Sunday, September 26, 2021

New York City Screwed Taxi Drivers. Now They’re Drowning in Debt.

 That article can be found at Jacobin Magazine at  https://www.jacobinmag.com/2021/09/nyc-taxi-cab-medallion-debt-speculative-bubble-values-nytwa-city-hall

Monday, September 13, 2021

Why does New York state sue its college students? Thousands have been taken to court, and can defend themselves only in Albany — even if they live hundreds of miles away

Why does New York state sue its college students? Thousands have been taken to court, and can defend themselves only in Albany — even if they live hundreds of miles away? 

This article can be found at Hechinger Report at  https://hechingerreport.org/new-york-states-attorney-general-sues-suny-students-over-debt/

Wednesday, August 11, 2021

Wednesday, August 04, 2021

A New Bipartisian Bill is Introduced in Congress to Allow the Discharge of Student Loans in Bankruptcy After 10 Years

The FRESH START Through Bankruptcy Act of 2021Durbin/Cornyn 

FRESH START would:

-Make Federal Student Loans Eligible for Discharge in a Bankruptcy Proceeding ten years after the

first loan payment is due.

- As part of the bankruptcy proceedings, certain colleges and universities  who receive a certain amount

 of federally backed student loans, would be required to repay a portion of discharged federal student

 loans to the taxpayer, in a new cost-sharing structure.

- Retain the Existing Undue Hardship Option for private student loans and for federal student loans that

have been due for less than ten years.

- Increase Institutional Accountability by creating provisions that require colleges with more than one third of their students receiving federal student loans to partially refund the government if a student’s loan is later discharged in bankruptcy. This provision would apply if a school had consistently high 

student loan default and low repayment rates at the time of a student’s attendance.

-Provide an Option for Student Borrowers who have no realistic path to pay back their overwhelming

student loan debt by allowing bankruptcy to be an option to help them get back on their feet.

More Information about the Bill can be found at:

https://www.judiciary.senate.gov/imo/media/doc/FRESH%20Start%20Act%20of%202021%20One%20Pager.pdf


Thursday, July 29, 2021

A Mortgage on a House and a Subsequently Filed Tax Lien-which lien has priority the bank or the IRS?

 

A Mortgage on a House and a Subsequently Filed Tax Lien-which lien has priority the bank or the IRS?

 

This is a question that clients often ask us.  


The typical scenario is that a couple buys a house, and then due to financial difficulties, they are unable to pay their taxes, and the IRS files a lien against the house.


There is concern from the clients and they ask what takes priority, the tax lien or the mortgage?


New York is a race state and if the mortgage was recorded and duly perfected, then it has priority over a subsequently filed tax lien.

See Citizens Bank, N.A. v. Nash, No. 2:20-cv-00351 (E.D. Pa. 2021) which involved  a lien priority fight  between the IRS and the bank holding the taxpayer’s mortgage.  The bank erroneously recorded a release of its mortgage and that error caused it to lose the lien priority fight with the IRS.  An excellent article on this case can be found at Procedurally Taxing blog at https://procedurallytaxing.com/irs-wins-lien-priority-fight-with-bank/

The question we are next asked is whether the IRS will foreclose on their tax lien and seize the house to satisfy their tax debt. The IRS rarely forecloses on tax liens because they need to satisfy the mortgage first, as a result of the sale, and they do not want taxpayers to lose their homes.


In addition, in Kings, Queens, New York, Bronx, Richmond, Nassau, Suffolk, Rockland, Westchester, or Putnam counties, there is a $179,950 homestead exemption per spouse who owns and lives in the house. Therefore, a married couple who owns and lives in the house can protect $359,900 in equity. A homestead exemption applies after a mortgage but before a tax lien. Therefore, if a house had a $700,000 fair market value and a mortgage of $500,000, and a bank foreclosed on its lien, the bank would receive $500,000, the homeowners $200,000, and the IRS nothing.  

So what is the impact of an IRS tax lien on a house if the IRS does not foreclose on the tax lien? The IRS  tax lien will prevent the taxpayer from selling or refinancing their house for 10 years. A tax lien is a lien against a home for ten years. 


If a homeowner wants to sell or refinance their house and is subject to a tax lien, they can contact the IRS and request a satisfaction of the lien by paying the tax at closing.  Taxes, interest, and penalties must be paid to the IRS by homeowners. Sometimes the IRS will waive certain tax penalties, so homeowners should hire a lawyer or CPA to negotiate with the IRS on their behalf. 


Those with questions about foreclosures and tax liens should contact Jim Shenwick 212-541-6224 & jshenwick@gmail.com, who has an LLM in taxation from NYU Law School. 

Monday, June 21, 2021

What Debt's are dis-chargeable in a Debtor's Chapter 7 Bankruptcy Filing?

 


What Debts can a debtor discharge in Chapter 7 bankruptcy filing? 

A recent article in the American Bar Association Journal discussed a disbarred attorney who attempted to file chapter 7 bankruptcy to discharge the debts he owed to the State  Bar Association for restitution to clients. 

The article and the decision can be found at 

https://www.abajournal.com/news/article/disbarred-lawyer-cant-discharge-debt-he-owes-state-for-reimbursing-his-ex-clients-bankruptcy-judge-says?utm_source=maestro&utm_medium=email&utm_campaign=weekly_email

In that case, the Bankruptcy Judge held that the disbarred lawyer's restitution obligations were fines, penalties, or forfeitures payable to and for the benefit of a government unit and non dischargeable under section  § 523(a)(7) of the Bankruptcy Code.


What debts are dischargeable in chapter 7 bankruptcy? 

Clients and attorneys representing debtors often ask us this question.

As many readers know Bankruptcy is a code-oriented area of the law and the sections  pertaining to a debtor's discharge are 523 and 727 of the Bankruptcy Code. Similarly to the analysis in the disbarred attorney case discussed above, an experienced bankruptcy attorney needs to understand the facts regarding a debt and how that debt would be characterized or treated under Section 523 and 727 of the Bankruptcy Code.

What types of debts are generally dischargeable?

Business and consumer loans, guaranties and good guy guaranties, credit card debt, medical bills, store purchases, phone bills, mortgage debt and car loans (providing that the debtor surrenders the collateral securing those loans)


What debts generally are non dischargeable?

Recent taxes, trust fund taxes such as sales tax, alimony or child support, fines or penalties owed to a government agency,  injury caused from drunk driving or driving while under the influence of drugs


Anyone with questions about which debts are dischargeable in chapter 7  bankruptcy should contact Jim Shenwick   212 541 6224  jshenwick@gmail.com 






Tuesday, June 15, 2021

You Can't Find a Cab. Uber Prices Are Soaring. Here's Why. New York Times https://www.nytimes.com/2021/06/15/nyregion/uber-prices-rise-yellow-taxis.html

 

You Can’t Find a Cab. Uber Prices Are Soaring. Here’s Why.

The number of drivers and for-hire cars on the streets plunged during the pandemic, frustrating those seeking rides as the city starts to recover.

Less than half of the city’s 13,500 taxis are operating, with many drivers saying there is not enough demand to justify returning to work yet.
Credit...Michael M. Santiago/Getty Images

The taxi line at La Guardia Airport had barely budged.

There were no cabs in sight, and the grumbling was getting louder. People scanned the road for any glimpse of yellow. A dispatcher grimaced.

Finally, a lone taxi rolled up for a waiting passenger. Then it was gone.

“I haven’t seen it like this,” said Alex Hyken, 28, who lives in Brooklyn and had just returned from visiting relatives in St. Louis, only to find herself stuck behind 40 people who were also trying to get a taxi. Ten minutes later, she whirled off with her suitcase in search of an Uber or Lyft.

When the pandemic shut down New York, it all but wiped out the city’s taxi industry, as commuters worked from home, tourists stayed home and businesses closed. Fleet owners reduced operations or suspended them altogether. Many drivers found other jobs, including driving trucks or making Amazon deliveries.

Now, as the city starts to recover, buoyed by low virus rates and widespread vaccinations, yellow taxis are largely missing from many street corners and airport arrival areas.

There are about 6,000 cabs on the road currently, according to industry analysts. That represents fewer than half of the total pool of 13,500 medallions, the city-issued permits required to operate a yellow taxi. Some 5,700 of those that are not working were taken out of service indefinitely by owners who put them into storage voluntarily and returned the license plates.

The shortage is the latest setback for an industry that has struggled amid an influx of ride-hailing services and a spate of suicides among taxi owners and for-hire drivers. Even before the pandemic, some taxi owners faced financial ruin after being lured into taking on reckless loans to buy medallions at artificially inflated prices.

In New York, ChicagoLas Vegas and other cities, demand for taxis and ride-hail cars has rebounded sharply from pandemic lows, outpacing the return of both drivers and cars. That has led to frustrating waits for riders, when taxis are even available.

With drivers slow to return to work, the lack of for-hire cars has also pushed up the fares charged by ride-hailing apps like Uber that switch to so-called surge pricing when demand peaks.

Many taxi owners are wary about how soon business will rebound. Demand is inconsistent and could be diluted if more cabs come rushing back to the streets, they said. The industry’s immediate future also depends on how soon workers return to their offices, and how soon tourists and business travelers come back to New York in big numbers.

Richard Wissak, whose family operates 140 taxis, took his cars out of service last year as the coronavirus shut down the city. He later put the entire fleet into storage to save thousands of dollars in insurance, taxes and fees.

“The city was in awful shape,” he said. “No airport work, no office work, and that’s the heartbeat of the yellow taxi industry.”

ImageMany drivers for Uber and other ride-hailing services have also been slow to return to work, contributing to an increase in fares. 
Credit...Amr Alfiky/The New York Times

Mr. Wissak wants to get his taxis back on the road, but he worries that there is not enough business yet. “Why are we going to put our toe back in the water if we’re not going to be able to survive?” he said.

Many owners of single medallions also received a temporary reprieve on their loan payments during the pandemic. Once they start working again, the payments may restart again too, without a guarantee that the owners can earn enough to afford them, said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance.

“They don’t want to go back to work before there’s substantial debt restructuring,” said Ms. Desai, whose group has started a fund to help taxi owners pay off their medallions in cash at lower prices.

Another thing causing the shortage of available taxis is that some drivers who qualified for expanded unemployment benefits during the pandemic have not yet come back to work. Others have moved away or taken other jobs.

Mohammad Hossain, 45, a driver from Queens, said that two of his friends — one who drove taxis, the other who drove for Uber — continue to collect unemployment, though “I’ve tried to tell them our business is a little bit better.”

About 6,000 taxi drivers were working in April, according to Bruce Schaller, a transportation analyst. That was up from 2,200 in April 2020, at the pandemic’s height, but far below the 20,000 who were working in February, Mr. Schaller found.

Many fleet owners have tried to attract more drivers by slashing leasing rates for taxis to make it easier for drivers to make money.

The Taxi and Limousine Commission, which oversees the industry, is working closely with taxi operators to ensure there are enough taxis to meet demand and trying to help drivers by streamlining the regulatory process, said Allan Fromberg, a commission spokesman.

The lack of drivers and cars has also affected ride-hailing services. About 54,000 worked for the services in New York in April, compared with 79,000 in February 2020, Mr. Schaller said. Across the United States, a ride with such a service costs as much as 40 percent more than it did a year ago, according to the research firm Rakuten Intelligence.

Uber has dangled $250 million in bonuses and incentives to recruit more drivers around the county. In New York, the result has been more drivers and fewer rides at surge-pricing levels. “Drivers are returning to Uber in force to take advantage of higher earnings opportunities from our driver stimulus,” said Alix Anfang, an Uber spokeswoman.

The shortage is a temporary problem that should be resolved as more drivers answer the demand for rides, Mr. Schaller said. But while the availability of cars may return to prepandemic levels, he added, Uber and Lyft fares may remain high, in part because customers are willing to pay them.

“It’s like restaurants, it’s like Broadway, it takes a while to put things back in place,” said Mr. Schaller. “And things will go back differently than before.”

Sunny Madra, who visited New York from California in late May, tweeted that an Uber from Midtown Manhattan to Kennedy International Airport had cost him $248, or nearly as much as his $262 plane ticket.

“We all have this prepandemic muscle memory: You walk out, you hail an Uber and it’s reasonably priced,” Mr. Madra said in an interview. “A $200-plus Uber, you sort of say, ‘What happened here?’”

Elizabeth Halem, 43, said she wanted to support taxi drivers by taking cabs but that even before the pandemic, she never saw them in her neighborhood, Greenpoint in Brooklyn.

“Sighting a cab would be like sighting Bigfoot,” she said. “Cabs are sort of mythical beings here.”

Instead, Ms. Halem ends up ordering cars using Lyft, which can cost nearly $50 for a ride, or almost twice what she paid before the pandemic.

On a Thursday in Downtown Brooklyn this month, shoppers loaded with heavy bags waved down passing taxis. One woman, Lissette Carter, 41, said she was occasionally forced to settle for an Uber even if it cost more. “It’s painful, but you’ve got to get around when you don’t have a car, especially if you’ve got small children and it’s raining,’’ she said.

The taxi shortage has led to long lines at La Guardia, where there is no direct link to the subway or commuter rail lines. Supply and demand can fluctuate, with taxis outnumbering passengers at times since there are still fewer air travelers than before the pandemic.

“It’s almost impossible to survive,” said Stephen Benesoczky, 70, a taxi driver who waited close to an hour to pick up a fare. He spends nearly $200 a day to lease the taxi and cover his gas and expenses. If he makes $400 in fares, he said, “that’s a good day.”

Image
There were about 54,000 ride-hail drivers working in April, compared with 79,000 in February 2020, one transportation analyst found. 
Credit...Mark Abramson for The New York Times

The Port Authority of New York and New Jersey, which runs La Guardia and Kennedy, has taken steps to try to bring in more cabs, including sending regular updates to drivers through the taxi network’s internal messaging system. The authority has also created Twitter feeds to post information about airport hold lots, where cabs wait to be dispatched to a terminal.

At terminal curbs, airport workers have even urged people waiting for taxis to try ride-hailing services instead.

“There clearly is a shortage of taxi drivers,” said Rick Cotton, the authority’s executive director. “Part of the coming back from the pandemic is the taxi drivers were decimated and they need to see that the passenger volume has come back to return to the roads.”

Sergio Cabrera, 57, who has owned and driven taxis for more than 20 years, was already hurting financially before the pandemic, losing passengers to the ride-hail cars that, he said, officials allowed to flood New York’s streets.

Mr. Cabrera said he had also been laid up for three months after getting sick with Covid-19. When he was able to return to driving, he said, he went hours without a passenger. He made grocery deliveries and took out a pandemic-related loan meant to help small businesses.

Mr. Cabrera said he was picking up about 10 passengers a day now, half of what he did before the outbreak.

“I’ve lost my motivation for this business,” he said. “I wish I didn’t have to drive. I wish I didn’t have this burden on my shoulders.”

Winnie Hu is a reporter on the Metro desk, focusing on transportation and infrastructure stories. She has also covered education, politics in City Hall and Albany, and the Bronx and upstate New York since joining The Times in 1999. @WinnHu

Patrick McGeehan writes about transportation and infrastructure for the Metro section. He has been a reporter for the Times since 1999 and has covered Wall Street, executive pay, transportation, the New York City economy and New Jersey. @NYTpatrick