuant to 11 U.S.C. Sec. 363(h).  The debtor co-tenants objected to paying the affiliate of the management company based on the interests that were assigned to it post-petition.  Instead, they sought to limit the affiliate to the interest it owned on the petition date and to award the interests that were transferred to it to the co-tenants who had filed bankruptcy.     The Bankruptcy Court agreed and reduced the interest of UTSA from 21.17% to 3.14%.The Debtors also sued Woodlark for breach of fiduciary duty.   The Court found breach of fiduciary duty but did not find any specific damages.   Instead, it denied the portion of Woodlark’s claim for deferred management fees based on Texas law allowing for fee forfeiture in a case of insider dealings.   However, it affirmed the portion of the claim relating to funds advanced to the project.On appeal, the debtor co-tenants argued that the share attributable to UTSA, the affiliate of the management company, could be reduced as an “equitable remedy” for Woodlark’s breaches of fiduciary duty.  However, UTSA was never sued.   The Fifth Circuit found that the Bankruptcy Court could not reduce the share of proceeds payable to a non-debtor party who had not been sued.   The Fifth Circuit affirmed the reduction in the proof of claim based on breach of fiduciary duty.Disclosure:   I represented Woodlark and UTSA in the Bankruptcy Court and subsequent appeals.   There is a motion for rehearing still pending.Valuation/Section 1111(b) Election (Sections 506 and 1111)Houston Sportsnet Finance, LLC v. Houston Astros, LLC (Matter of Houston Regional Sports Network, LP),  886 F.3d 523 (5th Cir. 3/29/18)The Houston Astros and the Houston Rockets formed a television network (the Network) to televise their games.   The Network entered into an agreement with the Teams granting them the exclusive rights to broadcast their games.  It also entered into an Affiliation Agreement with Comcast to carry the Network on its cable systems in return for a fee.  An affiliate of Comcast  loaned the Network $100 million secured by tangible and intangible assets.  After the Network defaulted on its payments to the Astros, the Astros threatened to terminate their agreement.   This would have jeopardized Comcast which would not have been able to broadcast the games.   Various Comcast entities filed an involuntary petition against the Network.  The Network reached an agreement with AT&T and DirecTV for those entities to acquire its equity and to enter into separate agreements to pay the Network to broadcast its content.   In connection with this deal, the Teams agreed to waive $107 million in media-rights fees which had accrued during the bankruptcy.Comcast made an 1111(b) election to have its claim treated as fully secured.   The election did not apply to the Network’s tangible assets because those assets were to be sold and the 1111(b) election does not apply in the context of a sale.   The Bankruptcy Court valued the Affiliation Agreement with Comcast as of the petition date.  As of the petition date, the Court concluded that the value of the Affiliation Agreement was less than the amount of the media-rights fees to be paid by the Network.  As a result, the Court valued the Affiliation Agreement at $0.   Because an 1111(b) election cannot be made with regard to property which is of inconsequential value, the Court denied the election. On appeal, the Fifth Circuit evaluated whether the collateral should have been valued as of the petition date or as of the effective date of the plan.   It stated:We conclude that a court is not required to use either the petition date or the effective date. Courts have the flexibility to select the valuation date so long as the bankruptcy court takes into account the purpose of the valuation and the proposed use or disposition of the collateral at issue.Because the proposed use was under the plan, the Affiliation Agreement should have been valued based on that use.   Because the Teams had agreed to waive the media rights fees, the Fifth Circuit found that it was error to deduct them from the value of the collateral.  The Court stated:Therefore, the value of the Agreement in the reorganized debtor’s hands is unaffected by these waived fees. Subtracting those costs from the value of Comcast’s collateral would value the Agreement in light of a hypothetical disposition of the property—i.e. liquidation—that will not occur. As a result, the Court remanded for a new valuation.   It is important to note that this result is unique to a Chapter 9, 11 or 12 proceeding.   In 2005, Congress amended Section 506 to state that valuation in Chapter 7 and 13 cases should be made as of the petition date based on replacement value.Exemptions (Section 522)Lowe v. DeBerry (In re DeBerry), 864 F.3d 526 (5th Cir. 3/7/18)A debtor filed chapter 7 and claimed a Texas homestead as exempt.  No party objected.  While the case was still open, the debtor sold the homestead and used the proceeds to hire a criminal attorney among other items.   The trustee then sued to recover the proceeds on the basis that failure to re-invest them in another Texas homestead within six months caused the exemption to lapse.   The bankruptcy court denied the trustee’s motion but the district court reversed.The Fifth Circuit ruled that property claimed as exempt in a chapter 7 case could not re-enter the estate based on subsequent events.   The Court distinguished its prior precedent in Frost as being limited to the chapter 13 context.Peake v. Ayobami (In re Ayobami), 879 F.3d 152 (5th Cir. 1/3/18)A chapter 13 debtor sought to exempt 100% of the value of an asset up to the applicable limit under the federal exemptions.   Following several rounds of objections to exemptions, the bankruptcy court certified a question to the Fifth Circuit as follows:  “May a debtor claiming federal exemptions under §522 of the Bankruptcy Code ever exempt a 100% interest in an asset?”   The Court’s answer was yes.   Where the value of the asset, taken together with other exemptions in the same category, is below the statutory cap, the debtor may properly exempt 100% of the value of the asset.  However, the Court declined to address whether exempting 100% of the value would be the same as exempting the asset itself.    Sanctions; Appellate ProcedureKenneth Michael Wright, LLC v. Kite Bros., LLC (In re Kite), 710 Fed. Appx. 628 (5th Cir. 1/12/18)(unpublished)A creditor filed an untimely appeal to the U.S. District Court.   The District Court dismissed the appeal and awarded sanctions.   The creditor appealed to the Fifth Circuit and the appellees again asked for sanctions.On appeal, the appellant argued that the time limit of Rule 8002 to file a notice of appeal was not jurisdictional.    The Fifth Circuit said that “an appeal is frivolous if the result is obvious or the arguments of error are wholly without merit and the appeal is taken 'in the face of clear, unambiguous, dispositive holdings of this and other appellate courts.”   The Court noted that a deadline is jurisdictional if it is mandated by Congress.   Because 28 U.S.C. §158(c)(2) specifically adopts the time limit set forth in Fed.R.Bankr.P. 8002, the deadline was jurisdictional and the argument that it was not was frivolous.    The Court awarded nominal damages of $1 and double costs.  DamagesMandel v. Thrasher (Matter of Mandel), 720 Fed.Appx. 186 (5thCir. 2/15/18) (unpublished)A debtor misappropriated trade secrets.   The bankruptcy court awarded $1 million to the inventor and $400,000 to the company’s chief creative officer.   In the first appeal, the Fifth Circuit affirmed the liability finding but remanded for a new hearing on damages.   On remand, the bankruptcy court awarded the same damages.   The Fifth Circuit quoted its prior opinion that damages for theft of trade secrets could be based on:the value of plaintiff's lost profits; the defendant's actual profits from the use of the secret, the value that a reasonably prudent investor would have paid for the trade secret; the development costs the defendant avoided incurring through misappropriation; and a reasonable royalty.The Fifth Circuit affirmed the damages awards from the lower courts.   Judge Jennifer Walker Elrod dissented.    She said, “Our caselaw cannot be bent to support the award of unproven damages.”    She explained that in the first instance, the bankruptcy judge had rejected all of the damage models offered and then awarded damages without stating what model it did use.   On remand, the bankruptcy court awarded damages on a model it had previously rejected—the lost asset theory.   She faulted the bankruptcy court for accepting a valuation based on a range of values of successful companies without considering the risk of failure.   She concluded:Valuing intellectual property is hard, and the misappropriation of that technology is potentially as easy as a download to a flashdrive. The difficulty of determining a correct valuation methodology, however, does not excuse the burden to show that the technology's value rises above mere speculation and is based on just and reasonable inferences from the credible evidence. Our flexible and creative standard is not a license for pie-in-the-sky damages; rather, damages must be grounded both in theory and fact.The opinion is interesting not so much for the majority opinion but for the spirited dissent. Non-Bankruptcy DecisionsHere are a few non-bankruptcy decisions that I found interesting. JurisdictionTrois v. Apple Tree Auction Center, Incorporated, 882 F.3d 485 (5th Cir. 2/5/18)A Texas resident sued Ohio citizens in a Texas court based on breach of contract and fraudulent misrepresentation.   The breach of contract claim was based on a contract executed and performed in Ohio.    The fraudulent misrepresentation claim was based on a conference call from Ohio to Texas.   The Fifth Circuit found that there were not minimum contacts with regard to the breach of contract claim.   The only Texas contacts were phone calls with regard to the contract.   "[C]ommunications relating to the performance of a contract themselves are insufficient to establish minimum contacts.").    However, the Court found jurisdiction with regard to the fraud claim although narrowly so.  The Court stated:This case falls within the fuzzy boundaries of the middle of the spectrum. Although Schnaidt did not initiate the conference call to Trois in Texas, Schnaidt was not a passive participant on the call. Instead, he was the key negotiating party who made representations regarding his business in a call to Texas. It is that intentional conduct on the part of Schnaidt that led to this litigation. So Schnaidt is not being haled into Texas court "based on [his] 'random, fortuitous, or attenuated' contacts."  To be sure, we are somewhat wary of drawing a bright line at who may push the buttons on the telephone.Texas Debt Collection ActClark v. Deutsche Bank National Trust Company, 719 Fed. Appx. 341 (5thCir. 1/22/18)(unpublished)Homeowner sued under Texas Debt Collection Act Sec. 392.304(a)(19) which prohibits debt collectors from using any other false representation or deceptive means to collect a debt.   The Court found that communications with regard to renegotiation of a debt do not concern the collection of a debt.   Therefore the District Court was correct to dismiss the action for failure to state a claim.ForeclosureWilliams v. Wells Fargo Bank, N.A., 884 F.3d 239 (5th Cir. 2/26/18)Swis Community, Limited built a low-income housing project.   The project was financed with debt which was assigned to Fannie Mae with Wells Fargo Bank as servicer.   Swis Community defaulted on the debt.   A Wells Fargo employee provided incorrect notice addresses to the substitute trustee.  As a result, at least some obligors did not receive notice of acceleration or substitute trustee’s sale.    Fannie Mae purchased the property at foreclosure.   Parties associated with the debtor brought suit against Fannie Mae, Wells Fargo and the substitute trustees.   The District Court granted summary judgment in favor of the Defendants.  The plaintiffs appealed the summary judgments in favor of Wells Fargo and Fannie Mae.  The Fifth Circuit affirmed the judgment as to Wells Fargo.   Because Wells Fargo was merely the servicer of the debt, it was not a party to the deed of trust.   Therefore, it could not have breached the deed of trust.   However, the Fifth Circuit reversed the judgment in favor of Fannie Mae for breach of contract.   Generally under Texas law, a party who has materially breached a contract cannot bring an action for breach of contract.   However, the plaintiffs argued that the obligation to give proper notice under the deed of trust was an independent covenant which could still be enforced notwithstanding default under the note.   The Fifth Circuit agreed.   The notice provisions under the deed of trust could only come into play in the event of default.   If they could not be enforced based on breach of the note, they would be of little benefit.Smitherman v. Bayview Loan Servicing, LLC, 2018 U.S. App. LEXIS 5660 (5th Cir. 3/6/18)Smitherman acquired property in 2005.  He stopped making payments in 2011.   When Bank of America sought to foreclose, he filed various suits to stop the foreclosure.   In June 2016, he brought his fourth suit in which he alleged wrongful foreclosure and to quiet title.   The District Court dismissed his claims and enjoined him from interfering with future foreclosure sales.   The Fifth Circuit found that the wrongful foreclosure claim was premature at the time the claim was dismissed since no foreclosure had occurred.  The quiet title claim failed because the plaintiff made only conclusory claims that the assignment to the current lender was improper.  As a result, it failed to state a cause of action.  Warren v. Bank of America,  N.A., 717 Fed.Appx. 474 (5th Cir. 3/9/18)(unpublished)A lender foreclosed upon a property and sent its contractor to change the locks.  The lender did not allow the borrower to remove her property.   The Court found that Warren was a tenant at sufferance following the foreclosure.  As a result, the Court found that the District Court properly dismissed the borrower’s claims for wrongful foreclosure, unlawful lockout, trespass and invasion of privacy.    The opinion raises the possibility that the borrower could have raised a claim for conversion.    However, this point is not developed.

by Joe Nocera Bloomberg News on Monday posted an article about something that has become a pretty big deal in New York City: Taxi drivers are committing suicide.Since November, six drivers, beset with financial difficulties, have taken their own lives, most recently last Friday. After every death, there are calls from the Taxi Workers Alliance, which represents the drivers — and plenty of others — for the city to start restricting the number of Uber and Lyft cars on the road. Taxi drivers view Uber Technologies Inc. and Lyft Inc. as not so much disrupting their industry as destroying it.I suppose you can't really blame them for portraying Uber and Lyft as the enemy. In 2011, before Uber entered the New York market, there were 13,587 yellow cabs in the city of 8.5 million people.The number of cabs in New York has been capped since 1937, after a Depression-era glut made it impossible to make a living as a taxi driver. The mechanism the city used to restrict cabs was a medallion that one had to buy to own a cab. Because there were so few cabs for so many people, the law of supply and demand kicked in, driving up the price of medallions. According to the New York Times, the value of a medallion topped out at $1.3 million in 2014. Today, according to Bloomberg, there are an astonishing 80,000 "app-based transportation vehicles," driving around New York City. If 13,587 cabs were too few, then it's fair to say that the current 100,000-plus cars-for-hire are too many. The price of a medallion has dropped as low as $130,000.Taxicab operators who thought their medallion would finance their retirement are now drowning in debt. Cabbies — many of whom lease their cabs from medallion owners — can no longer make their lease payments because their business has dwindled. And there is one other downside: All those app-based cars have slowed down traffic in New York by 23 percent since 2010, costing the city an estimated $34 billion a year.On the other hand, is it really fair to blame everything on Uber and Lyft? I would argue that before throwing rocks at the competition, the New York taxi industry would do well to take a long, hard look in the mirror. Like internet stocks in the late 1990s, and real estate in 2005 and 2006, medallions were a bubble that was bound to burst. Uber and Lyft mainly provided the pins that popped it.As was the case in many cities, yellow cabs in New York held a monopoly on cars-for-hire — and as is often the case with government-mandated monopolies, the result was an industry that put its own needs before that of its customers. As my colleague Barry Ritholtz pointed out recently, the taxi industry changed shifts between 5 p.m. and 6 p.m. — the exact moment when the largest number of people were trying to hail cabs. It was impossible to get a cab when it rained, or if there was a subway breakdown. Cars were often grimy.Did the taxi industry care? No. So long as cabs remained scarce, the value of their medallions kept going up — and that's all that really mattered. As the price rose, people wanting to buy medallions had to take out loans that were as big, or bigger, than their mortgages. But that was OK too. They made the same assumption that homebuyers made in 2006: that the price could only keep rising.There are any number of things the industry could have done to minimize the impact of Uber and Lyft. The most obvious was to have increased the number of cabs over the years, something that could have been sensibly calibrated so that cabbies could still make a good living while riders had an easier time finding a taxi. It could have embraced technology so that people could hail a cab via an app instead of having to stand at a corner and hope for the best. 1  And it could have replaced medallions with renewable licenses, which would have ended the bubble before it got out of hand. But the taxi lobby was powerful, and so was the industry's view that medallions were a sure-fire way to get rich. The situation was untenable, however; if Uber hadn't come along to burst the bubble, something else would have. Because the taxi industry had treated riders so shabbily, people embraced the new cars-for-hire even though they were usually more expensive than a taxi ride.What is astonishing to me is that the industry still doesn't seem to realize that it sowed the seeds of its own destruction. For instance, in a case decided late last year, two medallions owners sued the city's Taxi & Limousine Commission for failing to maintain the "financial stability" of the medallions — as if that were somehow a government responsibility. But, wrote the judge, the plaintiffs "have pointed to no statute or regulation that compels the Taxi & Limousine Commission to artificially inflate the value of medallions." The suit was tossed.In another case, medallion owners and their lenders sued the city and the commission for, as Reuters put it, "jeopardizing their survival by imposing burdensome regulations and letting the Uber ride-sharing service take passengers away." That suit got tossed as well.At a rally outside city hall Monday, the Taxi Worker Alliance once again pointed to Uber and Lyft — "Wall Street companies," an alliance official called them — as the reason for the cabbies' struggles. She called on the city to both regulate them and reduce their number. I have some sympathy with the latter request. A cabbie — or an Uber driver — ought to be able to make a living driving a car-for-hire, and that doesn't appear to be possible now. 2  But any reduction should involve every kind of car-for-hire, not just Uber. There is no law that says the number of Uber cars must shrink so that all 13,587 taxis can be saved.Medallions are a different story. When the internet bubble burst, nobody bailed out tech investors. And when the subprime loan bubble burst, the federal government took the position that it had to let foreclosures run their course, no matter how much pain they inflicted on homeowners. Why should medallion owners be treated any differently?Medallion owners had a sweet deal for a long time. Now that sweet deal is going away. It's painful, yes, but it's not the job of government to protect a monopoly. Once medallions are no longer prized for their ability to make people rich, everyone in New York — taxi drivers included — will be better off. It uses such technology now, but it's a day late and a dollar short. I've spoken to many Uber drivers over the years. I've yet to meet one who said he could make a living driving full time for the company. Copytight 2018 Bloomberg L.P.  All rights reserved.

By Emma G. FitzsimmonsAfter a growing furor among Uber drivers in New York City in 2016 over plunging incomes, Uber relented and made a rare concession: It agreed to recognize a local driver group.The group, the Independent Drivers Guild, was not quite a union, but it would meet regularly with Uber management and advocate for drivers. Still, there was lingering suspicion that the guild was a pawn for Uber since it accepts money from the powerful company.But two years later, the guild is taking an increasingly confrontational stance toward Uber as it pushes for higher pay and a cap on new drivers.Backed by veterans from the Barack Obama and Bernie Sanders presidential campaigns, the guild is drawing attention to the plight of Uber drivers struggling to make a living — just like taxi drivers.After a taxi driver killed himself last month — one of six driver suicides since December — the Independent Drivers Guild called for new regulations in stark terms, saying city leaders had ignored “widespread exploitation.” While Uber as a corporate behemoth has eviscerated the yellow cab industry, front-line workers in both worlds share a common bond over their economic desperation.“How many more of our families must be shattered before the city will act?” said Sohail Rana, an Uber driver and guild member.Yet some continue to doubt the guild’s independence. Leaders will not say how much Uber pays the guild as part of its agreement to represent drivers or how many dues-paying members it has. But officials at Uber are hardly pleased by the group’s decision to go after its bottom line.The guild’s campaign comes as New York City is considering stricter rules for Uber and other ride-hailing services that have flooded the streets with vehicles. Mayor Bill de Blasio and the City Council are under pressure to address several issues: setting fair wages for drivers, reducing street congestion and stabilizing the crashing values of taxi medallions.Last Monday, Uber’s chief executive, Dara Khosrowshahi, visited City Hall as part of a global charm offensive to repair the company’s image. Mr. Khosrowshahi met with Corey Johnson, the City Council speaker, who said recently that it had been a mistake not to rein in Uber’s growth in 2015, when Mr. de Blasio tried unsuccessfully to institute a cap.Uber has become hugely popular in New York, and its trips outpaced yellow taxis for the first time last year. There are about 65,000 vehicles affiliated with Uber in the city, which provide more than 400,000 trips per day, according to the Taxi and Limousine Commission. Lyft, its main rival, tallies about 112,000 trips per day. City law caps the number of yellow taxis at about 13,500; they typically make about 300,000 trips each day.New Yorkers get cheap rides in nice vehicles — and a respite from the failing subway — while Uber is moving toward an initial public offering next year at a value of $48 billion. But many of the drivers who New Yorkers and Uber executives rely on are feeling hopeless.Drivers are trapped in predatory car loans. The money they make from each trip is relatively paltry after fees, like sales tax, are deducted and after Uber takes its cut of more than 20 percent.Pedro Acosta began driving for Uber shortly after the service arrived in New York in 2011. At first, he made a good living. Uber enticed drivers, promising they would make $5,000 during their first month. But then the app started reducing its rates.“They dropped the price so much,” Mr. Acosta said at his apartment in East New York, Brooklyn, the day after he worked an 11-hour shift. “We have to work so many hours.”Mr. Acosta made 4,457 trips for Uber last year, or more than 85 rides each week. He made about $30,000 after expenses, according to his tax returns, an amount that he said was difficult to live off in an increasingly expensive city. He has six children, and his wife works giving massages and facials.His expenses add up quickly — a $750 monthly car payment, insurance, gas, oil changes, professional clothing. To buy his 2016 Mitsubishi Outlander SUV, Mr. Acosta took out a loan with an interest rate of 17.7 percent. He makes a point of wearing a tie in hopes of improving his rating as a driver and making his children proud.A survey by the Independent Drivers Guild found that one-fifth of drivers had household incomes of less than $30,000 per year. A survey by a competing group, the New York Taxi Workers Alliance, which represents taxi and ride-hailing service drivers, found that about 44 percent of drivers made incomes between $20,000 and $39,000.Mr. Acosta, a guild member, pays $18 in dues each month. The group has given him a voice, he said, like when it fought to allow passengers to tip from within the app — an idea Uber embraced last year. Most riders still do not tip, though. “They got used to not paying a tip,” he said.The guild is now calling for change. It wants a minimum pay rate for app drivers, similar to the metered fare taxi drivers earn; a limit on Uber’s commission; and a halt to licensing additional drivers.The City Council is considering a series of bills, including one that would restrict the number of for-hire vehicles. At the same time, the city’s taxi commission is studying driver pay and is planning to propose new rules this summer to address the problem.Meera Joshi, the city’s taxi commissioner, said an influx of vehicles has made it much harder for drivers to find trips.“The pay, from what we can see, has been declining, in part because of the competition among apps to offer the lowest passenger price,” Ms. Joshi said.Alix Anfang, a spokeswoman for Uber, said the driver pay study was a good idea.“We believe that all full-time drivers in N.Y.C. — taxi, limousine and Uber alike — should be able to make a living wage and support their families,” Ms. Anfang said.The drivers who have taken their lives were from across the industry — men who drove taxis and for livery and black car services. The latest suicide was Abdul Saleh, a yellow taxi driver who leased his cab and died last week, according to the Taxi Workers Alliance.In light of the taxi driver suicides, Mr. Khosrowshahi said he would support a fee on Uber trips to pay for a “hardship fund” to support taxi medallion owners who are struggling. Medallions once sold for more than $1 million and now go for as low as $175,000.Bhairavi Desai, executive director of the New York Taxi Workers Alliance, slammed the “hardship fund” as a public relations stunt and an attempt to avoid new regulations. Ms. Desai is a frequent critic of the Independent Drivers Guild, arguing that its leaders cannot be trusted because they receive money from Uber. Ms. Desai says the guild’s attacks on Uber are meant to give the impression that it is not cooperating with the company.“They have to create tension to have some level of credibility,” Ms. Desai said.The taxi workers alliance, which was founded in 1998 and has about 4,000 dues-paying members, has also pressed for new rules, including a vehicle cap and minimum fare rate.But the Independent Drivers Guild’s message is more polished. The guild, which is affiliated with a regional branch of the International Association of Machinists and Aerospace Workers, hired Revolution Messaging, the company behind Mr. Sanders’s digital campaign in 2016. It was founded by staffers from Mr. Obama’s 2008 campaign.Last week, the guild’s executive director, Ryan Price, criticized Mr. Khosrowshahi’s “hardship fund” as another fee that would hit workers.“Uber’s C.E.O. needs to address the widespread hardship faced by drivers for his own company before considering taking another cut from our sub-minimum wage pay,” Mr. Price said.Facing low wages and long hours, some Uber drivers have quit. But Mr. Acosta keeps working for the company because he needs a job with flexibility. One of his sons has spina bifida and uses a wheelchair. He has to take him to many appointments.“I don’t have any other choice,” Mr. Acosta said.Copyright 2018 The New York Times Company.  All rights reserved.

NEW YORK -- The CEO of Uber says New York City should impose a fee on app-hailed rides to help taxi medallion owners who are struggling with debt. CEO Dara Khosrowshahi told the New York Post on Monday the city should put the surcharge into a fund to help taxi owners who bought their medallions at sky-high prices. He didn't say how much the fee should be. "In circumstances where medallion owner-operators are having a hard time, where technology has changed and demand patterns has changed their environment, we would support some kind of fee or pool to be formed, a hardship fund, call it," Khosrowshahi said. Because taxi drivers in New York City are required to own them, medallions were once extremely valuable and highly coveted because the demand for cabs was stable. But in the years since Uber and similar companies disrupted the industry, a medallion's value has fallen from as much as $1 million to $200,000. Drivers working for Uber and other app-based companies don't need medallions, and now many taxi owners who thought their medallions would continue to grow in value say they're hundreds of thousands of dollars in debt. Advocates have blamed five apparent suicides of drivers since last November on the taxi industry's woes. In the most recent case, yellow cab owner-driver Yu Mein Chow was found floating in the East River last month. The city medical examiner hasn't determined a cause of death, but Chow's family members believe he jumped to his death. A livery cab driver shot himself to death outside City Hall in February after writing a Facebook post blaming politicians for the taxi industry's decline. Groups that represent drivers blasted Khosrowshahi's proposal. "Dara Khosrowshahi's proposals are a slap in the face to struggling drivers and an attempt to get out of being regulated," said Bhairavi Desai, executive director of the New York Taxi Workers Alliance. The Independent Drivers Guild, which represents Uber drivers, said Khosrowshahi "needs to address the widespread hardship faced by drivers for his own company before considering taking another cut from our sub-minimum-wage pay."© 2018 CBS Interactive Inc. All Rights Reserved.

The Social Security Administration (SSA) provides several types of disability benefits. These include disability insurance benefits, Supplemental Security Income (SSI) benefits, benefits for disabled children, and disability benefits for widows or widowers. Unfortunately, it’s not always easy to get the benefits you or your loved one deserves, even with a severe medical condition. The application process is full of obstacles, and many claims are initially denied. The good news is that, with a little bit of research, you can increase your chances of being approved. In this article, the Pennsylvania long term disability lawyers of Young, Marr & Associates share six tips for improving the odds of getting your Social Security disability benefits claim approved successfully. 6 Tips for Filing a Social Security Disability Claim with the SSA According to the SSA’s own disability claim statistics, only about 45% of all claims were approved during the period from 2001 to 2010. Among them, only 28% were approved on the claimant’s first attempt at qualifying. Shockingly, a mere 3% were approved at the first level of appeals (“reconsideration”), while just 13% were awarded at the second level (“hearing”). Fortunately, there are a few steps you can take to help tilt these odds in your favor. Make sure you meet SSA criteria to apply for disability. In order to have a chance at being approved, you need to meet some basic requirements, including the following: You must be at least 18 years old. (Children and teenagers can also receive benefits, but an adult must apply on their behalf.) You must have a medical condition serious enough to stop you from going to work. Your condition must be expected to last one year or longer, or to result in death. Compile the necessary paperwork. You’ll need to have plenty of documentation ready in order to file a successful claim. Here are just a few examples of forms and records the SSA requires, where applicable: Birth and citizenship documents Direct deposit and bank information Employment records and job history Marriage and divorce records Records related to your military service Self-employment business records Your doctor’s contact information Your employer’s contact information Familiarize yourself with the disability application form. As the SSA cautions, the disability benefits application is a comprehensive form that normally takes anywhere from one to two hours to complete. It’s a good idea to review the application before filling it out, which reduces the risk of accidentally leaving sections blank or misreading the instructions. Consult with your doctor. When filing a disability claim in Pennsylvania, you need all the support you can get. Talk to your treating physician to ensure that he or she will make a positive recommendation on your behalf. While it’s not mandatory to get your doctor’s support or approval, it can go a long way towards persuading the SSA that you should be awarded benefits. Obtain copies of your medical records. Your medical records will play a vital role in determining whether your claim is denied or accepted. If you are missing records, or have outdated records that don’t reflect the severity of your symptoms, you are less likely to be approved. It’s also a good idea to supply your own records, because if the SSA has to track them down for you, your claim will take longer to process. You can get access to your medical records by asking your doctor, who will explain which steps you need to take to complete the process. It’s also wise to hold onto related records and objects that could support your claim, such as prescription slips, medications, medical devices, and the contact information for any caregivers, specialists, or therapists who treat you in addition to your primary care provider (PCP). Contact an experienced disability lawyer. An experienced disability benefits attorney, like the Bucks County disability attorneys of Young, Marr & Associates, can strengthen your claim and improve your odds of approval in a few important ways. Your attorney can: Fight aggressively for a different outcome if you receive a disability claim denial Help you to secure copies of your medical records and related documents Prepare you for hearings you will need to attend Protect your legal rights from being abused or violated Resolve delays or processing errors that might be slowing your claim down Review your claim to make sure it is free of errors, meets all requirements, and is supported by thorough, relevant, up-to-date evidence Experienced Disability Lawyers Can Help You File a Claim for Benefits in PA or NJ If you’re applying for disability benefits, you’re up against challenging odds. You need a Montgomery County disability lawyer who understands how the system works. At Young, Marr & Associates, our results speak for themselves. Our skilled, effective attorneys have a success rate of more than 89%, compared to the average industry success rate of just 62%. When you need experienced, results-oriented representation, turn to Young, Marr & Associates for legal guidance you can trust. For a free consultation, contact our Pennsylvania and New Jersey disability lawyers online. Alternately, Pennsylvania residents can reach us by calling (215) 515-2954, while New Jersey residents should call (609) 557-3081. The post How Can I Improve My Chances of Obtaining Social Security Disability Benefits? appeared first on .

By Zack FriedmanIt's one of the most intensely-debated student loan questions: Can you discharge your student loans in bankruptcy?The short answer: normally, student loans are not dischargeable. However, that may change. Here's what you need to know - and why. Student Loans & Bankruptcy: Overview First, a quick overview. As many borrowers struggle to repay ballooning student loan debt, bankruptcy is one option that gets floated. According to Make Lemonade, there are more than 44 million borrowers who collectively owe $1.5 trillion in student loan debt in the U.S. The average student in the Class of 2016 has $37,172 in student loan debt. Student loans are now the second highest consumer debt category - behind mortgages, but ahead of credit card debt. Unlike other consumer debt such as credit card and mortgage debt, however, student loans traditionally cannot be discharged in bankruptcy. Why? Some can't explain the rationale for the student loan "no bankruptcy" exception, but others say it grew from a concern that student loan borrowers could take advantage of bankruptcy laws, borrow a bunch of debt, earn a degree and then file for bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met. The Brunner Test: Financial Hardship Those conditions are reflected in the Brunner test, which is the legal test in all circuit courts, except the 8th circuit and 1st circuit. The 8th circuit uses a totality of circumstances, which is similar to Brunner, while the 1st circuit has yet to declare a standard. In plain English, the Brunner standard says: the borrower has extenuating circumstances creating a hardship;those circumstances are likely to continue for a term of the loan; andthe borrower has made good faith attempts to repay the loan. (The borrower does not actually have to make payments, but merely attempt to make payments - such as try to find a workable payment plan.)There are variances across federal districts, but that’s the basic framework. How Do You Discharge Student Loans In Bankruptcy? In order to have a student loan discharged through bankruptcy, an Adversary Proceeding (a lawsuit within bankruptcy court) must be filed, where a debtor claims that paying the student loan would create an undue hardship for the debtor. Were Student Loans Ever Dischargeable In Bankruptcy? Yes. Prior to 1976, you could discharge your student loans in bankruptcy. Congress then changed the law: student loans were dischargeable if they had been in repayment for five years. Subsequently, that period was extended to seven years. In 1998, Congress removed dischargeablility except if a debtor could show that paying back the student loans would create an undue hardship. In 2005, Congress extended this protection to private student loans. So, What's Changed Now? According to the Wall Street Journal, which spoke to more than 50 current and past bankruptcy judges appointed during both Democratic and Republican administrations, some judges may be more open to helping debtors. Does that mean the floodgates are now open and student loans can be discharged in bankruptcy? No. That said, some judges are looking at ways to help alleviate the burden. Examples, per the Wall Street Journal, may include: encouraging bankruptcy attorneys to represent debtors at no costpotentially eliminating future tax bills that be linked to student loan debt relief or debt cancellation after 25 years through federal student loan repayment programscancelling private student loan debt from unaccredited schoolsallowing student loan borrowers to make full payments during the Chapter 13 debt repayment period (which can last five years)While these tactics may be welcomed by some student loan borrowers, critics may question whether judges should actively try to circumvent the existing law (suggesting that Congress, and not judges, should make the law). Since the vast majority of student loan debt outstanding is comprised of federal student loans, any cancellation of federal student loan debt would be at the federal government's (and taxpayer) expense. What Else Can You Do If Your Struggling To Make Student Loan Payments? Here are two strategies: 1. Income-Driven Repayment: For federal student loans, consider an income-driven repayment plan such as IBR, PAYE or REPAYE. Your payment is based on your income, family size and other factors, and is typically lower than the standard repayment plan. After a certain period of time (such as 20 or 25 years, for example), your federal student loans (not private student loans) can be forgiven. However, you likely will owe income taxes on the amount of your student loans that are forgiven. 2. Pay Off Other Consumer Debt: If you have other high interest debt such as credit card debt, consider paying off this debt first (particularly if the interest rate is higher than your student loan interest rate). This can free up cash that can be applied to student loan debt reduction. You can also consider a personal loan to pay off your credit card debt. Credit card consolidation is the process of paying off your existing credit card debt with a single personal loan at a lower interest rate. If you can borrow a personal loan at a lower interest rate than your credit card debt, you can save in interest costs and also potentially improve your credit score.© 2018 Forbes Media LLC. All Rights Reserved.

The May 2018 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are James Shenwick’s comments about those sales results. 1. The volume of transfers rose from April. In May, there were 37 taxi medallion sales (excluding stock transfers).2. 21 of the 37 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).  Four additional transfers were family or estate transactions for minimal or no consideration, which we have also excluded from our analysis.3. The amount of foreclosure sales indicates, in our opinion, that medallion values will continue to decline. 4. The twelve regular sales ranged from a low of $150,000 (one medallion), to two medallions at $155,000, to two medallions at $160,000, to two medallions at $175,000, to two medallions at $190,000, to one medallion at $200,000 and two medallions at $287,500.5. The sales volume rose from April’s eight regular sales. At this stage of the market, not many parties are involved in selling or buying medallions, possibly due to the fear that medallion prices may further decrease.6. The median of May’s sales was $175,000, a $2,500 (1.4 %) decrease from April’s median sales of $177,500.7. Based on this data and market conditions, we do not believe that taxi medallion values have bottomed out. 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 [email protected].