By WINNIE HU Owning a yellow cab has left Issa Isac in deep debt and facing a precarious future.It was not supposed to turn out this way when Mr. Isac slid behind the wheel in2005. Soon he was earning $200 a night driving. Three years later, he borrowed$335,000 to buy a New York City taxi medallion, which gave him the right to operatehis own cab.But now Mr. Isac earns half of what he did when he started, as riders havedefected to Uber and other competitors. He stopped making the $2,700-a-monthloan payment on his medallion in February because he was broke. Last month, it wassold to help pay his debts.“I see my future crashing down,” said Mr. Isac, 46, an immigrant from BurkinaFaso. “I worry every day. Sometimes, I can’t sleep thinking about it. Everythingchanged overnight.”Taxi ownership once seemed a guaranteed route to financial security, somethingthat was more tangible and reliable than the stock market since people hailed cabs in in good times and bad. Generations of new immigrants toiled away for years to earn enough to buy a coveted medallion. Those who had them took pride in them, and viewed them as their retirement fund.Uber and other ride-hail apps have upended all that.Just as homeowners faced ruin when housing markets sank, struggling cabowners in Chicago, Boston, San Francisco and other cities are now facing foreclosureand bankruptcy. Many took out loans to pay for taxi medallions, counting onbusiness that has instead nose-dived amid fierce competition. They are fallingbehind on loan payments, being turned away by lenders and stand to lose not onlythe medallions that are their livelihoods but also their homes and savings.Nowhere is the crisis more dire than in New York, which has the largest taxi fleet inthe country. Medallions now sell for a fraction of the record $1.3 million price in2014, and in many cases, are worth far less than what their owners borrowed to buythem. Even if these owners sell their medallions, they still owe hundreds ofthousands of dollars — far more than in many other cities where medallion priceswere lower to begin with.In an unprecedented fire sale of medallions, up to 46 of them are expected to goon the auction block later this month as part of bankruptcy proceedings against taxicompanies affiliated with an embattled taxi mogul. While the city has previously heldauctions to sell a limited number of new medallions — about 1,800 since 1996 — thisis believed to be the first auction to dispose of foreclosed medallions, according tocity officials.While the auction has drawn attention to the precipitous fall of the once-mightytaxi industry, it does not reflect the hardship — and heartbreak — of individualowners like Mr. Isac. It is their stories that often get lost in the larger debate overnew technology and commutes, and tell of the human cost of the city’s rapidlyevolving transportation landscape.Since 2015, a total of 85 medallions have been sold as part of foreclosureproceedings, according to city records. In August alone, 12 of the 21 medallion saleswere part of foreclosures; the prices of all the sales ranged from $150,000 to $450,000 per medallion.Many more taxi owners say they do not know how much longer they can holdon. Didar Singh, 65, who took out a loan to buy two medallions for a total of $2.6million in 2013, said he can only afford to pay the interest — $4,816 a month — onthe loan. As it is, his taxis do not bring in enough to cover his expenses, forcing himto rely on savings and help from his children.Sohan Gill once saw his medallion as such a good investment — ”better than ahouse” — that his wife bought two more in 2001. Now they cannot find enoughdrivers for the cabs because business is so bad. And Mr. Gill, 63, who had retiredfrom driving, had to go back on the road. “How many more years am I going to driveto take care of these medallions?” he asked.Gone are the years when taxi medallions steadily rose in value, largely becausethere was a limited supply of them. The city controls the number of medallions —currently capped at 13,587 — to prevent an oversupply of cabs like what occurred inthe 1930s when concerns over congestion, reckless driving and cut-rate faresprompted the city to step in. The last time there was an auction for medallions waswhen the city sold 350 new medallions in 2014 at the height of the market,generating $359 million in revenue.But today, yellow cabs are dwarfed by cars working for ride-hail apps, whichface far fewer regulations. Taxi owners and their supporters complain that theircompetitors do not have a similar cap on their cars, and are not subject to strict ruleson taxis that cover fares, vehicle equipment and access for disabled people, amongother things.There are more than 63,000 black cars providing rides in the city through fivemajor app services: Uber, Lyft, Via, Gett and Juno. Of those, about 61,000 cars areconnected with Uber, though they may also work for the other app services, too.“We are not against competition, we are not against technology, but we want tocompete fair and square,” said Nino Hervias, 58, a taxi owner and spokesman for theTaxi Medallion Owner Driver Association, which represents about 1,500 individualtaxi owners, most of whom are immigrants.Taxi owners have sought to sue the city over what they see as an unfair playing field, with little success. Earlier this year, a lawsuit filed against the city and taxicommission by taxi owners, trade groups and credit unions was dismissed by afederal judge who found that they had failed to show they were denied due processor equal protection.Mr. Hervias and another driver have also taken legal action, known as an Article78 proceeding, to compel the city and its regulators to establish and enforcestandards that will make sure that all licensed cars — including yellow cabs — “areand remain financially stable.” The case is pending in State Supreme Court inManhattan, with a court appearance scheduled in October.Yellow taxis made an average of 277,042 daily trips and collected $4 million infares per day in July, down from 332,231 daily trips and $4.9 million in fares theyear before, according to city data.Allan J. Fromberg, a spokesman for the taxi commission, said it had taken anumber of steps to help struggling taxi owners, such as lifting a requirement forindividual owners to personally drive their taxis at least 150 shifts a year, which wasnot only a burden for older people but also limited the pool of potential buyers formedallions. It has also supported laws that have eased restrictions on who could buythe medallions and significantly lowered the transfer tax on medallion sales.The commission has also provided financial incentives to defray the cost andmaintenance of handicap-accessible cars, Mr. Fromberg said. And it has created apilot program that is intended to help fleet owners attract more drivers; the programallows drivers to pay a percentage of their earnings during a shift to lease the cab, inlieu of a flat fee up front that puts drivers under pressure and leaves them in the holeif they do not earn enough back.But for many taxi owners, such measures have not been enough.Mr. Isac is again leasing yellow cabs since he no longer has his own medallion.At times, he picks up only one passenger an hour. Even so, he is not ready to give upon yellow cabs yet.“I’m still driving a yellow taxi because I want them to come back,” he said. “I don’t want to see yellow cars disappear from the streets.”Uppkar Thind, 46, an immigrant from India, said he now has to drive 11 to 13hours a day and can no longer take time off if he wants to break even. He is payingoff a medallion that he bought for $357,000 in 2006 with money borrowed from hisrelatives and a credit union.“I worked hard,’’ he said. “I achieved my American dream and it turned into anightmare.”Copyright 2017 The New York Times Company.  All rights reserved.

When filing a Chapter 7 and 13 you must: 1. Reside, be domiciled, or have property or a place of business in the United States (U.S.). A person does not have to be a U.S. citizen to file, nor live in the U.S., if they have assets in the U.S. 2. You can file if you do not have a prior Chapter 7 discharge or it has been more than 8 years, or 6 years since a Chapter 13 discharge. The post Whether to file a Chapter 7, 13, or 20? appeared first on Tucson Bankruptcy Attorney.

CFPB Knocks Out Another Scam Yesterday, the Consumer Finance Protection Bureau put another credit repair outfit out of business. This was National Credit Advisors.  These folks claimed that you can use them to “free yourself from bad credit.” According to the Consumer Finance Protection Bureau, they collected $20 million from 50,000 consumers over a three […] The post Consumer Finance Protection Bureau Knocks Out A Scam by Robert Weed appeared first on Robert Weed.

CFPB Knocks Out Another Scam Yesterday, the Consumer Finance Protection Bureau put another credit repair outfit out of business. This was National Credit Advisors.  These folks claimed that you can use them to “free yourself from bad credit.” According to the Consumer Finance Protection Bureau, they collected $20 million from 50,000 consumers over a three […]The post Consumer Finance Protection Bureau Knocks Out A Scam by Robert Weed appeared first on Robert Weed.

Upright Law on trial in Roanoke Bankruptcy court Trial is set on September 25, 2017, for Upright Law, at the bankruptcy courthouse in Roanoke VA. The US Justice Department, through the Office of the United States Trustee, is asking that Upright be banned from accepting cases in Virginia. They are also asking for refunds for […] The post Upright Law on trial in Roanoke Bankruptcy court by Robert Weed appeared first on Robert Weed.

Upright Law on trial in Roanoke Bankruptcy court Trial is set on September 25, 2017, for Upright Law, at the bankruptcy courthouse in Roanoke VA. The US Justice Department, through the Office of the United States Trustee, is asking that Upright be banned from accepting cases in Virginia. They are also asking for refunds for […]The post Upright Law on trial in Roanoke Bankruptcy court by Robert Weed appeared first on Robert Weed.

  A district court reversed a lower court decision requiring debtor to pay 1/2 of the monies he held from a lump sum retroactive social security benefit in In re: CARL MANZO Debtor/Appellant., No. 16 C 7218, 2017 WL 3675809 (N.D. Ill. Aug. 25, 2017).  The chapter 13 debtor claimed the funds, sitting in a bank account as of the petition date, as exempt under 42 U.S.C. §407, and the bankruptcy court overruled the objection to the exemption.  However, the creditor objected to confirmation that the case was filed in bad faith because the debtor was only paying $30/month to creditors while the debtor held $7,500 in the bank as proceeds from such lump sum benefit.  The bankruptcy court sustained the objection and required the debtor to pay in 1/2 of such sum as a condition of confirmation.  The debtor sought an interlocutory appeal, which was granted..     The district court first looked at the standards of allowing an interlocutory appeal.  The requirements to allow these are 1) the appeal involves a controlling issue of law; 2) over which there is substantial ground for difference of opinion, 3) and an immediate appeal of the decision may materially advance termination of the litigation.  28 U.S.C. 1292(b).  The court found all three conditions were met.  The court then examined the good faith requirement for chapter 13.  §1325(a)(3) provides that a court may only confirm a plan if it is filed in good faith.  While good faith is not defined in the statute, the court summarized the analysis as to whether the debtor is attempting to pay creditors to the reasonable limit of his ability, or is he trying to thwart them. In re Schaitz, 913 F.2d 452, 453 (7th Cir. 1990).  Factors examined in making a determination of good faith include 1) does the plan state the secured and unsecured debts accurately; 2) does it state the debtor's expenses accurately, and 3) is the percentage repayment to unsecured creditors accurate; 4) if there are any deficiencies in the plan, do these inaccuracies reflect an attempt to mislead the court; and 5) do the proposed payments indicate a fundamental fairness in dealing with one's creditors.  Matter of Smith, 848 F.2d 813, 817 (7th Cir. 1988).  Courts may also consider how the debts arose, and whether the debts would be dischargeable in chapter 7, as well as other factors related to the debtor's honesty and fairness to creditors.    While 11 U.S.C. 541(a)(1) brings into the estate all legal and equitable interests of the debtor as of the filing of the case, 42 U.S.C. 407 provides that No other provision of law, enacted before, on, or after April 20, 1983, may be construed to limit, supersede, or otherwise modify the provisions of this section except to the extent that it does so by express reference to this section.  This provision has the effect of preventing social security benefits from ever entering the bankruptcy estate.   Charnetsky v. Buenviaje (In re Buenviaje), No. 2:16-BK-15191-VZ, 2016 WL 8467650, at *4 (B.A.P. 9th Cir. Mar. 10, 2016)(unpublished/nonprecedential) (citing In re Franklin, 506 B.R. 765, 776 (Bankr. C.D. Ill. 2014)); see Carpenter v. Ries (In re Carpenter), 614 F.3d 930, 936 (8th Cir. 2010).    The issue is whether this policy can be extended to prohibit courts from requiring debtors to contribute funds excluded from the estate toward the plan as a condition of good faith.  On a related issue, the Ninth, Fifth, and Tenth Circuits have determined that a Chapter 13 debtor's refusal to include in a chapter 13 plan the surplus income from social security benefits may not properly impact the good faith determination. See Drummond v. Welsh (In re Welsh), 711 F.3d 1120, 1132-33 (9th Cir. 2013) (Ripple, J., sitting by designation); Beaulieu v. Ragos (In re Ragos), 700 F.3d 220, 227 (5th Cir. 2012), Anderson v. Cranmer (In re Cranmer), 697 F.3d 1314, 1319 (10th Cir. 2012).  In Welch the 9th Circuit found that the rigid means test requirements under BAPCPA to compute a debtor's disposable income reflected a departure from previous case law allowing courts to include social security income in deciding whether to confirm chapter 13 plans.  The 9th Circuit rejected the trustee's argument that failure to include such funds reflected a lack of good faith.  We cannot conclude...that a plan prepared completely in accordance with the very detailed calculations that Congress set forth is not proposed in good faith. To hold otherwise would be to allow the bankruptcy court to substitute its judgment of how much and what kind of income should be dedicated to the payment of unsecured creditors for the judgment of Congress. Such an approach would not only flout the express language of Congress, but also one of Congress's purposes in enacting the BAPCPA, namely to “reduce[ ] the amount of discretion that bankruptcy courts previously had over the calculation of an above-median debtor's income and expenses.” Coop v. Frederickson (In re Frederickson), 545 F.3d 652, 658 (8th Cir. 2008).   The district court is MANZO followed this reasoning in reversing the bankruptcy court's decision.  Even if 42 U.S.C. 407 is not sufficient clear on its own to exclude social security benefits from consideration in bankruptcy proceedings, the structure of chapter 13 and the means test excluding such benefits reflects Congressional intent that such benefits should be beyond the reach of creditors.  The bad faith cases in the 7th Circuit deal with debtors attempting to discharge debts not dischargeable in chapter 7 with a minimal distribution in chapter 13.  Michael Barnett www.tampabankruptcy.com

Here at Shenwick & Associates, we’ve been paying close attention to developments concerning the plummeting values of New York City taxicab medallions.  A client we’ve been working with sent us this AP story last month that describes how the taxicab medallion crash isn’t just affecting owners of medallions and cab drivers, but has spread to lending companies. According to the article, three credit unions that specialized in loans collateralized by taxicab medallions have been placed into conservatorship with the National Credit Union Administration (NCUA), including LOMTO Federal Credit Union and Melrose Credit Union .  The article also alleges that the NCUA is aggressively attempting to collect from borrowers, even those who are current on their loan payments, by demanding payment of the loan in full and threatening foreclosure on the assets pledged as collateral against the loan (which may include not just the medallion, but also motor vehicles and real estate). In a April 2014 supervisory letter regarding taxi medallion lending , the NCUA advised field staff to “[c]onfirm that a credit union that places more emphasis on the collateral value than on standard cash flow qualifications supports the market premium with other committed sources of repayment to the loan and additional collateral.”  Based on this guidance, we can expect that that the management teams hired by the NCUA to administer these credit unions will demand additional collateral to further secure these loans, and if they’re unsuccessful, to commence foreclosure actions against the current collateral. As we’ve detailed in our initial e-mail on the topic , there are many possible options to consider to address “underwater” taxi medallions, including a workout and several bankruptcy scenarios, but a detailed financial analysis is necessary.  Our firm specializes in debtor/creditor relations and bankruptcy, so if you need help with your taxi medallion debt, please contact Jim Shenwick.

   There may be a disagreement among the Judges in Florida on how to value property when a case is converted from chapter 13 to 7.  Most cases reject the argument that since property vested in the debtors upon confirmation, no further analysis is required upon conversion.  The issue seems to be whether you use the value of the property as of the date the chapter 13 was filed, less any payments on the secured claims post-petition; and less any payments to unsecured and priority creditors in the chapter 13; or whether you simply take the value of the property as of the date the case is converted.        A couple of decisions take the former position, giving credit to the debtor in the 7 for payments made to unsecured and priority creditors in the chapter 13 case.    Judge Glenn, in In re Sparks, 379 B.R. 178 (Bankr. M.D. Fla. 2006) involved a case converted a bit over a year after it was filed, in which the chapter 13 trustee had paid $3,989.06 to unsecured creditors.  The debtor had a car valued at $5,000 when the chapter 13 had been filed.  When the chapter 7 trustee filed a request for turnover the debtor answered asserting that he already paid unsecured creditors nearly the entire non-exempt amount of equity.        Judge Glenn started with 11 U.S.C. §348(f)(1)(A), that property of the estate in a converted case consists of property of the estate, as of the filing of the petition, which remains in the possession of or is under the control of the debtor on the date of the conversion.  §1325(a)(4) requires that in order for a chapter 13 plan to be confirmed, the plan must provide to pay unsecured creditors at least as much as they would have received in a chapter 7 case.   The Court also noted cases finding that when property appreciates during the chapter 13, it is the value as of filing the chapter 13 that controls in the converted chapter 7 (though there is conflicting case law on this point).   The legislative intent of the Bankruptcy Reform Act of 1994, which enacted §348(f) was to encourage debtors to reorganize their affairs through chapter 13 rather than immediately liquidate under chapter 7.   Ultimately Judge Glenn determined that equity compelled that the debtor should be given credit for payments made to unsecured and priority creditors in determining the value of property in the converted chapter 7 estate.   Judge Jennemann appeared to follow the same theory in In re Curtis, 2015 WL 4065260 (Bankr. M.D. Fla. 2015).   In this case the Judge rejected the debtor's argument that since the property vested in the debtors upon confirmation, the trustee had no right to turnover of the property.  The Court again cited §348(f), and found that the property subject to turnover met the two conditions required therein: that the property was property of the estate when the chapter 13 was filed, and that it remained in the possession or control of the debtor upon conversion.  When the case converts to chapter 7 it is no longer a chapter 13 case and thus the vesting language no longer applies.  In a footnote to that decision (fn 7) the court did give credit to the debtor for payments made in the chapter 13 to unsecured and priority creditors.  The contrary position is reflected in Judge Killian's decision in In re John, 352 B.R. 895 (2006).  Here the debtors had $3,660 worth of unencumbered, nonexempt personal property scheduled in the chapter 13 case, and had paid over $42,000 to unsecured creditors in the chapter 13.  In response to the trustee's request for turnover, the debtor's made the argument enunciated in Sparks that they should be given credit for the payments to unsecured creditors in the chapter 13.  Judge Killian found no support for that position in the language of the bankruptcy code.  The cases noting that appreciation of property during the chapter 13 do not benefit the chapter 7 estate were inapplicable, since this property did not appreciate.  Payments to unsecured creditors in the chapter 13 do not transform the property into property acquired post-petition.       The Court declined debtors' offer to use §105(a) to prevent unfairness in requiring them to pay more in after already covering the liquidation value of the estate.  Instead the Court pointed to the hardship discharge provisions of §1328(b) where the debtor's inability to complete a plan are due to circumstances which were beyond the debtor's control.  The Court examined the nature of the chapter arrangement: a court supervised bargain wherein in exchange for giving up their right to future earnings debtors obtain benefits including a 'superdischarge', retention of all property of the estate, the right to modify secured claims, and to cure and reinstate mortgages.   When a debtor failes to make the required payments, they are not entitled to keep what as bargained for.    The Debtors also argued that they effectively redeemed the property from the estate by paying the nonexempt value to unsecured creditors in the chapter 13.  This argument was rejected in that 1) there is no support for the notion that the trustee has a lien on property, and 2) redemption requires use of the debtor's own funds that are not part of the chapter 7 estate; whereas post-petition wages in chapter 13 are property of the estate.   The last argument by the Debtors was that the result was contrary to congressional intent to encourage chapter 13 filings, and should not be penalized for for attempting and failing a chapter 13 case.  Again the court cited the hardship discharge provisions as a way to avoid such penalty.   In the final paragraph of the decision the Court clarifies that the value of any property that is subject to turnover shall be determined according to its present value, since that is all the trustee could realize from its liquidation today.   Judge Kimball agreed with this result in In re Loycano, 2015 WL 8526634 (Bankr. S.D. Fl 2015).  This involved a request for turnover of a 2004 Lexus suv with a scheduled value (as of the filing of the chapter 13) of $19,650 subject to a $2,458 lien and $1,000 exemption for a net $15,542 value as of filing.  The debtor was in chapter 13 for over 4 years.  At the time of conversion he valued the Lexus at $8,300 subject to exemptions of $3,968 and no liens.  The debtor argued that turnover is inappropriate because he paid more than the liquidation value to unsecured creditors, which should offset the nonexempt portion of the vehicle.    Judge Kimball, like Judge Killian, found no support for this argument in the language of the code. Under §348(f) the Lexus was property of the estate upon the filing of the chapter 13, and remained property in the possession and control of the debtor upon conversion.   Judge Kimball also noted the 'breach of the chapter 13 agreement' argument as expressed by Judge Killian in In re John.   The effect of the result in Lovcano, where the vehicle was sold and the exempt portion of the proceeds turned over to the trustee, conforms with the legal theory that the valuation is reexamined upon the conversion, rather than using values as of the filing of the chapter which are no longer applicable, and no longer obtainable by the trustee in the event of a sale of the property.Michael Barnett www.hillsboroughbankruptcy.com     

Whether you are only considering bankruptcy, or currently in the middle of one, you are probably already looking ahead to the future. Life after bankruptcy may seem scary, but it is actually pretty great! The feelings of stress and anxiety you felt while drowning in debt will have melted away, and you can begin to focus on planning and preparing for your new life. The primary concern for many people coming out of a bankruptcy is rebuilding and repairing credit. If you are wondering how to begin improving your credit score, this post may provide some insight on establishing a solid credit history post bankruptcy. The post Rebuilding Credit After Bankruptcy appeared first on Tucson Bankruptcy Attorney.