Sunday, February 21, 2021

AG Letitia James won’t sue NYC over taxi medallion debt

This article originally appeared in politicalsay on February 19, 2021 at

AG Letitia James won’t sue NYC over taxi medallion debt

New York Attorney General Letitia James has abandoned her threat to sue New York City into providing financial relief to taxi drivers burdened by debt from medallions purchased at inflated costs at city-sponsored auctions, her office said Thursday.

James had threatened to sue last February — warning the city and its Taxi and Limousine Commission that it had 30 days to fork over the money.

But 30 days came and went and James did not take action. On Thursday, her office argued a lawsuit would take years to settle, delaying financial benefits for drivers.

Instead, James has endorsed a proposal from the New York Taxi Worker’s Alliance to write medallion loans down to $125,000.

“This proposal would provide a fiscally fair and responsible way to support the recovery of the taxi medallion industry by guaranteeing loans written down to no more than $125,000, which is why I have been working with the city to approve it since last year,” James said in a statement to Crain’s.

“This relief package not only lays out the best way to support the needs of a community that has been economically devastated right now without burdensome and drawn-out litigation, but will help to ensure justice is finally delivered for thousands of medallion owners.”

Last year’s threat to sue came after an investigation by the AG’s office concluded that the city made “over $855 million” off medallion auctions between 2002 and 2014, despite knowing as early as 2011 that the medallions were selling at higher than their actual value.

Drivers have demonstrated for months in support of NYTWA’s relief proposal. A competing plan from U.S. Congressman Ritchie Torres (D-The Bronx) proposed to re-peg the value of medallions at $250,000.

NYTWA Director Bhairavi Desai lamented the decision not to pursue the city in court, but welcomed James’ support for her group’s bailout plan.

“We know it’s because of technicalities and status of limitations, but it doesn’t make it less painful and infuriating that so many ex-city officials have gotten away with destroying drivers’ lives,” Desai told The Post.

“Our proposal is the only way forward, not just for survival but also for an ounce of justice.

Thursday, February 18, 2021

Student Loan Forgiveness Myths

This article originally appeared on Forbes on February 16, 2021 the article can be found at:

Student Loan Forgiveness Myths

Borrowers and policymakers have been urging President Joe Biden and Congress to forgive student loan debt. Student loans are complicated and confusing. This has contributed to many misconceptions about student loan forgiveness. Some of these myths support student loan forgiveness and some oppose it.

Let’s debunk some of the more common student loan forgiveness myths.

There are many misconceptions and myths about student loan forgiveness. GETTY
President Biden Will Forgive All Student Loans

This myth asserts that President Biden will forgive all student loans.

Senator Bernie Sanders proposed forgiving all student loans, not President Joe Biden.

Even if Congress were to pass legislation forgiving student loans, it is likely to fall short of forgiving all student loans. The Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act), which passed the U.S. House of Representatives but did not pass the U.S. Senate, proposed forgiving up to $10,000 in student loans per borrower. President Biden has said that he supports $10,000 in student loan forgiveness per borrower.

Due to the cost, Congress is likely to limit the forgiveness in various ways, such as limiting it to borrowers who are experiencing economic distress, borrowers who owe less than $10,000 and borrowers who earn less than $125,000.
The President Can Forgive All Student Loans

This myth claims that the President can forgive all student loans through executive order.

A few policymakers have stated that the President (actually, the Secretary of Education) has the legal authority to forgive all student loans.

Student Loan Cancellation Less Likely If Stimulus Checks Get Cut

3 Reasons Why Biden Excluded Student Loan Relief From Stimulus – And What It Means For Borrowers

Biden Comes Out Against $50,000 In Student Loan Forgiveness - But Supports This Amount, Instead

This false assertion is based on a misreading of the waiver authority in the Higher Education Act of 1965 [20 USC 1082(a)(6)], taken out of context. The waiver authority, which applies only to loans made under the Federal Family Education Loan (FFEL) and Federal Perkins Loan programs, is limited to operating within the scope of the statute. Specifically, when Congress authorizes a loan forgiveness program, such as Public Service Loan Forgiveness, Teacher Loan Forgiveness or the Total and Permanent Disability Discharge, the U.S. Department of Education has the authority to forgive student loans as authorized under the terms of these loan forgiveness programs.

Also, the parallel terms clause in the Higher Education Act of 1965, which requires Direct Loan program loans to have the same terms and conditions as FFEL program loans, does not apply to waiver authority, which is not part of the terms and conditions of the loans.

Only Congress has the power of the purse. The executive branch cannot spend money that has not been appropriated by Congress. Congress can pass legislation to forgive student loans, but without this legislation, the President does not have the legal authority to issue blanket student loan forgiveness.

The waiver authority also does not apply to private student loans.
The Legal Authority for the Payment Pause and Interest Waiver Can Be Used to Forgive Student Loans

Some people claim that President Trump used the waiver authority to implement the payment pause and interest waiver, setting a precedent that could be used to forgive student loans.

President Trump did not identify the legal authority used to implement the payment pause and interest waiver in his executive memo, but there are three possibilities that do not rely on a misreading of the general waiver authority.

The statutory definition of the economic hardship deferment provides the Secretary of Education with the authority to create other eligibility criteria for the economic hardship deferment. [20 USC 1085(o)(1)(B)]
The regulations for the Direct Loan program allow the Secretary of Education to provide administrative forbearance “due to a national military mobilization or other local or national emergency.” [34 CFR 685.205(b)(8)]
The Heroes Act of 2003 authorizes the Secretary of Education to ensure that “recipients of student financial assistance under Title IV of the Act who are affected individuals are not placed in a worse position financially in relation to that financial assistance because of their status as affected individuals” in connection with a war or other military operation or national emergency. Affected individuals include individuals who “suffered direct economic hardship as a direct result of a war or other military operation or national emergency.” [20 USC 1098bb(a)(2)(A)]

Student Loan Forgiveness Will Stimulate the Economy

This myth claims that “student debt cancellation can … give a boost to our struggling economy through a consumer-driven economic stimulus that can result in greater home-buying rates and housing stability.”

Forgiving student loan debt yields an annual financial impact that is about 6% of the amount forgiven, corresponding to the amount borrowers are actually paying on their student loans.

Student loan payments total about $100 billion a year, approximately 0.4% of GDP. (For comparison, the cost of the payment pause and interest waiver is about $60 billion a year.) Forgiving all student loan debt will yield a smaller positive impact on the economy in the short term than other stimulus efforts.

Student loan forgiveness will also not have a big impact on home-buying rates.

According to research by Federal Reserve economists, a $1,000 increase in student loan debt before age 23 causes “a decrease of about 1.5 percentage points in the homeownership rate,” which is the “equivalent to a delay of 2.5 months in attaining homeownership.” This effect, however, disappears by the time borrowers enter their early thirties. Thus, student loan debt affects only the timing of homeownership, not the attainment of homeownership.

Student loan debt outstanding is one-sixth of mortgage debt outstanding. A similar ratio applies to comparisons of student loan and mortgage balances and loan payment amounts.

Based on data from 2017 follow-up to the 2016 Baccalaureate and Beyond longitudinal study (B&B:16/17), the average student loan payment among Bachelor’s degree recipients is $306, compared with an average car payment of $392 and an average mortgage payment of $1,254. The average rent payment for borrowers who don’t own homes is $875, yielding a difference of $379, which is greater than the average student loan payment.
Student Loan Forgiveness Will Provide Immediate Financial Relief

This myth claims that student loan forgiveness will provide immediate financial relief to millions of student loan borrowers who are experiencing economic distress because of the pandemic and recession.

Forgiving less than the full amount owed might not yield much of an immediate impact because it will change the remaining time in repayment but not the monthly payment amount. This is especially true of borrowers in income-driven repayment plans, where the loan payments are based on the borrowers’ income and not the amount they owe. Even with $50,000 in student loan forgiveness, more than 40% of borrowers in income-driven repayment plans will still owe some student loan debt.

Thus, student loan forgiveness provides long-term financial relief but not necessarily short-term financial relief.

The payment pause and interest waiver, on the other hand, provides immediate financial relief.
Student Loan Forgiveness Will Solve the Student Loan Problem

This myth claims that student loan forgiveness is a solution to the student loan problem.

There really isn’t a student loan problem, so much as a college completion problem. Students who drop out of college are four times more likely to default on their federal student loans than borrowers who graduate, and represent more than two-thirds of the defaults. Borrowers who drop out of college have the debt, but not the degree that can help them repay the debt.

Most borrowers who graduate are able to repay their student loans. Only 0.1% of Bachelor’s degree recipients and 1.1% of Associate’s degree recipients default on their federal student loans.

Forgiving student loans will not increase the number of students enrolling in college. It will not increase the number of students graduating from college. It will not make college more affordable.

The average federal student loan debt of borrowers who are in default on their federal student loans is about $22,000.
Student Loan Forgiveness Will Close the Racial Debt Gap

This myth claims that student loan forgiveness is the best way to address racial disparities in student loan debt.

Students who attend Historically Black Colleges and Universities (HBCUs) are twice as likely to borrow to pay for college. They also graduate with 25% more student loan debt. Their student loan payments represent a greater share of income.

But, forgiving $50,000 in student loan debt per borrower is not the most effective way of closing the racial debt gap. Only 18% of the financial benefit from blanket student loan forgiveness will go to Black or African-American borrowers. Instead, why not just forgive the student loan debt of all borrowers who attended HBCUs? This student loan debt was caused, in part, by chronic underfunding of these institutions. The cost of this forgiveness is about $30 billion.
The Federal Government Can’t Forgive Private Student Loans

This myth asserts that the federal government can’t forgive private student loans, just federal education loans.

The Truth in Lending Act [15 USC 1650(e)] bans prepayment penalties on private education loans. The Higher Education Act of 1965 [20 USC 1083(a)(14)] bans prepayment penalties on federal education loans, including those held by private lenders.

So, Congress could pass a law to forgive private student loans by appropriating funds to pay off the loan balances.

This would cause losses for the lenders and investors in student loan securitizations, since they would not receive the future interest revenue they were expecting, just par value for the loans.

Lenders might respond by no longer offering private student loans or by charging higher interest rates.
All Student Loan Forgiveness Is Tax-Free

This myth claims that all student loan forgiveness is tax-free.

Some student loan forgiveness is tax-free and some is taxable.

Generally, if student loan forgiveness is provided by the loan program, it is tax-free if the loan forgiveness requires the recipient to work in certain professions for a specified period of time. Examples include Public Service Loan Forgiveness and Teacher Loan Forgiveness.

Certain student loan discharges are also tax-free. These include the death and disability discharges (through December 31, 2025), closed school discharges, false certification discharges, unpaid refund discharges and the borrower defense to repayment discharge.

Employer-paid student loan repayment assistance programs, or LRAPs, are also tax-free through the end of 2025.

Otherwise, the cancellation of debt is treated like taxable income to the borrower under current law. It is as though someone provided the borrower with income to pay off the debt. Thus, the forgiveness after 20 or 25 years in an income-driven repayment plan is taxable.

The IRS will forgive tax debts when the taxpayer is insolvent (total debt exceeds total assets). A borrower who has been in an income-driven repayment plan for two decades is likely to be insolvent. But, there are no guarantees that the tax debt will be forgiven.
Student Loans Can Be Discharged in Bankruptcy

This myth asserts that student loan forgiveness is not necessary because student loans can be discharged in bankruptcy.

Bankruptcy discharge of student loans is very rare.

There is an exception to bankruptcy discharge of student loans unless the debt imposes an “undue hardship” on the borrower and the borrower’s dependents. This is a very harsh standard, requiring a current and future inability to repay the debt while maintaining a minimal standard of living. One bankruptcy court judge referred to it as requiring “a certainty of hopelessness.”

Certain other types of student loans, such as bar study loans and residency/relocation loans, can also be discharged because they are not considered to be qualified education loans.
The Federal Government Has Never Previously Forgiven Student Loans

This myth asserts that the federal government generally does not forgive student loans.

The source of this myth is the very low approval rates for public service loan forgiveness and borrower defense to repayment discharges. Only about 3% of borrowers who applied for public service loan forgiveness have been approved. Some of those borrowers were not eligible for loan forgiveness (yet) and the loan servicer miscounted the number of qualifying payments for other borrowers. A similarly low percentage of borrower defense to repayment claims were approved by the Trump Administration.

But, borrowers do qualify for other types of loan forgiveness. About 37,000 teachers qualify for teacher loan forgiveness each year. About 4,700 borrowers qualify for an automatic closed school discharge each year.
Student Loan Forgiveness Creates A Moral Hazard

This myth asserts that student loan forgiveness creates a risk of moral hazard.

Moral hazard occurs when a student borrows to the limit because they expect their student loans to be forgiven.

Most student loan forgiveness programs cap the amount of forgiveness per borrower, thereby limiting the potential for moral hazard.

The main exceptions are public service loan forgiveness and income-driven repayment plans. Public service loan forgiveness cancels the remaining debt after the borrower has made 120 qualifying payments. The income-driven repayment plans cancel the remaining debt after 240 or 300 loan payments. A borrower must have very low income for a decade or longer to qualify for some loan forgiveness.

Blanket student loan forgiveness is likely to be a one-time event and the amount of loan forgiveness is likely to be limited.
Obama Student Loan Forgiveness

This myth claims that borrowers are eligible for Obama Student Loan Forgiveness after paying down 10% of their student loan debt or satisfying other easy criteria.

There is no such thing as “Obama Student Loan Forgiveness.” This is a name used by some student loan scams who say that they will help you apply for student loan forgiveness, if you pay them an up-front fee. The promised loan forgiveness never materializes. Changing an up-front fee for credit repair, including student loan forgiveness, violates federal and state consumer protection laws. The Federal Trace Commission (FTC) and several state attorneys general cracked down on such advance-fee loan scams in Operation Game of Loans.

Often, these scams describe a fictional loan forgiveness program that garbles characteristics of Public Service Loan Forgiveness (PSLF) and certain income-driven repayment plans.

Public Service Loan Forgiveness was created by the College Cost Reduction and Access Act of 2007, during the Bush Administration, not the Obama Administration. The loan forgiveness program became effective on October 1, 2007, before President Obama took office. This law also created income-based repayment, which became available starting on July 1, 2009. Neither of these programs were ever called Obama Student Loan Forgiveness.

Private student loans are not eligible for Public Service Loan Forgiveness or income-driven repayment.

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Mark Kantrowitz

I am Publisher of, a free web site about borrowing to pay for college. I am an expert on student financial aid, the FAFSA, scholarships, 529…

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Wednesday, February 17, 2021

Bankruptcy Subchapter V Debt Limits


In February 2020, Congress passed a new law establishing a new small business bankruptcy filing subchapter, known as “Subchapter V”. The original debt limit for Subchapter V was $2.7 million, however, in March 2020, the CARES Act increased the debt limit to $7.5 million for one year. 

Unless Congress renews the $7.5 million debt limit established last March, the debt limit will revert back to $2.7 million on March 27, 2021.

Subchapter V was designed to be a fast track, cheaper alternative, to traditional chapter 11’s for business. The law is extremely helpful for restaurants, retailers, and other small businesses who prefer reorganization to liquidation or shutting down. 

In a prior blog post at we discussed many of the benefits of Subchapter V:   

If a small business has debt that exceeds $2.7M and they want to file under Subchapter V, they must file their bankruptcy petition on or before March 27, 2021, unless Congress raises the debt limit.  

Any individuals or businesses with questions about Subchapter V should contact Jim Shenwick: (212) 541-6224;

Tuesday, January 05, 2021

FICO and Personal Bankruptcy

 FICO and Personal Bankruptcy

When clients contact me for a consultation with respect to a personal bankruptcy filing, they will often ask how this could impact their FICO score. My reply is that the impact of a filing on their FICO score is of secondary importance; how to rehabilitate their credit after filing, is of primary importance.

A wonderful article regarding one’s FICO score was recently published at Groovy Post and can be found at: 

Reader’s with questions regarding FICO should review this post.

Generally, a bankruptcy filing results from a “triggering event” such as being sued, losing a lawsuit and being subject to a judgment, failure to make a payment on credit cards, or defaulting on car lease payments. A person contemplating a bankruptcy filing usually has a FICO score of 550 to 650 and is unable to get credit.

Accordingly, a chapter 7 bankruptcy filing would not lower the FICO score since it is already low. 

However, a chapter 7 bankruptcy filing can increase a person’s ability to obtain credit. Yes, let me repeat, a chapter 7 filing can make a person more credit-worthy. 

Why? For two reasons: 1) one can only file for chapter 7 bankruptcy once every eight years and 2) the bankruptcy filing cleans up one’s personal balance sheet: liabilities are discharged in and exempt assets are kept.

Banks are aware of these factors and are thus more likely to loan money to a debtor after a bankruptcy filing with credit rehabilitation than before a filing.

So how does a debtor rehabilitate their credit? 1) By getting a secured credit card, charging the card and repaying it, and finally asking the bank or credit card company to increase their credit limit. 2) By working, reducing their expenses, and saving as much money as possible.

For these reasons, filing for bankruptcy and rehabilitating one’s credit is more important than the impact of chapter 7 bankruptcy on one’s FICO score.

People with questions regarding FICO and credit rehabilitation should contact:

Jim Shenwick,, (212) 541-6224 

Thursday, December 03, 2020

New York State Uniform Voidable Transactions Act

New York has adopted a new  Uniform Voidable Transactions Act (“NYUVTA”), to replace New York State’s existing fraudulent conveyance law, which was over 100 years old.

NYUVTA is effective as of April 4, 2020. Transfers that occurred prior to April 4, 2020 are governed by NYS former fraudulent conveyance law.

NYUVTA can be found at N.Y. Debt. & Cred. Law §§ 270-281

NYUVTA provides for a 4 year statute of limitation, unlike NYS’s former  fraudulent conveyance law, which provided for a 6 year statute of limitations. 

NYUVTA also provides for a period of one year after the transfer in question to avoid a transfer to an insider—similar to the Bankruptcy Code’s insider preference reach back period of one year prior to the petition date, under 11 U.S.C. § 547(b)(4)(B)

NYUVTA eliminates the “good faith” element of a fraudulent transfer and adopts the “reasonably equivalent value” requirement of the Bankruptcy Code. 11 U.S.C. 548  

NYUVTA provides for a cause of action to avoid transfers to an insider if the insider had reasonable cause to believe that the debtor was insolvent. N.Y. Debt. & Cred. Law §274(b).

Insolvency. Plaintiffs pursuing fraudulent transfer claims to collect unsatisfied judgments will now be required to prove insolvency in connection with a fraudulent transfer claim. 

Burden of Proof.  NYUVTA provides that a creditor challenging a transfer bears the burden of establishing the elements of its claim by a preponderance of the evidence, rather than the higher "clear and convincing evidence" standard under the former fraudulent conveyance law.

Presumption of Insolvency. NYUVTA provides that consistent with section 303(h)(1) of the Bankruptcy Code,  any nonpayment of debts subject to "bona fide dispute" is not presumptive of insolvency; and (ii) expressly provided that the burden to rebut this presumption falls on the "party against whom the presumption is directed.

Conflict of Law. NYUVTA provides that the law of a debtor's place of business or if the business is conducted in more than one state, the place in which the business had its chief executive office, at the time that a transfer was made, applies to claims under NYUVTA. 

Attorneys Fees. Section 276(a) of NYUVTA allows for the award of reasonable attorney fees as an additional amount required to satisfy the creditors’ claim.

Foreclosure Sale and Reasonably Equivalent Value. Section 272(b) of NYUVTA provides that reasonably equivalent value is given “if the person acquires an interest of the debtor in an asset pursuant to a regularly conducted, non-collusive foreclosure sale

For questions regarding NYS new Voidable Transaction law please contact Jim Shenwick 212 541 6224

Sunday, November 22, 2020

Guarantee of Leases in New York State and their application when Tenants want to terminate or exit a Lease






At Shenwick & Associates, we are receiving many calls and emails these days from clients regarding leases which they would like to terminate and the principals' exposure for guarantees and good guy guarantees associated with those leases.

Most commercial tenants in New York City are organized as either corporations or LLCs and those entities are the tenant on the commercial office lease. Almost all landlords in New York City will require a principal or principal’s of the corporation or LLC to guarantee the lease.

There are two types of lease guarantees in New York. A full or complete guarantee for the payment of rent or a “good guy guarantee (“GGG”)”, which is a specialized type of guarantee, which can limit the payment of the guarantor under the lease, if certain conditions enumerated in the GGG are met.

Under the full or complete guarantee, for example if the tenant fails to make lease payments for 6 months and owes $50,000 for rent and additional rent under the lease, the Landlord can demand that the guarantor pay those monies and if payment is not made, the Landlord can sue the guarantor for $50,000.

The second type of guarantee which is known as a good guy guaranty limits the principal’s exposure under the guarantee if certain conditions are met. To be a “good guy” means that the tenant vacates the space and delivers possession to the Landlord without litigation.

An example of how GGG operates is provided below.

The GGG provides that the principal’s financial exposure under the GGG terminates when: 1. the tenants sends notice to the Landlord that it is vacating the leased space (the usual notice required is 90 to 120 days), 2. the tenant must be current on its payment of rent and additional rent, when it sends the notice to the Landlord or current on rent when it vacates the space, 3.the space must be left “broom clean” and 4. keys for the office must be delivered to the Landlord.

Under this scenario, if all 4 conditions are satisfied, the guarantor is released from liability under the Lease. However, if the 4 conditions are not satisfied the guarantor’s liability continues until the lease expires.

If the tenant is unable to pay the rent due under the lease when it vacates the principal will often pay the rent for the tenant to terminate the GGG.

It should be noted that just because the tenant vacated the space, the lease is not terminated and the tenant remains liable for rent until the lease terminates. If the tenant does not pay the rent, the landlord can sue the tenant but not the guarantor.

Under that scenario, the tenant will either close its business or file for chapter 7 bankruptcy.

As can be seen from the above examples, a GGG is a more limited form of guarantee.

The statute of limitations for a landlord to commence an action under a guaranty under New York State law is 6 years. CPLR 213(2)

Under New York custom and practice, the guarantee whether it is a regular guarantee or a GGG can be incorporated into the lease or it can be a separate document.

Under certain limited circumstances based on a NYC administrative law, certain guarantees are void see New York City Administrative Code §22-1005, which provides for the suspension of certain contractual obligations between March 7 and Sept. 30, 2020. The law is applicable to leases for restaurants, bars, retail establishments and other similar non-essential businesses that were required to cease operations due to various COVID-19-related executive orders issued by the Governor. If a guarantor can avail themselves of that law, then the guarantor may be able to avoid liability even if the tenant does not pay rent under the lease.

From a landlord’s perspective once they obtain possession of their space, they need to determine based on cost benefit analysis if they want to sue the tenant or the guarantor for rent that is due and owing. The landlord will consider the cost of litigation (legal fees and court costs) and the ability to collect on a judgment, if one is obtained.

Due to the covid virus, many Landlords are taking a wait and see attitude and not commencing lawsuits immediately, as they may have in the past.

A tenant that wished to vacate a lease should have the lease and the guarantee reviewed by an experienced attorney and the tenant and guarantor need to develop a strategy to deal with the landlord.

Any clients having questions regarding a terminating a lease or with respect to a guarantee or good guy guarantees should contact Jim Shenwick at 212-541-6224 or email him at Jim Shenwick negotiates commercial leases, practices debtor creditor law and bankruptcy law.

Tuesday, November 17, 2020

NYC Comptroller Backs Proposed Taxi Medallion Bailout Program

Originally appeared on the


New York City Comptroller Scott Stronger has backed a proposal that would bail out taxi drivers burdened with exorbitant debt owed on medallions and worsened by the coronavirus pandemic. 

New York City Comptroller Scott Stronger has backed a proposal that would bail out taxi drivers burdened with exorbitant debt owed on medallions and worsened by the coronavirus pandemic. (Courtesy of Tim Lee)

NEW YORK CITY — New York City Comptroller and mayoral hopeful Scott Stringer has put his weight behind a proposal from the New York Taxi Workers Alliance that aims to bail out thousands of taxi drivers drowning in medallion debt amid the coronavirus pandemic.

The plan would write down outstanding loans on medallions to $125,000 and offer up funds to ensure drivers in default can sell a medallion and recuperate all or part of its cost, Stringer announced at a news conference on Thursday.

The plan would also reduce the interest on outstanding loans for medallions taxi and offer drivers a way out of the industry without landing in a financial sinkhole, he said.

"For decades, driving a cab in New York City was a road to the middle class for immigrants from around the world," Stringer said in a news conference. "But today, the medallion that once promised prosperity and stability is now a financial sinkhole."

Should a driver default on a medallion, the city would take back the medallion and place a minimum bid equivalent to the amount owed on it before offering it for sale on the free market, guaranteeing purchase of any medallions that borrowers default on.

The taxi workers alliance estimates the plan could cost the city up to $75 million, a rather small amount compared to the $810 million lawsuit Attorney General Letita James filed against the city in February for inflating the value of medallions.

The proposal also calls for monthly loan payments to be capped at less than $800 and for interest rates to be kept at or below 4 percent.

New York Taxi Workers Alliance executive director Bhairavi Desai said the bailout is the last chance the industry has to weather the pandemic, which has drastically decreased ridership and left cab drivers in a financial lurch for months.

"It is the only way drivers, the yellow cab industry is going to survive," Desai said.

Ricardo Lopez, who has driven taxis for 40 years in New York City, said he is hopeful the plan goes through. He is facing bankruptcy as he works to continue making payments on his medallion.

"I paid $60,000 [for my medallion] 40 years ago and have been paying on and off until today," Lopez said. "We are in bankruptcy, literally. If I don't get any help directly, I'm going to go out of this business soon because I can't afford it anymore. The streets are empty."

Taxi drivers in New York City watched their fares dry up as the coronavirus pandemic gave way to stay-at-home orders and business closures earlier this year.

Although ridership has been on a steady increase since the city ground to a standstill in March and April, taxi industry revenue remains down some 81 percent from where it was in 2019, the New York Times reports. Ridership was also down by about 70 percent in September compared to the year prior.

Stringer said while the proposal cannot increase ridership in the face of a pandemic, it can right a wrong and save New York City families staring down the barrel of financial ruin.

"Predatory lenders took drivers for a ride and left families in a wreckage of financial distress and despair," Stringer said. "We have a fiscal and moral obligation to make this right—and embracing this plan is a start."