From: NY Post
Coronavirus has slammed the brakes on the Big Apple taxi industry.
New York City cabbies are suffering a radical drop in ridership amid concerns over the potentially deadly bug, with some only scraping together a few bucks after long shifts behind the wheel.
“We don’t make money,” said Queens cabbie Jones Donkoi while trying
to land fares on the Upper West Side. “I collected $300 in fares but if
you take the taxes and surcharges and lease payment, I make about $40 at
the end of a 12-hour shift.”
“I support three children,” he said. “I’m going to find another job because I can’t continue like this. I can’t buy anything.”
Driver Mohammad Azad said it’s so bad out there that he had just $10
in his pocket after his first three hours on the road on Sunday.
“Our pockets are empty,” said Azad, who was near Spring Street in
SoHo Sunday. “If it continues like this, it will be very hard to survive
in New York City. All taxi drivers are miserable. Am I scared? Yes. But
we take the risks.”
Another driver said he took home just $50 one day last week, and at one point drove around two hours without a single fare.
“I don’t know what’s going to happen,” said the cabbie, who would
only identify himself as Patrick. “I am driving around hoping to get a
passenger and there are none. They are too scared.”
One cabbie said his family has had to cut down on food spending and even stopped buying laundry detergent to try to get by.
Taxi garages throughout the city told The Post that business has
dropped by 30–50 percent as fewer tourists hit the city and more locals
stay indoors to avoid contact with the COVID-19 virus.
And cabbies are feeling the squeeze.
“It’s really dire out there,” said Bhairavi Desai, executive director
of the New York Taxi Workers Alliance. “Trips dry up after evening
hours and with significant loss of airport trips, only small fares
remain.”
A chunk of the fares they collect go toward paying off their pricey
taxi medallions or, in some cases, the weekly lease payments to garages
that rent them their cabs.
“Tomorrow I will ask if my garage can lower the rate to rent the
cabs,” said Brooklyn cabbie Abdallah Abdujabar. “Every week I pay $600
plus gas, EZ Pass. It adds up to $800, $900.”
Then there are fees that come out of the fares, including a $2.50 state congestion surcharge and a 30-cent city surcharge.
According to taxi garage owners and dispatchers, the crunch is having a ripple effect on the industry.
Garages that rent out the cabs rely on the drivers’ lease payments to
pay off their medallions, and without that money coming, some owners
said they risk defaulting on bank loans they took out to make their
medallion payments.
“My drivers work a 12-hour shift and they’re not even making the
money to pay the lease on the car,” said Mahbub Hassan, a dispatcher at
Yellow Cab Crescent Management in Long Island City. “In four hours,
they’re lucky to get three rides.”
“We have 268 cabs in our fleet, and 100 of those cars are just
sitting there without drivers,” Hassan said. “We have been giving our
drivers $200, $300 discounts on the lease, and drivers are still not
making enough to cover the lease payment.”
Added a manager at Midtown Operating Corp: “At the end of the day, we
are all in the same boat along with the rest of the city. My pockets
are not that deep.”
Meanwhile, drivers said they also have to live with the fear that they’re exposing themselves to the virus while trying to make a living.
“They give me three hand sanitizers per shift,” driver Muhammad
Boote, a cabbie for 12 years, said of his bosses at Queens Medallion
Leasing in Long Island City. “I’ve almost run out. I need to ask for
more.”
Additional reporting by Anabel Sosa and Khristina Narizhnaya
Monday, March 16, 2020
What Trump’s Student Loan Interest Freeze Does - And Does Not - Do
From: forbes.com
By: Adam S. Minsky
Yesterday, President Trump announced that he would be freezing student loan interest as part of his national emergency declaration regarding the Coronavirus outbreak. But with few details provided during his public announcement, student loan borrowers have been wondering what exactly this means for them.
Here’s what President Trump’s student loan interest rate freeze would do:
This is an evolving situation, so stay tuned.
By: Adam S. Minsky
Yesterday, President Trump announced that he would be freezing student loan interest as part of his national emergency declaration regarding the Coronavirus outbreak. But with few details provided during his public announcement, student loan borrowers have been wondering what exactly this means for them.
Here’s what President Trump’s student loan interest rate freeze would do:
- Interest accrual on certain federal student loans will be frozen. This means that no further interest will accrue on certain federal student loans going forward.
- The student loan interest freeze will only apply to student loans “held by federal government agencies,” such as the U.S. Department of Education and its contracted student loan servicers.
- The student loan interest freeze is temporary, but will continue indefinitely until the policy is changed.
- The student loan interest freeze will be implemented automatically, likely in the coming week (although the exact timing is unclear).
- Private student loans are not covered by the interest freeze, since these loans are not held by U.S. federal government agencies.
- Certain federally-guaranteed student loans — such as federal Perkins loans and FFEL-program loans — may not be subject to the interest freeze if they are not held by a federal government agency (which is the case for many of these loans).
- Borrowers must continue to pay their normal monthly payments on all
student loans. Your monthly payment amount will not change, nor will
your payments be suspended. To be absolutely clear: the President’s declaration does not include any student loan payment relief at all, whatsoever.
- For student loan borrowers who have already accrued significant uncapitalized interest (such as for borrowers on income-driven repayment plans), all outstanding interest will still have to be paid off first, before any payment will be applied to principal. This is required under federal regulations and the underlying federal student loan promissory notes, and President Trump’s declaration does not alter these terms.
- For student loan borrowers in default, so-called “forced collections” will continue. That means student loan borrowers will still be subject to administrative wage garnishment, offset of Social Security payments, and involuntary seizure of federal and state tax refunds.
This is an evolving situation, so stay tuned.
Sunday, March 15, 2020
Biden endorses Warren's bankruptcy plan, calling it 'one of the things that I think Bernie and I will agree on'
From: CNN Politics
By: Eric Bradner and Arlette Saenz, CNN
Sat March 14, 2020
By: Eric Bradner and Arlette Saenz, CNN
Sat March 14, 2020
(CNN) Former Vice President Joe Biden says he now backs Massachusetts Sen. Elizabeth Warren's bankruptcy plan, endorsing his former Democratic rival's proposal to repeal portions of a law they had clashed over 15 years earlier.
Biden touted his support for Warren's plan as an olive branch to supporters of Vermont Sen. Bernie Sanders
in a virtual town hall for Illinois voters Friday night, calling it
"one of the things that I think Bernie and I will agree on."
He
highlighted a portion of Warren's plan that would allow student loan
debt to be eliminated in bankruptcy just like other debts.
"I'm
going to endorse -- I've endorsed -- Elizabeth Warren's bankruptcy
proposal, which in fact goes further, allows for student debt to be
relieved in bankruptcy, provides for a whole range of other issues that
allows us to in fact impact on how people are dealing with their
circumstances," Biden said. "So there's a whole range of things we agree
on."
Biden's move to back Warren's plan shows
that, as he moves toward clinching the Democratic presidential
nomination and seeks to soothe over tensions from a year-long
intra-party battle, the former vice president is taking steps to embrace
his former rivals and adopt planks of their platforms -- and is willing
to move left to do so.
Warren's
team got a heads-up from the Biden camp that he would be endorsing the
senator's bankruptcy plan ahead of his public announcement on Friday, a
Warren aide told CNN's MJ Lee. The two teams were in touch leading up to
the announcement, the aide said.
A
Biden campaign aide said he would likely say more about his support for
Warren's bankruptcy plan in his debate against Sanders on Sunday night.
Biden and Warren's high-profile
battle over a 2005 bill that made it more difficult to declare
bankruptcy, when he was a Delaware senator and leading advocate of the
measure and she was a Harvard professor and vocal opponent, played a key
role in inspiring Warren's move into politics.
As
a presidential candidate, she used it to highlight her differences with
Biden. On the day in April 2019 that Biden entered the race, she said
at a rally that Biden had been "on the side of the credit companies."
The
law, which was heavily backed by the banking and credit card
industries, made it harder for Americans to get out of debt by filing
for bankruptcy. Supporters of the measure said it would prevent
financially irresponsible people from abusing the system, while
opponents denounced it, saying it would hurt struggling people by
increasing the regulation, documentation and costs of seeking bankruptcy
protection. Bankruptcies plummeted after the law took effect, but not
for the right reasons, consumer advocates argued.
Biden
was seen as a leading proponent of the bill at the time, though it was
largely backed by Republicans and passed by a GOP-controlled Congress.
Biden's campaign has argued he successfully fought for changes to the
bill that prioritized child support and alimony in front of lenders and
required credit card companies to warn borrowers about their interest
rates.
The Warren plan
targets a series of provisions that she has criticized for years,
arguing that they benefit credit card companies and big lenders at the
expense of Americans struggling with consumer, household and student
debt.
Warren's
proposal would make the bankruptcy system "simple, cheap, fast, and
flexible," she wrote in a Medium post when she unveiled it in January.
It would merge the two types of consumer bankruptcy filings -- Chapter 7
and Chapter 13 -- into one, offering filers a "menu of options" for
dealing with their unpaid debt. It would eliminate what she termed
"burdensome paperwork" that makes bankruptcy more expensive, deterring
some from filing. It would reverse the 2005 law's requirement that
filers seek pre-filing credit counseling, as well as the additional
rules it placed on consumer bankruptcy attorneys.
She
would also reduce the cost of filing and make it easier for people to
keep their homes and cars during bankruptcy. The proposal would make it
harder for the wealthy to shield assets in trusts and would crack down
on companies that violate consumer financial protection laws while
trying to collect on debts. And her proposal would end the ban on
shedding student loan debt in bankruptcy.
Saturday, March 14, 2020
NYC Cap on Ride-Hail Vehicles Made Permanent from Courthouse Web Services
NYC Cap on Ride-Hail Vehicles Made Permanent from Courthouse News Service
MANHATTAN (CN) – The New York City Taxi and Limousine Commission voted Tuesday to permanently freeze the number of Ubers, Lyfts and other ride-hailing vehicles that drive here.
A one-year cap on such vehicles was set to expire next week. It was first instituted last August after a 39-6 City Council vote.
Taxicabs speed down Broadway near the intersection of Seventh Avenue and 42nd street in New York’s Times Square on May 5, 2005. (AP Photo/Kathy Willens)
From 12,600 in 2015 to more than 80,000 last year, the number of Uber, Lyft, Via and similar vehicles on the city’s streets has exploded in recent years, according to Taxi and Limousine Commission reported by Bloomberg. More cars mean more of them drive around empty, increasing congestion and emissions.
In addition to the vehicle cap, the commission voted Wednesday to reduce the amount of time drivers can spend looking for riders below 60th street in Manhattan. That allotted downtown time will drop to 31% by August 2020, down from its current level of 41%.
Uber challenged the cap in court earlier this year, claiming it relied on bogus traffic data. The ride-hailing service said the cap was anti-competitive and “will have a disproportionate impact on residents outside of Manhattan who have long been underserved by yellow taxis and mass transit” in the outer-borough areas where most Uber trips occur.
New Yorkers are split on the issue, with some saying the city should instead address other causes of its traffic-congestion crisis, such as by implementing congestion pricing in Midtown Manhattan. The city’s residents are also widely frustrated with the crumbling subway system, which sometimes forces people to find alternate methods of transportation, with the history of race discrimination among yellow cabs, and with the trend of sporadic taxi service in the outer-boroughs.
Community groups in the city have fought against the cap, saying it stifles drivers’ abilities to buy rather than lease the cars they use.
New York Mayor Bill de Blasio, a contender in the 2020 Democratic presidential primary, weighed in on the decision Wednesday.
“For far too long, ride-share apps took advantage of their drivers,” de Blasio said in a statement. “Their wages plummeted and families struggled to put food on their tables. We stood up and said no more. We will not let big corporations walk all over hardworking New Yorkers and choke our streets with congestion. Our caps have resulted in increased wages and families finally have some relief.”
Arthur Goldstein, a former attorney for the Taxicab Service Association, called the cap long overdue.
“The ride-hailing cap will help to reduce congestion on our streets, but does not adequately address the consequences of nearly a decade of government inaction,” Goldstein, who is with the firm Davidoff Hutcher & Citron, said in an email. “When Uber, Lyft and other app-based companies began flooding the streets with cars, many yellow cab owners who have invested in taxi medallions were deprived of an opportunity to earn a return on their investment. These largely immigrant entrepreneurs who invested in taxi medallions are still suffering. Uber and Lyft continue to operate relatively free from regulations applied to their regulated yellow cab competitors and, with ten of thousands of ride-hailing vehicles remaining on the street, the problem persists.”
MANHATTAN (CN) – The New York City Taxi and Limousine Commission voted Tuesday to permanently freeze the number of Ubers, Lyfts and other ride-hailing vehicles that drive here.
A one-year cap on such vehicles was set to expire next week. It was first instituted last August after a 39-6 City Council vote.
Taxicabs speed down Broadway near the intersection of Seventh Avenue and 42nd street in New York’s Times Square on May 5, 2005. (AP Photo/Kathy Willens)
From 12,600 in 2015 to more than 80,000 last year, the number of Uber, Lyft, Via and similar vehicles on the city’s streets has exploded in recent years, according to Taxi and Limousine Commission reported by Bloomberg. More cars mean more of them drive around empty, increasing congestion and emissions.
In addition to the vehicle cap, the commission voted Wednesday to reduce the amount of time drivers can spend looking for riders below 60th street in Manhattan. That allotted downtown time will drop to 31% by August 2020, down from its current level of 41%.
Uber challenged the cap in court earlier this year, claiming it relied on bogus traffic data. The ride-hailing service said the cap was anti-competitive and “will have a disproportionate impact on residents outside of Manhattan who have long been underserved by yellow taxis and mass transit” in the outer-borough areas where most Uber trips occur.
New Yorkers are split on the issue, with some saying the city should instead address other causes of its traffic-congestion crisis, such as by implementing congestion pricing in Midtown Manhattan. The city’s residents are also widely frustrated with the crumbling subway system, which sometimes forces people to find alternate methods of transportation, with the history of race discrimination among yellow cabs, and with the trend of sporadic taxi service in the outer-boroughs.
Community groups in the city have fought against the cap, saying it stifles drivers’ abilities to buy rather than lease the cars they use.
New York Mayor Bill de Blasio, a contender in the 2020 Democratic presidential primary, weighed in on the decision Wednesday.
“For far too long, ride-share apps took advantage of their drivers,” de Blasio said in a statement. “Their wages plummeted and families struggled to put food on their tables. We stood up and said no more. We will not let big corporations walk all over hardworking New Yorkers and choke our streets with congestion. Our caps have resulted in increased wages and families finally have some relief.”
Arthur Goldstein, a former attorney for the Taxicab Service Association, called the cap long overdue.
“The ride-hailing cap will help to reduce congestion on our streets, but does not adequately address the consequences of nearly a decade of government inaction,” Goldstein, who is with the firm Davidoff Hutcher & Citron, said in an email. “When Uber, Lyft and other app-based companies began flooding the streets with cars, many yellow cab owners who have invested in taxi medallions were deprived of an opportunity to earn a return on their investment. These largely immigrant entrepreneurs who invested in taxi medallions are still suffering. Uber and Lyft continue to operate relatively free from regulations applied to their regulated yellow cab competitors and, with ten of thousands of ride-hailing vehicles remaining on the street, the problem persists.”
Wednesday, March 04, 2020
How to get rid of debt without paying from Bankrate
Outstanding debt is higher than ever. The Federal Reserve Bank of New York reports that household debt in the United States has now reached its highest-ever total: more than $14 trillion.
Regardless of the debt you’re suffering from, you might not see an end in sight. Is there a chance you can get out of debt without paying?
The answer is maybe, depending on a number of factors. Here are some ways you can explore getting out of debt that don’t include paying it.
How you can get out of debt without paying
Debt might feel homogeneous, but each type is different — so your options will depend on which type you’ve accrued. Before you stop paying, make sure you know the limitations and the long-term ramifications of doing so.
How to get out of student loan debt without paying
There are a few different options for getting out of student loan payments. Your loan, job status and sometimes the school you attended all determine what you’re eligible for.
Income-driven repayment plans: These revise your monthly payment to 10 to 20 percent of your income for the next 20 or 25 years (depending on the plan). After that, the remaining loan balance is forgiven.
Public Service Loan Forgiveness: Available for those who work in the public sector, like employees at the federal, state and local level, and for those who work for a nonprofit organization. After you’ve made 120 qualifying payments while working full time for a qualifying employer, the rest of your Direct Loans will be forgiven.
Teacher Loan Forgiveness: Open to teachers who work five consecutive years at a low-income elementary or secondary school and to those who work at an educational service agency. You might qualify for forgiveness of up to $17,500 of your Direct Loans or Stafford Loans.
Perkins Loan Cancellation: Teachers, firefighters, law enforcement officers and others are eligible for Perkins Loan cancellation or discharge. Cancellation can happen over the course of five years, while discharge could happen in the event of bankruptcy, death or disability.
Closed school discharge: If your school closed while you were attending (or soon after you withdrew), you may qualify to have your federal student loans discharged.
Discharge options: You could get your loans discharged in the event of death, permanent disability or — very rarely — bankruptcy.
For most options, you’ll need to make qualifying, timely payments each month. However, even then, not everyone qualifies or receives forgiveness. For instance, less than 1 percent of Public Service Loan Forgiveness applicants were approved and considered eligible.
You can’t have a defaulted loan forgiven, but defaulted loans may qualify for discharge, depending on the loan and the program.
How to get out of credit card debt without paying
If you have more credit card debt than you can handle, there are a few steps you can take; however, you may want to consider the repercussions.
If you stop paying your credit card bill, it gets turned into collections and your credit score tanks. But there’s a statute of limitations for how long creditors can sue you for outstanding credit card debt, which varies from three to 10 years in most states. You could skip payments, but you might be liable for them later. Even at that point, if you are sued for outstanding payment, you most likely wouldn’t win the case.
Another route is debt settlement, which is when you settle your debt with the current lender (or collection agency, if it’s reached that point) for less than what you owe. You may not be responsible for your entire credit card debt, but you’d still pay some of it.
How to get out of debt through bankruptcy
Bankruptcy should only be considered if you don’t have any other options. Filing for bankruptcy may sound like you’re starting over, but depending on the route you go, you may still be on the hook for some of your outstanding debt.
In a Chapter 7 bankruptcy filing, some of your assets are sold off to pay back debt, meaning you could lose your home and personal property. A few months after filing, your remaining debt will be discharged — although Chapter 7 typically won’t cover things like student loan debt or child support.
In a Chapter 13 filing, you get set up on a court-ordered repayment plan. Any remaining debt after a certain time has passed, like five years, might be discharged. This process means you’ll spend even longer paying off your debt, and you’ll also have a bankruptcy filing on your credit report.
Depending on the type of bankruptcy you file, a bankruptcy filing could stay on your credit report for up to 10 years, which is why it’s important to carefully weigh your options and your outstanding debt. Debt collectors can’t attempt to collect a debt that was discharged in bankruptcy, and they can’t continue collection activity while the bankruptcy case is pending — but the filing itself will have long-term effects on your financial health.
Why not paying off debt doesn’t work
Your credit report is a vital part of your financial well-being. Late or missed payments, defaults, collections and bankruptcies not only crush your credit score, but can also hurt your chances of taking out a loan or getting approved for a credit card.
Not paying your bills also puts you in a dangerous position with lenders. Avoiding payment means that creditors can sue you for unpaid bills. In some states, you could get your wages garnished or have your assets seized. Even if you aren’t making the payments directly, you’re still paying your outstanding debt.
Alternatives to bankruptcy
If you have the chance to avoid bankruptcy, you should take it. Here are some alternatives to consider.
Supplement your income: Whatever you need to do to start paying off your debt, do it now. Ask for a raise at work or move to a higher-paying job, if you can. Get a side-hustle. Start to sell valuable things, like furniture or expensive jewelry, to cover the outstanding debt.
Ask for assistance: Contact your lenders and creditors and ask about lowering your monthly payment, interest rate or both. For student loans, you might qualify for temporary relief with forbearance or deferment. For other types of debt, see what your lender or credit card issuer offers for hardship assistance. If you have the means, see if friends and family will help you.
Take out a debt consolidation loan: If you have many different types of debt, look into consolidation options. Taking out a debt consolidation loan is a way to simplify your finances — putting all of your debt in one place — and potentially pay less interest in the long run.
Get professional help: Reach out to a nonprofit credit counseling agency that can set up a debt management plan. You’ll pay the agency a set amount every month that goes toward each of your debts. The agency works to negotiate a lower bill or interest rate on your behalf and, in some cases, can get your debt canceled.
The bottom line
It can feel like it’ll take a lifetime to get out of a huge debt trap. You may skip payments, consider not paying at all or file for bankruptcy. While you might, in certain circumstances, get out of paying your outstanding debt, the likelihood is low. And more often than not, it’s harmful to your financial well-being to avoid paying your outstanding debt.
Regardless of the debt you’re suffering from, you might not see an end in sight. Is there a chance you can get out of debt without paying?
The answer is maybe, depending on a number of factors. Here are some ways you can explore getting out of debt that don’t include paying it.
How you can get out of debt without paying
Debt might feel homogeneous, but each type is different — so your options will depend on which type you’ve accrued. Before you stop paying, make sure you know the limitations and the long-term ramifications of doing so.
How to get out of student loan debt without paying
There are a few different options for getting out of student loan payments. Your loan, job status and sometimes the school you attended all determine what you’re eligible for.
Income-driven repayment plans: These revise your monthly payment to 10 to 20 percent of your income for the next 20 or 25 years (depending on the plan). After that, the remaining loan balance is forgiven.
Public Service Loan Forgiveness: Available for those who work in the public sector, like employees at the federal, state and local level, and for those who work for a nonprofit organization. After you’ve made 120 qualifying payments while working full time for a qualifying employer, the rest of your Direct Loans will be forgiven.
Teacher Loan Forgiveness: Open to teachers who work five consecutive years at a low-income elementary or secondary school and to those who work at an educational service agency. You might qualify for forgiveness of up to $17,500 of your Direct Loans or Stafford Loans.
Perkins Loan Cancellation: Teachers, firefighters, law enforcement officers and others are eligible for Perkins Loan cancellation or discharge. Cancellation can happen over the course of five years, while discharge could happen in the event of bankruptcy, death or disability.
Closed school discharge: If your school closed while you were attending (or soon after you withdrew), you may qualify to have your federal student loans discharged.
Discharge options: You could get your loans discharged in the event of death, permanent disability or — very rarely — bankruptcy.
For most options, you’ll need to make qualifying, timely payments each month. However, even then, not everyone qualifies or receives forgiveness. For instance, less than 1 percent of Public Service Loan Forgiveness applicants were approved and considered eligible.
You can’t have a defaulted loan forgiven, but defaulted loans may qualify for discharge, depending on the loan and the program.
How to get out of credit card debt without paying
If you have more credit card debt than you can handle, there are a few steps you can take; however, you may want to consider the repercussions.
If you stop paying your credit card bill, it gets turned into collections and your credit score tanks. But there’s a statute of limitations for how long creditors can sue you for outstanding credit card debt, which varies from three to 10 years in most states. You could skip payments, but you might be liable for them later. Even at that point, if you are sued for outstanding payment, you most likely wouldn’t win the case.
Another route is debt settlement, which is when you settle your debt with the current lender (or collection agency, if it’s reached that point) for less than what you owe. You may not be responsible for your entire credit card debt, but you’d still pay some of it.
How to get out of debt through bankruptcy
Bankruptcy should only be considered if you don’t have any other options. Filing for bankruptcy may sound like you’re starting over, but depending on the route you go, you may still be on the hook for some of your outstanding debt.
In a Chapter 7 bankruptcy filing, some of your assets are sold off to pay back debt, meaning you could lose your home and personal property. A few months after filing, your remaining debt will be discharged — although Chapter 7 typically won’t cover things like student loan debt or child support.
In a Chapter 13 filing, you get set up on a court-ordered repayment plan. Any remaining debt after a certain time has passed, like five years, might be discharged. This process means you’ll spend even longer paying off your debt, and you’ll also have a bankruptcy filing on your credit report.
Depending on the type of bankruptcy you file, a bankruptcy filing could stay on your credit report for up to 10 years, which is why it’s important to carefully weigh your options and your outstanding debt. Debt collectors can’t attempt to collect a debt that was discharged in bankruptcy, and they can’t continue collection activity while the bankruptcy case is pending — but the filing itself will have long-term effects on your financial health.
Why not paying off debt doesn’t work
Your credit report is a vital part of your financial well-being. Late or missed payments, defaults, collections and bankruptcies not only crush your credit score, but can also hurt your chances of taking out a loan or getting approved for a credit card.
Not paying your bills also puts you in a dangerous position with lenders. Avoiding payment means that creditors can sue you for unpaid bills. In some states, you could get your wages garnished or have your assets seized. Even if you aren’t making the payments directly, you’re still paying your outstanding debt.
Alternatives to bankruptcy
If you have the chance to avoid bankruptcy, you should take it. Here are some alternatives to consider.
Supplement your income: Whatever you need to do to start paying off your debt, do it now. Ask for a raise at work or move to a higher-paying job, if you can. Get a side-hustle. Start to sell valuable things, like furniture or expensive jewelry, to cover the outstanding debt.
Ask for assistance: Contact your lenders and creditors and ask about lowering your monthly payment, interest rate or both. For student loans, you might qualify for temporary relief with forbearance or deferment. For other types of debt, see what your lender or credit card issuer offers for hardship assistance. If you have the means, see if friends and family will help you.
Take out a debt consolidation loan: If you have many different types of debt, look into consolidation options. Taking out a debt consolidation loan is a way to simplify your finances — putting all of your debt in one place — and potentially pay less interest in the long run.
Get professional help: Reach out to a nonprofit credit counseling agency that can set up a debt management plan. You’ll pay the agency a set amount every month that goes toward each of your debts. The agency works to negotiate a lower bill or interest rate on your behalf and, in some cases, can get your debt canceled.
The bottom line
It can feel like it’ll take a lifetime to get out of a huge debt trap. You may skip payments, consider not paying at all or file for bankruptcy. While you might, in certain circumstances, get out of paying your outstanding debt, the likelihood is low. And more often than not, it’s harmful to your financial well-being to avoid paying your outstanding debt.
Thursday, February 27, 2020
Cabbies worry as hedge fund snaps up taxi medallions New York Post February 20, 2020
New York taxi drivers and politicians are raising alarms after a secretive hedge fund this week quietly became the city’s largest owner of taxi-medallion loans.
Marblegate Asset Management — a tight-lipped investment firm that has already scooped up some 300 medallions and 1,000 loans, many of them previously owned by disgraced “Taxi King” Gene Freidman — has taken over loans tied to an additional 3,000 New York medallions, sources told The Post.
The deal — valued at about $350 million with the inclusion of an additional 1,500 loans from Chicago, Philadelphia and other cities, according to sources — makes Marblegate New York City’s biggest-ever owner of medallion loans, with nearly a third of the total of 13,500 issued.
The Greenwich, Conn.-based hedge fund didn’t respond to requests for comment, even as critics raised fears that the deal could spell more bad news for cab drivers.
The market value of a New York City taxi medallion — which had topped $1 million in late 2013 — has since tanked below $200,000 with the rise of ride-sharing startups like Uber and Lyft. With passengers defecting in droves, New York’s yellow-cab drivers are facing mounting debts, with nine suicides reported in the last two years.
Some industry sources said they were skeptical whether Marblegate would be interested in taking a haircut on the loans to help out taxi drivers.
“[Marblegate] is happy owning these assets because they want to own a superfleet and build economies of scale,” according to one industry insider. “The idea is to keep buying the loans, keep foreclosing on them and keep gobbling up medallions until you control the market.”
About 60 members of the New York Taxi Workers Alliance had driven down to Virginia on Wednesday in a last-ditch effort to stop Marblegate’s purchase of the loans from the National Credit Union Administration, a federal agency that had taken on the New York loans after the collapse of two local credit unions in 2018.
“It’s ridiculous,” said Bhairavi Desai, the taxi driver group’s executive director. “We’re pretty pissed off.”
Letitia James preps suit against city over medallion debt crisis
Desai says the group met with NCUA reps two weeks ago to discuss letting the Taxi Workers Alliance find a private partner that would help the nonprofit buy the loans. The alliance has said it wants to restructure the loans at uniform values of $150,000 and freeze monthly payments on those debts at $900.
Instead, Desai said that the NCUA — which said in a Wednesday announcement it has lost $760 million holding onto the debt — simply turned around and sold the medallions to the highest bidder.
“We are fiduciaries for the share insurance fund. We are not some hedge fund selling assets,” NCUA board member J. Mark McWatters told the 60 visiting New Yorkers at the regulator’s monthly board meeting in Virginia. “We needed to take this offer.”
The NCUA has assured the Taxi Workers Alliance that Marblegate is open to talking debt relief with medallion owners and that a meeting between the parties to start those talks has been set for “sometime next week,” Desai said.
City officials are equally concerned about what putting an outsize share of taxi medallions in the hands of a hedge fund means for taxi operators on the brink.
“People will read this story and think about committing suicide,” said City Council Member Ydanis Rodriguez, chair of the Transportation Committee. “We cannot wait for the city to create a public-private partnership to buy medallions in foreclosure and hold the medallions so that the debt on them can be reduced. We need to act yesterday on fixing this.”
Marblegate Asset Management — a tight-lipped investment firm that has already scooped up some 300 medallions and 1,000 loans, many of them previously owned by disgraced “Taxi King” Gene Freidman — has taken over loans tied to an additional 3,000 New York medallions, sources told The Post.
The deal — valued at about $350 million with the inclusion of an additional 1,500 loans from Chicago, Philadelphia and other cities, according to sources — makes Marblegate New York City’s biggest-ever owner of medallion loans, with nearly a third of the total of 13,500 issued.
The Greenwich, Conn.-based hedge fund didn’t respond to requests for comment, even as critics raised fears that the deal could spell more bad news for cab drivers.
The market value of a New York City taxi medallion — which had topped $1 million in late 2013 — has since tanked below $200,000 with the rise of ride-sharing startups like Uber and Lyft. With passengers defecting in droves, New York’s yellow-cab drivers are facing mounting debts, with nine suicides reported in the last two years.
Some industry sources said they were skeptical whether Marblegate would be interested in taking a haircut on the loans to help out taxi drivers.
“[Marblegate] is happy owning these assets because they want to own a superfleet and build economies of scale,” according to one industry insider. “The idea is to keep buying the loans, keep foreclosing on them and keep gobbling up medallions until you control the market.”
About 60 members of the New York Taxi Workers Alliance had driven down to Virginia on Wednesday in a last-ditch effort to stop Marblegate’s purchase of the loans from the National Credit Union Administration, a federal agency that had taken on the New York loans after the collapse of two local credit unions in 2018.
“It’s ridiculous,” said Bhairavi Desai, the taxi driver group’s executive director. “We’re pretty pissed off.”
Letitia James preps suit against city over medallion debt crisis
Desai says the group met with NCUA reps two weeks ago to discuss letting the Taxi Workers Alliance find a private partner that would help the nonprofit buy the loans. The alliance has said it wants to restructure the loans at uniform values of $150,000 and freeze monthly payments on those debts at $900.
Instead, Desai said that the NCUA — which said in a Wednesday announcement it has lost $760 million holding onto the debt — simply turned around and sold the medallions to the highest bidder.
“We are fiduciaries for the share insurance fund. We are not some hedge fund selling assets,” NCUA board member J. Mark McWatters told the 60 visiting New Yorkers at the regulator’s monthly board meeting in Virginia. “We needed to take this offer.”
The NCUA has assured the Taxi Workers Alliance that Marblegate is open to talking debt relief with medallion owners and that a meeting between the parties to start those talks has been set for “sometime next week,” Desai said.
City officials are equally concerned about what putting an outsize share of taxi medallions in the hands of a hedge fund means for taxi operators on the brink.
“People will read this story and think about committing suicide,” said City Council Member Ydanis Rodriguez, chair of the Transportation Committee. “We cannot wait for the city to create a public-private partnership to buy medallions in foreclosure and hold the medallions so that the debt on them can be reduced. We need to act yesterday on fixing this.”
Wednesday, February 26, 2020
New York Attorney General Accuses N.Y.C. of Fraud Over Taxi Crisis from New York Times
The city’s Taxi and Limousine Commission marketed the medallions — city-issued permits required to own a yellow cab — as “a solid investment with steady growth” and reaped a profit from the sale of thousands of them at auction at exorbitant prices from 2004 to 2017, according to an investigation by the attorney general’s office. The attorney general, Letitia A. James, said the city must provide financial relief to the debt-ridden taxi medallion owners within 30 days or she would sue for fraud, unlawful profit and other violations of state law. “These taxi medallions were marketed as a pathway to the American dream, but instead became a trapdoor of despair for medallion owners harmed by the T.L.C.’s unlawful practices,” Ms. James said. “The very government that was supposed to ensure fair practices in the marketplace engaged in a scheme that defrauded hundreds of medallion owners, leaving many with no choice but to work day and night to pay off their overpriced medallions.’’Bhairavi Desai, the executive director of the New York Taxi Workers Alliance, which represents cabdrivers, said she welcomed Ms. James’s action and saw it as a validation of the city’s culpability in the taxi crisis. “The devastation that has happened across the taxi industry has been a deep betrayal by the city,” she said. “Not only did they close their eyes to predatory practices and directly engage in inflating the prices but they then allowed in Uber and Lyft completely unregulated.” Freddi Goldstein, a spokeswoman for Mayor Bill de Blasio, said that although the taxi crisis began under Michael R. Bloomberg’s administration, city officials since then have taken steps to provide financial help to taxi drivers and tighten oversight of Uber and other ride-hailing companies. The attorney general began her inquiry in response to an investigation by The New York Times, which found that a handful of taxi industry leaders earned hundreds of millions of dollars by deliberately inflating the price of a medallion to more than $1 million from about $200,000. The Times found that thousands of drivers, many of them immigrants, thought they were safe taking out loans to buy medallions because of the taxi commission’s assurances of their high value. City, state and federal officials exacerbated the problems by exempting the industry from regulations, The Times revealed. The city also filled in budget gaps by selling medallions and running ads promoting the permits as “better than the stock market.” Ms. James said that the city continued to market the medallions at inflated prices even after internal warnings were raised. During the last auction for medallions in 2014, the city sold 350 new medallions at the height of the market, generating $359 million in revenue. Since then, medallion prices have cratered, selling for a fraction of the record $1.3 million price in 2014. In many cases, they are worth far less than what their owners borrowed to buy them. In 2018, New York became the first major American city to adopt a one-year moratorium on issuing new vehicle licenses for Uber, Lyft and other ride-hail services. It came three years after Mr. de Blasio attempted to adopt a similar cap but abandoned the effort after Uber waged a fierce campaign against him. Since then, the city has extended the moratorium. “This crisis has been ours to solve — working tirelessly to clean up the carelessness and greed of others,” Ms. Goldstein said. “If the attorney general wants to launch a frivolous investigation into the very administration that has done nothing but work to improve the situation, this is what she’ll find.” But Ms. Desai said the city’s response has been slow and its efforts so far have generally been underwhelming. She noted that the city waived some small fees for taxi owners even as they drowned under huge debts. “There has been no substantial financial relief — this restitution would be the first,” she said.
The city comptroller, Scott M. Stringer, said Ms. James had made “significant allegations” and that his office “takes these issues very seriously.” The city controls the number of medallions — currently capped at just under 13,600 — to prevent an oversupply of cabs like what happened in the 1930s when concerns over congestion, reckless driving and cut-rate fares led the city to step in. As medallion prices soared, drivers were steered into taking out loans totaling billions of dollars that they could never repay, plunging many into bankruptcy. A spate of suicides by taxi owners and professional drivers in recent years underscored the severity of their plight and has spurred city legislation to try to improve their working conditions. A spokesman for Ms. James said that while Thursday’s action was focused on the city’s role in the taxi crisis, their ongoing investigation continued to examine “all aspects of the taxi industry.” The United States Attorney’s office in Manhattan has also launched a criminal investigation. Taxi industry leaders have denied doing anything wrong, characterizing their actions as normal business practices. They have sought to blame the taxi meltdown entirely on the rise of competing ride-app services such as Uber and Lyft. Last month, a city panel appointed by the New York City Council and Mr. de Blasio proposed a bailout of up to $600 million for taxi drivers, but most of that money would come from private investors. Ms. James is seeking $810 million directly from the city. It is unclear how her demand would affect the bailout plans. City Councilman Ydanis Rodriguez, who was the co-chairman of the panel, said he believed the city did bear some responsibility for creating the taxi crisis, and as a result, it had an obligation to provide financial relief to taxi owners. He added that the city should consider all proposals, including Ms. James’s demand for compensation as well as the private-public bailout proposed by the panel. “What I know is this crisis is so huge and the medallion owners are so desperate that they cannot wait any longer,” Mr. Rodriguez said. Ms. James said the payment from the city would be used to pay restitution to taxi medallion owners, which could include paying off loans, and compensating them for damages resulting from the city’s actions. She also plans to take additional measures to prevent the Taxi and Limousine Commission and the city from inflating taxi prices in the future.Nino Hervias, a taxi owner and spokesman for the Taxi Medallion Owner Driver Association, which represents many immigrant taxi owners, said that it was time that the city was held directly liable for destroying the yellow taxi industry and pushing so many drivers into bankruptcy.
Friday, February 21, 2020
Wednesday, February 19, 2020
Monday, February 17, 2020
Wednesday, February 12, 2020
The Best Way to Use a Credit Card? Treat It Like Cash from New York Times
The Best Way to Use a Credit Card? Treat It Like Cash from New York Times February 12, 2020
Fewer people than ever carry cash these days, it seems. Life can seem ultraconvenient when you don’t have to worry about a wad of bills in your pocket (or even a wallet in your pocket, for that matter).
But it can hurt people with low incomes when businesses go cashless, it can hurt workers who rely on cash tips and — even if you’re not in either of these groups — it can hurt you because it’s easy to get into financial trouble with credit cards.
Studies prove that people spend more when using credit vs. cash, and late payments are on the rise.
“You have an out-of-sight, out-of-mind phenomenon with credit cards,” said Amy Bucher, the director of behavior change design at Mad*Pow, a design consultancy group. “Unless they’re checking their credit card balance on a daily basis, most people don’t have an awareness of how much debt they’re in.”
But if used responsibly, credit cards are a fast way to build credit without paying a dime of interest. Good credit scores can save you money down the road, typically qualifying you for lower mortgage or auto loan interest rates. Credit card rewards can make things you buy a little cheaper.
The good news: Mental tricks, apps and tools can make spending with credit cards similar to cash, giving you the best of both worlds.
Editorial note: The assessments of financial products in this article are independently determined by Wirecutter, a New York Times company that reviews and recommends products, and have not been reviewed, approved or otherwise endorsed by any third party.
Make credit card purchases feel tactile
Cash requires you to shop at a physical store, grab your physical wallet and hand over physical money. Giving a cashier a $20 bill in exchange for an $18 item is a tangible transaction. In exchange for a $20, you now have $2 left and a physical bauble.
But a credit card looks the same before and after the transaction, obfuscating what was actually given up for that bauble. Add online shopping to the mix, and you might not even think about your credit card or where the money is coming from.
Grab a receipt. Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News & World Report, always takes a receipt. “It’s just one more thing to help you keep a grip on reality,” she said. “When they ask if you want a receipt, just say yes so you have that feeling of payment in your hand.”
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Remove payment information from your computer. Consumer psychologists refer to creating friction — meaning barriers to doing something — as an effective way to stop an impulse buy. “If you’re sitting on your couch, you’ve had two glasses of wine, you see rain boots on sale, and your credit card information auto-populates, you’re probably going to buy it, because you really only needed to hit two buttons to make that purchase,” Ms. Bucher said. “If you had to get off your couch, pull out your credit card and type in the numbers, that’s friction. You have to commit a little more to make the purchase.” In contrast, digital payments like Apple Pay offer convenience when you’re at the cash register, but they take cash and physical cards out of the equation. If you’re nervous that holding your phone next to the scanner to complete a transaction could turn you into a spendthrift, don’t partake.
[Like what you’re reading? Sign up here for the Smarter Living newsletter to get stories like this (and much more!) delivered straight to your inbox every Monday morning.]
Set spending limits
You can’t buy $300 headphones if your wallet contains only $100. But you can if you’ve got a card with a credit limit over $300 (even if $300 exceeds your budget).
Let robots count your money. Budgeting apps like You Need a Budget ($84 a year) or Mint (no fee) track balances across all your accounts, giving you a clearer picture of your actual balance even if you have multiple cards and accounts from different banks. Some banks, such as Bank of America, also let you sync other accounts, even if those accounts are with competing banks. Check your balance in the app to ensure your next purchase fits your budget.
Try “action planning.” Determine your budget, then implement measures that prevent you from exceeding it. The Uber Credit Card has a feature that lets you create a self-imposed spending limit for certain categories or merchants, which could remove the temptation to stop at Starbucks on the way to work. Other companies, like Discover, allow you to set up alerts if your credit card balance exceeds a certain amount or you near your credit limit.
Tuesday, February 11, 2020
Section 108 of the Internal Revenue Code Relief of Indebtedness Income and Workouts
Section 108 of the Internal Revenue Code Relief of Indebtedness Income and Workouts
One of the most overlooked areas of the law when doing a workout is Section 108 of the Internal Revenue Code (“IRC”). Section 108 is a trap for the unwary and unless the attorney or lawyer is aware of this tax code section, it can upend a workout or result in a taxpayer having to recognize, report, or pickup unknowingly a significant amount of taxable income. This could ruin the attorney-client relationship or worse yet a malpractice lawsuit by the client against the attorney.Let's begin this post with an explanation of Section 108 of the IRC.
IRC § 108 provides that if an individual or an entity that owes money (the “Debtor”) is relieved of indebtedness, then that indebtedness is deemed to be ordinary income to the Debtor. The Debtor must report that income on their tax return and the Creditor is required to file a 1099 with the IRS. There are two exceptions to this rule: first, if the Debtor files for bankruptcy protection, then the relief of indebtedness income is not picked up; and second, on a balance sheet basis, if the individual’s liabilities exceed their assets and they are insolvent, then they do not have to pick up the income.
The goal of a workout from the perspective of the Debtor (the person who owes money) is to pay less than the balance due to the Creditor (person or company owed money).
An example of the application of IRC § 108 will help to explain the above. Let’s assume that an individual owes a financial institution $1,000,000. The individual is unable to pay the $1,000,000, so the parties enter into a workout (an out of court settlement) in which the individual repays the financial institution $600,000. According to IRC § 108, the taxpayer must pick up the $400,000 differential between what he or she owed and paid as ordinary income.
Unless the client is made aware of this fact in advance of or during a workout, the client may walk away from the workout. If not told at all, when the client receives the 1099 from the Creditor or worse gets audited by the IRS, they will point a finger at the attorney or sue the attorney for malpractice.
Many clients and some lawyers assume that the $400,000 of income is capital gains, but it is ordinary income.
Another question raised by clients is how does the IRS find out about this relief of indebtedness income? The answer is that the Creditor is required to file a Form 1099-C with the IRS reporting the relief of indebtedness income for more than $600 of forgiven debt.
Yet another question asked by clients is whether the Creditor will file the 1099 with the IRS? The answer is that the Creditor is legally required to do so and most institutional investors will do the 1099 filing.
Section 108 of the IRC comes up in almost every workout, but is currently most prevalent in taxi medallion and restaurant workouts. Both of these industries are struggling and are areas we are doing a lot of workouts.
Clients should review all workouts with their CPA’s or accountants.
At Shenwick & Associates, we are not tax lawyers, but we are familiar with the IRC and James Shenwick has an LLM in Taxation from the NYU School of Law.
Clients who are doing or contemplate doing a workout, are encouraged to consult with James Shenwick to discuss their strategy. Jim Shenwick 212 541 6224 jshenwick@gmail.com
Friday, January 31, 2020
I Paid Off My Student Loans Early, and I Regret It
By: Christy Bieber
From: The Motley Fool
https://www.fool.com/student-loans/paid-off-student-loans-early/
Thursday, January 30, 2020
How Uber and Lyft doomed NYC's yellow cab business - New York Daily News
Driving NYC taxis out of business: How Uber and Lyft doomed the once-solid yellow cab industry
By: Clayton Guse
From: nydailynews.com
https://www.nydailynews.com/new-york/ny-medallion-foreclosures-taxi-bailout-plan-uber-lyft-20200130-s2mjkhjubzgptdxasoxddwdote-story.html
Wednesday, January 22, 2020
Myth Busted: Turns Out Bankruptcy Can Wipe Out Student Loan Debt After All
From: wamc.org
By: Chris Arnold
https://www.wamc.org/post/myth-busted-turns-out-bankruptcy-can-wipe-out-student-loan-debt-after-all
By: Chris Arnold
https://www.wamc.org/post/myth-busted-turns-out-bankruptcy-can-wipe-out-student-loan-debt-after-all
Originally published on January 22, 2020 9:31 am
A
few years ago, Lauren had a big problem. The Queens, N.Y., resident had
graduated from college with an art degree as the Great Recession had
hit. She had private student loans with high interest rates. For work,
all she could find were retail jobs. And by 2016, her loans had
ballooned to about $200,000.
" 'I can't afford to actually pay my bills and eat and pay my rent,' " she remembers thinking. "I was financially handicapped. I mean, my student loan payments were higher than my rent was."
So Lauren started to look into bankruptcy. She doesn't want her last name used because she thinks all this might hurt her job prospects.
Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help.
Bankruptcy is not fun. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to make sense. But if you reach that point, you can get your debts reduced or erased through bankruptcy so you can get back on your feet.
But the lawyers Lauren called said that with student loans it's different because there are special rules for student debt.
"They had told me things like you have to have a disability where you're not able to even work," she says. "And I was like, 'Well, but that doesn't make any sense.' "
Jason Iuliano, a Villanova University law professor, says that over the past 30 years, Congress has made it harder to discharge student debt. You need to meet what's called an "undue hardship" standard. That also means more work for your lawyer.
But Iuliano says that this has created the misconception that it's nearly impossible to get help for student debt through bankruptcy. That's not true.
Iuliano did some research and says a quarter-million student loan debtors file for bankruptcy each year. They do that because they have credit card debt or other debts and they can get those reduced or erased.
But when it comes to trying to get their student debt forgiven, "more than 99% of the student loan debtors in bankruptcy just give up without even trying," Iuliano says. "It struck me as a really surprising statistic when I first uncovered it."
For those who do try, though, Iuliano's research finds that about half the time the person gets some or all of the student loan debt erased. One study he did found that they got help through bankruptcy about 40% of the time. And he says more recent data from this past year show that figure rising to more than 50% of the time.
"So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue-hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt," Iuliano says.
Just this month, a federal judge in New York discharged more than $220,000 in student loans for a borrower. In her ruling, Chief Bankruptcy Judge Cecelia Morris criticized the fact that even many lawyers "believe it impossible to discharge student loans." She added, "This Court will not participate in perpetuating these myths."
Robert Lawless, a law professor at the University of Illinois, says, "I think we're reaching a tipping point with what the bankruptcy courts are doing." He says he hopes more people are able to get help through bankruptcy.
But he says the rules are still too restrictive. Lawless researched the issue with a group of attorneys and former judges for the American Bankruptcy Institute, a professional organization. They're recommending that Congress rewrite the rules on student loans in bankruptcy. Under the proposal, Lawless says, "after seven years from when the loans became due, they would be treated pretty much like any other debt in a bankruptcy case."
There is at least some support for that in Congress. Part of the obstacle now is that the current rules often require paying your lawyer more money to attempt to get student debt forgiven.
Lawless says it costs on average about $1,200 to file a typical Chapter 7 bankruptcy case. Bankruptcy attorneys say it can cost thousands of dollars more to pay your lawyer to jump through the extra hoops related to student loan debt, unless you find one who will do that for a reduced rate.
Iuliano says the outcome and how much student debt is forgiven, if any, can have a lot to do with what particular judge you end up with and what the rules are in that bankruptcy district.
Some of that is because of the language of the original statute stating that student loan borrowers have to meet a threshold of "undue hardship," he says. Iuliano says Congress has never defined what that means, so a lot of discretion is left up to the courts and the particular judge you get.
Harrison Wadsworth, a consultant for the Consumer Bankers Association, notes that most student loans are issued by the government. But for loans from private lenders, he says relaxing the bankruptcy rules to make it easier to reduce or eliminate student debt could push up interest rates. "Lenders would have to be careful about making loans and probably have to charge more for them," Wadsworth says.
Lauren eventually found a lawyer who took her case and charged her about $3,000, doing some of the work pro bono. And going through bankruptcy, she got her debt reduced from about $200,000 to around $100,000, with the bulk of that reduced to a 1% interest rate.
"It's still a lot of money," she says. But she says, "I was extremely relieved."
Lauren says it is significantly less than she owed before. And she says the payments are manageable.
"And because they lowered the interest, I'm actually paying off the loan," she says. So she says she can recover financially, which Lawless says is what bankruptcy is there for.
Many Americans who get overwhelmed by student loan debt are told bankruptcy is not an option for them because you can't get student debt reduced or wiped out through bankruptcy. Well, now more judges and legal scholars are saying that's a myth, and bankruptcy can be a way to help. Some advocates want Congress to act to change the laws so student debt is treated the same as any other kind of debt. Here's more from NPR's Chris Arnold.
CHRIS ARNOLD, BYLINE: A few years ago, Lauren (ph), who lives in Queens, N.Y., had a big problem. She graduated college with an art degree just as the Great Recession hit. She had private student loans with very high interest rates. For work, all she could find were retail jobs. And by 2016, her loans had ballooned to about $200,000. She remembers thinking...
LAUREN: I can't afford to actually pay my bills and eat and pay my rent. Basically, I was financially handicapped. I mean, my student loan payments were higher than my rent was.
ARNOLD: So Lauren started to look into bankruptcy. She doesn't want to use her last name because she thinks all this might hurt her job prospects.
Now, bankruptcy is not fun. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to even make sense, but you can get your debts reduced or erased so that you can survive and get back on your feet. But the lawyers that Lauren called said, look; basically, with student loans, it's different.
LAUREN: They had told me things like you have to have a disability where you're not able to even work. And I was like, well, but that doesn't make any sense.
ARNOLD: Many bankruptcy judges and legal scholars agree. Jason Iuliano is a law professor at Villanova University. He says over the past 30 years, Congress has made it harder to discharge student debt. You need to meet what's called an undue hardship standard. That also means more work for your lawyer. But he says that's created this misperception that it's nearly impossible to get help for student loan debt through bankruptcy. Iuliano did some research, and...
JASON IULIANO: What struck me as a really surprising statistic when I first uncovered it - there is a quarter of a million student loan debtors who file bankruptcy each year.
ARNOLD: They do that because they have credit card debt or other debts, and they can get those reduced or erased. But trying to get their student debt forgiven...
IULIANO: More than 99% of the student loan debtors in bankruptcy just give up without even trying.
ARNOLD: But he's also found that when people do try and they pay a lawyer to jump through the extra hoops, about half the time, the person gets some or all of their student loan debt erased.
IULIANO: So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt.
ARNOLD: Just this month, a judge in New York discharged $220,000 in student loan debt for a borrower. And in her ruling, she criticized the fact that even many lawyers, quote, "believe it impossible to discharge student loans." She added, quote, "this court will not participate in perpetuating these myths."
ROBERT LAWLESS: Well, I think we're reaching a tipping point with what the bankruptcy courts are doing.
ARNOLD: That's Robert Lawless, a law professor at the University of Illinois. He hopes that more people are able to get help through bankruptcy, but he says the rules are still too restrictive. He took part in research on the issue for the professional organization the American Bankruptcy Institute, which recommends...
LAWLESS: That Congress rewrite the rules on student loans and bankruptcy and make it so after seven years from when the loans became due, they would be treated pretty much like any other debt in a bankruptcy case.
ARNOLD: There is at least some support for that in Congress.
Harrison Wadsworth is a consultant for the Consumer Bankers Association. He says most student loans are issued by the government these days, but for loans from private lenders, loosening the rules could push up interest rates.
HARRISON WADSWORTH: Lenders have to be more careful about making loans and probably have to charge more for them.
ARNOLD: In Lauren's case, she eventually found a lawyer and, going through bankruptcy, she got her debt reduced from around $200,000 down to around $100,000, and the bulk of that at a 1% interest rate.
LAUREN: It's still a lot of money (laughter).
ARNOLD: Yeah.
LAUREN: Yeah. So for me, like, I was extremely relieved. It is significantly less, and I'm actually able to, like, make the payment. And because they lowered the interest, I'm actually paying off the loan.
ARNOLD: So Lauren says she can recover financially, which, Lawless says, is what bankruptcy is there for.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.
" 'I can't afford to actually pay my bills and eat and pay my rent,' " she remembers thinking. "I was financially handicapped. I mean, my student loan payments were higher than my rent was."
So Lauren started to look into bankruptcy. She doesn't want her last name used because she thinks all this might hurt her job prospects.
Over the years, a myth has taken hold that you can't get student debt reduced or wiped out through bankruptcy. But many bankruptcy judges and legal scholars say that's wrong. And bankruptcy can be a way to get help.
Bankruptcy is not fun. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to make sense. But if you reach that point, you can get your debts reduced or erased through bankruptcy so you can get back on your feet.
But the lawyers Lauren called said that with student loans it's different because there are special rules for student debt.
"They had told me things like you have to have a disability where you're not able to even work," she says. "And I was like, 'Well, but that doesn't make any sense.' "
Jason Iuliano, a Villanova University law professor, says that over the past 30 years, Congress has made it harder to discharge student debt. You need to meet what's called an "undue hardship" standard. That also means more work for your lawyer.
But Iuliano says that this has created the misconception that it's nearly impossible to get help for student debt through bankruptcy. That's not true.
Iuliano did some research and says a quarter-million student loan debtors file for bankruptcy each year. They do that because they have credit card debt or other debts and they can get those reduced or erased.
But when it comes to trying to get their student debt forgiven, "more than 99% of the student loan debtors in bankruptcy just give up without even trying," Iuliano says. "It struck me as a really surprising statistic when I first uncovered it."
For those who do try, though, Iuliano's research finds that about half the time the person gets some or all of the student loan debt erased. One study he did found that they got help through bankruptcy about 40% of the time. And he says more recent data from this past year show that figure rising to more than 50% of the time.
"So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue-hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt," Iuliano says.
Just this month, a federal judge in New York discharged more than $220,000 in student loans for a borrower. In her ruling, Chief Bankruptcy Judge Cecelia Morris criticized the fact that even many lawyers "believe it impossible to discharge student loans." She added, "This Court will not participate in perpetuating these myths."
Robert Lawless, a law professor at the University of Illinois, says, "I think we're reaching a tipping point with what the bankruptcy courts are doing." He says he hopes more people are able to get help through bankruptcy.
But he says the rules are still too restrictive. Lawless researched the issue with a group of attorneys and former judges for the American Bankruptcy Institute, a professional organization. They're recommending that Congress rewrite the rules on student loans in bankruptcy. Under the proposal, Lawless says, "after seven years from when the loans became due, they would be treated pretty much like any other debt in a bankruptcy case."
There is at least some support for that in Congress. Part of the obstacle now is that the current rules often require paying your lawyer more money to attempt to get student debt forgiven.
Lawless says it costs on average about $1,200 to file a typical Chapter 7 bankruptcy case. Bankruptcy attorneys say it can cost thousands of dollars more to pay your lawyer to jump through the extra hoops related to student loan debt, unless you find one who will do that for a reduced rate.
Iuliano says the outcome and how much student debt is forgiven, if any, can have a lot to do with what particular judge you end up with and what the rules are in that bankruptcy district.
Some of that is because of the language of the original statute stating that student loan borrowers have to meet a threshold of "undue hardship," he says. Iuliano says Congress has never defined what that means, so a lot of discretion is left up to the courts and the particular judge you get.
Harrison Wadsworth, a consultant for the Consumer Bankers Association, notes that most student loans are issued by the government. But for loans from private lenders, he says relaxing the bankruptcy rules to make it easier to reduce or eliminate student debt could push up interest rates. "Lenders would have to be careful about making loans and probably have to charge more for them," Wadsworth says.
Lauren eventually found a lawyer who took her case and charged her about $3,000, doing some of the work pro bono. And going through bankruptcy, she got her debt reduced from about $200,000 to around $100,000, with the bulk of that reduced to a 1% interest rate.
"It's still a lot of money," she says. But she says, "I was extremely relieved."
Lauren says it is significantly less than she owed before. And she says the payments are manageable.
"And because they lowered the interest, I'm actually paying off the loan," she says. So she says she can recover financially, which Lawless says is what bankruptcy is there for.
Copyright 2020 NPR. To see more, visit https://www.npr.org.9(MDAyMjA1NDY4MDEyOTc4NzE4OTRmNjhkZg001))
DAVID GREENE, HOST: Many Americans who get overwhelmed by student loan debt are told bankruptcy is not an option for them because you can't get student debt reduced or wiped out through bankruptcy. Well, now more judges and legal scholars are saying that's a myth, and bankruptcy can be a way to help. Some advocates want Congress to act to change the laws so student debt is treated the same as any other kind of debt. Here's more from NPR's Chris Arnold.
CHRIS ARNOLD, BYLINE: A few years ago, Lauren (ph), who lives in Queens, N.Y., had a big problem. She graduated college with an art degree just as the Great Recession hit. She had private student loans with very high interest rates. For work, all she could find were retail jobs. And by 2016, her loans had ballooned to about $200,000. She remembers thinking...
LAUREN: I can't afford to actually pay my bills and eat and pay my rent. Basically, I was financially handicapped. I mean, my student loan payments were higher than my rent was.
ARNOLD: So Lauren started to look into bankruptcy. She doesn't want to use her last name because she thinks all this might hurt her job prospects.
Now, bankruptcy is not fun. Your credit gets destroyed for years, and you have to be in pretty dire financial straits for it to even make sense, but you can get your debts reduced or erased so that you can survive and get back on your feet. But the lawyers that Lauren called said, look; basically, with student loans, it's different.
LAUREN: They had told me things like you have to have a disability where you're not able to even work. And I was like, well, but that doesn't make any sense.
ARNOLD: Many bankruptcy judges and legal scholars agree. Jason Iuliano is a law professor at Villanova University. He says over the past 30 years, Congress has made it harder to discharge student debt. You need to meet what's called an undue hardship standard. That also means more work for your lawyer. But he says that's created this misperception that it's nearly impossible to get help for student loan debt through bankruptcy. Iuliano did some research, and...
JASON IULIANO: What struck me as a really surprising statistic when I first uncovered it - there is a quarter of a million student loan debtors who file bankruptcy each year.
ARNOLD: They do that because they have credit card debt or other debts, and they can get those reduced or erased. But trying to get their student debt forgiven...
IULIANO: More than 99% of the student loan debtors in bankruptcy just give up without even trying.
ARNOLD: But he's also found that when people do try and they pay a lawyer to jump through the extra hoops, about half the time, the person gets some or all of their student loan debt erased.
IULIANO: So I think that's really important for bankruptcy attorneys to see that there are judges out there who are willing to grant undue hardship discharges and that people are much more likely to obtain relief in bankruptcy for their student loan debt.
ARNOLD: Just this month, a judge in New York discharged $220,000 in student loan debt for a borrower. And in her ruling, she criticized the fact that even many lawyers, quote, "believe it impossible to discharge student loans." She added, quote, "this court will not participate in perpetuating these myths."
ROBERT LAWLESS: Well, I think we're reaching a tipping point with what the bankruptcy courts are doing.
ARNOLD: That's Robert Lawless, a law professor at the University of Illinois. He hopes that more people are able to get help through bankruptcy, but he says the rules are still too restrictive. He took part in research on the issue for the professional organization the American Bankruptcy Institute, which recommends...
LAWLESS: That Congress rewrite the rules on student loans and bankruptcy and make it so after seven years from when the loans became due, they would be treated pretty much like any other debt in a bankruptcy case.
ARNOLD: There is at least some support for that in Congress.
Harrison Wadsworth is a consultant for the Consumer Bankers Association. He says most student loans are issued by the government these days, but for loans from private lenders, loosening the rules could push up interest rates.
HARRISON WADSWORTH: Lenders have to be more careful about making loans and probably have to charge more for them.
ARNOLD: In Lauren's case, she eventually found a lawyer and, going through bankruptcy, she got her debt reduced from around $200,000 down to around $100,000, and the bulk of that at a 1% interest rate.
LAUREN: It's still a lot of money (laughter).
ARNOLD: Yeah.
LAUREN: Yeah. So for me, like, I was extremely relieved. It is significantly less, and I'm actually able to, like, make the payment. And because they lowered the interest, I'm actually paying off the loan.
ARNOLD: So Lauren says she can recover financially, which, Lawless says, is what bankruptcy is there for.
Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.
Saturday, January 18, 2020
Organizing at Work
This week we heard from Dan Loya at Spaces Transformed. Dan gave a talk and a couple of comments that I had on this important topic are below:
1. Dan did not mention this app for note taking, but many experts, tech people and tech websites state that “Google Keep” is the best note taking app. I have used this app for about five years and I'm extremely happy with it and I would suggest that everyone in the group try it. It is free, easy to use and learn, is available for Android, Apple and on your Windows computer and it syncs instantly to all of your devices
2 For my To Do list, I have probably tried 10 apps over the years and have stopped using them after two to three weeks. I believe that the best note taking app is an eight and ½ by 11 legal pad or a 4 by 6 legal pad. What are the benefits of a pen and paper? We all know how to read and write, you can use different ink colors and you can highlight your to-do list, throw it out when it is completed and. it is also a multi-platform device in that you can take it home at night or on the weekend by throwing it in your back. I have found that I need to 2 to-do lists, one for my personal use and one for work.
3. Organizing your emails. I would suggest the following approach using Outlook 365. Outlook 365 contain something called “Categories” at the ribbon at the top of the program, and categories allows you to color code your emails. As my emails come in, I color them purple- high priority work matters, red-for work matters, yellow- for personal, orange for higher-level personal, blue for an item that needs to be purchased, green for billing, accounts receivable and money related issues and brown for work matters. Categories also allows you to use two colors and in my system I use “purple red” for urgent client related work matters and they get my highest priority. The beauty of this system is that it organizes your emails by category and by need and it allows you to direct your time and focus to your highest priority matters, which are in my case purple red.
Before I take a break, after I come back from a meeting or Court and before I leave to go home I always try and make sure that my “Purple Red” emails are addressed.
The system is easy to use, free and very intuitive!
Finally, every 7 to 10 days, I try to achieve something called “Inbox Zero” and then I put a smile on my face. Inbox Zero means that I delete every email that is still in my Inbox and then smile because I have uncluttered my emails and simplified my work space.
This approach forces me to evaluate every email as it comes into my In Box, I either act on the email, color code it for later use or delete it. Give this approach a try it works. Jim Shenwick jshenwick@gmail.com
1. Dan did not mention this app for note taking, but many experts, tech people and tech websites state that “Google Keep” is the best note taking app. I have used this app for about five years and I'm extremely happy with it and I would suggest that everyone in the group try it. It is free, easy to use and learn, is available for Android, Apple and on your Windows computer and it syncs instantly to all of your devices
2 For my To Do list, I have probably tried 10 apps over the years and have stopped using them after two to three weeks. I believe that the best note taking app is an eight and ½ by 11 legal pad or a 4 by 6 legal pad. What are the benefits of a pen and paper? We all know how to read and write, you can use different ink colors and you can highlight your to-do list, throw it out when it is completed and. it is also a multi-platform device in that you can take it home at night or on the weekend by throwing it in your back. I have found that I need to 2 to-do lists, one for my personal use and one for work.
3. Organizing your emails. I would suggest the following approach using Outlook 365. Outlook 365 contain something called “Categories” at the ribbon at the top of the program, and categories allows you to color code your emails. As my emails come in, I color them purple- high priority work matters, red-for work matters, yellow- for personal, orange for higher-level personal, blue for an item that needs to be purchased, green for billing, accounts receivable and money related issues and brown for work matters. Categories also allows you to use two colors and in my system I use “purple red” for urgent client related work matters and they get my highest priority. The beauty of this system is that it organizes your emails by category and by need and it allows you to direct your time and focus to your highest priority matters, which are in my case purple red.
Before I take a break, after I come back from a meeting or Court and before I leave to go home I always try and make sure that my “Purple Red” emails are addressed.
The system is easy to use, free and very intuitive!
Finally, every 7 to 10 days, I try to achieve something called “Inbox Zero” and then I put a smile on my face. Inbox Zero means that I delete every email that is still in my Inbox and then smile because I have uncluttered my emails and simplified my work space.
This approach forces me to evaluate every email as it comes into my In Box, I either act on the email, color code it for later use or delete it. Give this approach a try it works. Jim Shenwick jshenwick@gmail.com
Thursday, January 16, 2020
Bailout Up to $500 Million Proposed for Taxi Drivers Trapped in Loans New York Times 1/16/20
Bailout Up to $500 Million Proposed for Taxi Drivers Trapped in Loans
The proposal is the most far-reaching step taken in response to a Times investigation into exploitative practices in the industry.
New York Times Article
Bailout Up to $500 Million Proposed for Taxi Drivers
A high-level New York City panel appointed by Mayor Bill de Blasio and other officials intends to propose a bailout for thousands of taxi drivers trapped in exploitative loans that could cost as much as $500 million, several panel members said this week.
The panel, which has been meeting regularly since last summer, wants a new public-private partnership to essentially absorb much of the debt that the drivers took on in recent years in order to buy medallions, the city-issued permits that let them own cabs. Many of the medallions were sold at artificially inflated prices by industry leaders who brought about one of the biggest speculative loan bubbles since the American financial crisis.
The drivers, nearly all of whom are immigrants, were channeled into reckless loans totaling billions of dollars, leaving many bankrupt and struggling to survive.
The proposal would call for the partnership to buy medallion loans at discounted prices and ease the burden on borrowers by forgiving much of the debt and lowering interest payments, panel members said.
Officials cautioned that they were still working out the details of the proposal. Mr. de Blasio has not indicated whether he would support it. In the past, he has expressed skepticism about a city-funded bailout. His office said this week it would review the panel’s recommendations after they are finalized.
Corey Johnson, the City Council speaker, who appointed most of the panel’s members, said on Wednesday that its emerging plan was an important milestone, an indication that he was open to spending a significant amount of city money to help drivers.
“We know that folks in this industry have suffered tremendously,” Mr. Johnson said. “I’m really excited that after six months of painstaking work and effort, the task force is going to be releasing a variety of recommendations that we think could stabilize the industry, plan for the future and help alleviate the suffering.”
Some panel members said the partnership would aim to raise up to $500 million, while others, including leaders of the City Council, said the numbers were still being finalized and the report would not list any amounts. The city might have to contribute a portion of the total, but most of the money would come from private donors. Investors could receive incentives for contributing to the fund and would earn a return on the loans.
The 19-member panel, which is headed by two powerful members of the Council, is set to release a report with the proposal this month.
Even with the mayor’s backing, organizers would have to raise money and convince lenders to sell loans. One issue is that the National Credit Union Administration, a federal agency that is now the largest holder of taxi medallion loans, is already considering selling off its loans to for-profit debt collectors and others who are unlikely to give borrowers a break.
Bhairavi Desai, founder of the Taxi Workers Alliance, a group of drivers, who is on the panel, expressed confidence in the plan.
“This is the most optimistic I have ever felt about solving this crisis,” said Ms. Desai, adding that several donors have already expressed interest.
“We’re going to win,” she said.
The proposal would be the most far-reaching step taken so far in response to a New York Times investigation that revealed more than a decade of exploitative practices in the industry.
The Times found that a group of industry leaders artificially inflated the price of a medallion to more than $1 million from about $200,000, channeled immigrant drivers into reckless loans to purchase medallions and extracted hundreds of millions of dollars before the bubble burst.
The practices set off a crisis that has been intensified by the arrival of ride-hailing companies such as Uber and Lyft. The new apps have reduced the revenue that yellow cabs receive, but virtually all of the hundreds of industry veterans interviewed by The Times said the bubble would have burst even if ride-hailing had never been invented.
Taxi industry leaders have denied wrongdoing, describing their tactics as normal business practices and noting that regulators approved their methods. They have blamed the industry’s financial crisis exclusively on Uber and Lyft.
The proposal is the most far-reaching step taken in response to a Times investigation into exploitative practices in the industry.
New York Times Article
Bailout Up to $500 Million Proposed for Taxi Drivers
A high-level New York City panel appointed by Mayor Bill de Blasio and other officials intends to propose a bailout for thousands of taxi drivers trapped in exploitative loans that could cost as much as $500 million, several panel members said this week.
The panel, which has been meeting regularly since last summer, wants a new public-private partnership to essentially absorb much of the debt that the drivers took on in recent years in order to buy medallions, the city-issued permits that let them own cabs. Many of the medallions were sold at artificially inflated prices by industry leaders who brought about one of the biggest speculative loan bubbles since the American financial crisis.
The drivers, nearly all of whom are immigrants, were channeled into reckless loans totaling billions of dollars, leaving many bankrupt and struggling to survive.
The proposal would call for the partnership to buy medallion loans at discounted prices and ease the burden on borrowers by forgiving much of the debt and lowering interest payments, panel members said.
Officials cautioned that they were still working out the details of the proposal. Mr. de Blasio has not indicated whether he would support it. In the past, he has expressed skepticism about a city-funded bailout. His office said this week it would review the panel’s recommendations after they are finalized.
Corey Johnson, the City Council speaker, who appointed most of the panel’s members, said on Wednesday that its emerging plan was an important milestone, an indication that he was open to spending a significant amount of city money to help drivers.
“We know that folks in this industry have suffered tremendously,” Mr. Johnson said. “I’m really excited that after six months of painstaking work and effort, the task force is going to be releasing a variety of recommendations that we think could stabilize the industry, plan for the future and help alleviate the suffering.”
Some panel members said the partnership would aim to raise up to $500 million, while others, including leaders of the City Council, said the numbers were still being finalized and the report would not list any amounts. The city might have to contribute a portion of the total, but most of the money would come from private donors. Investors could receive incentives for contributing to the fund and would earn a return on the loans.
The 19-member panel, which is headed by two powerful members of the Council, is set to release a report with the proposal this month.
Even with the mayor’s backing, organizers would have to raise money and convince lenders to sell loans. One issue is that the National Credit Union Administration, a federal agency that is now the largest holder of taxi medallion loans, is already considering selling off its loans to for-profit debt collectors and others who are unlikely to give borrowers a break.
Bhairavi Desai, founder of the Taxi Workers Alliance, a group of drivers, who is on the panel, expressed confidence in the plan.
“This is the most optimistic I have ever felt about solving this crisis,” said Ms. Desai, adding that several donors have already expressed interest.
“We’re going to win,” she said.
The proposal would be the most far-reaching step taken so far in response to a New York Times investigation that revealed more than a decade of exploitative practices in the industry.
The Times found that a group of industry leaders artificially inflated the price of a medallion to more than $1 million from about $200,000, channeled immigrant drivers into reckless loans to purchase medallions and extracted hundreds of millions of dollars before the bubble burst.
The practices set off a crisis that has been intensified by the arrival of ride-hailing companies such as Uber and Lyft. The new apps have reduced the revenue that yellow cabs receive, but virtually all of the hundreds of industry veterans interviewed by The Times said the bubble would have burst even if ride-hailing had never been invented.
Taxi industry leaders have denied wrongdoing, describing their tactics as normal business practices and noting that regulators approved their methods. They have blamed the industry’s financial crisis exclusively on Uber and Lyft.
Monday, January 13, 2020
Negotiations a Primer
Negotiations a Primer
As many of our clients and colleagues know, at Shenwick &
Associates we do a lot of negotiating and to date we have had many successes.
First, client’s ask what is an “out-of-court” settlement? An
out-of-court settlement is a settlement that is obtained without Court intervention
and without the use of a mediator or an arbitrator. Simply stated, an
out-of-court workout is a negotiation between a party that owes money ( a
debtor) and a party who is owed money ( a creditor). The benefit of an
out-of-court negotiation is that they can be cheaper, quicker and more
effective than litigation, mediation or arbitration.
People often ask what is the secret of our success or the “secret
sauce”?
Provided below is a “blueprint” that we use in
negotiating.
- Preparation,
preparation and more preparation! Many attorneys believe that since they
do not need to draft a motion or file a legal brief, in a negotiation, all
they need to do is pick up the phone and call their adversary and begin
talking. Experience has taught us that nothing could be further from the
truth. Prior to commencing a negotiation, a lawyer should engage in
extensive fact gathering or due diligence, gathering as much information
as they can from various sources about their adversary, counsel for their
adversary and the nature of the conflict.
For example, is the dispute related to a divorce where inflicting
pain is more important than the dollars involved in the case? Does the dispute
involve former partners one or both who may feel that a trust was breached as
well as money being owed?
If you skip the preparation step you are shortchanging your
client and undermining your chance of success in the negotiation. At
Shenwick & Associates we have developed a “negotiation worksheet” which we
complete before we commence any negotiation.
Additionally, during the preparation step an attorney should
formulate their strategy or tactics for the negotiation.
2.
Before we pick up the phone and call our adversary to begin the
negotiation, we also review our client’s assets and liabilities and we engage
in asset protection planning, to the extent possible (consistent with the law).
Very simply we want to make sure that the client’s property and assets are
protected as much as possible from creditor collection actions if the
negotiations fail.
3.
We also advise our client that in every negotiation there are two
adversaries, our opponent and the “clock”. Timing is crucial in many
negotiations and the pace and timing of a negotiation can often affect the
outcome or be the difference between success or failure.
If a client is anxious for a negotiation to be concluded
quickly, oftentimes they will concede points and end up on the losing side of a
negotiation, rather than allowing a professional to determine the pace of the
negotiations. For example, does the negotiation involves a foreclosure (with a
fixed day for the judgment of foreclosure), or is it a garden-variety
debtor-creditor dispute where litigation has not yet been commenced and
there are no deadlines pending?
4.
We then commence the negotiation and negotiate aggressively on our
client's behalf. As an experienced bankruptcy attorney (having filed hundreds
of cases), we will often advise our adversary that if there is no settlement,
our client will consider a bankruptcy filing and we will advise our adversary
on what their likely recovery will be if a bankruptcy case is filed. This
factor alone can often times affect the outcome of a negotiation.
5.
Also remember to consider the tax consequences of a settlement and
specifically section 108 of the Internal Revenue Code. “Relief of
indebtedness” income can be taxable income and that issue must be discussed
with the client and factored into the settlement. James Shenwick, Esq. has an
LLM in Taxation from New York University Law School and is very familiar with
this issue.
Finally, while there is no guarantee of success, our 20 plus years
of negotiating for clients has shown that using the above “blueprint” will often
result in a successful outcome for a client. Client’s or attorneys who have
questions about negotiations or negotiation strategy are welcome to contact Jim
Shenwick at 212-541-6224 or jshenwick@gmail.com
Friday, January 10, 2020
Student Loan Discharge may have just gotten easier based in Judge Morris decision in Southern District of New York
This Man Got $221,000 Of Student Loans Discharged In Bankruptcy
Can you now discharge your student loans in bankruptcy?
Here’s what you need to know.
Student Loans: Bankruptcy
A Navy veteran will have $220,000 of his student loans discharged, even though he is not unemployable, not disabled or wasn’t defrauded. A U.S. bankruptcy judge in New York, Cecilia G. Morris, ruled that Kevin J. Rosenberg will not have to repay his student loan debt because it will impose an undue financial hardship.
According the Wall Street Journal, Rosenberg borrowed $116,500 of student loans between 1993 and 2004 to earn a bachelor’s degree from the University of Arizona and a law degree from Cardozo Law School at Yeshiva University. He filed for Chapter 7 bankruptcy in 2018 and asked the court last June to discharge his student loan debt, which had grown to $221,400, including interest. At the time of filing, Rosenberg’s annual salary was $37,600, and after living and debt expenses, his monthly net loss was $1,500.
Traditionally, unlike mortgages or credit card debt, student loans cannot be discharged in bankruptcy. There are exceptions, however, namely if certain conditions regarding financial hardship are met.
Today In: Money
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; and
- the 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. To discharge student loans 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.
So, Can You Now Discharge Student Loans In Bankruptcy?
This is only one legal ruling. That said, federal judges and Democrat and Republican members of Congress are open to changing the law to make it easier for borrowers to discharge their student loans in bankruptcy. 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).
Wednesday, January 08, 2020
Saturday, January 04, 2020
Shenwick & Associates website
Visit our new website at: https://sites.google.com/site/jshenwick/home
Thursday, January 02, 2020
Retirees owe $30,000 or more in student loans
Why student loan debt is ballooning for those 50 and up
From: USAToday.com
By: Susan Tompor Detroit Free Press
https://www.usatoday.com/story/money/2019/12/29/retirees-student-loans-debt/2769065001/
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