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.”

New York Attorney General Accuses N.Y.C. of Fraud Over Taxi Crisis from New York Times

The state’s attorney general is seeking $810 million from the city to compensate financially struggling taxi medallion owners. New York State’s attorney general on Thursday accused New York City of committing fraud by artificially inflating the value of yellow taxi medallions, and she demanded $810 million from the city to compensate the thousands of cabdrivers who are now saddled with enormous debt.
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.

Cabbies worry as hedge fund snaps up taxi medallions

From: nypost.com 

By: Thornton McEnery

https://nypost.com/2020/02/20/cabbies-worry-as-hedge-fund-snaps-up-taxi-medallions/

'It’s ruined my life': Academy of Art ex-student owes $431,000 and has no job

From: sfchronicle.com
By: Nanette Asimov

https://www.sfchronicle.com/bayarea/article/Ex-students-blame-for-profit-Academy-of-Art-15061438.php

Wiping out the nation’s student-loan debt could have unintended financial consequences for borrowers

By: Andrew Keshner
From: Marketwatch

https://www.marketwatch.com/story/wiping-out-the-nations-student-loan-debt-could-have-unintended-financial-consequences-for-borrowers-2020-02-12

Student loan borrowers announce a strike, refusing to pay their debts

By: Annie Nova
From: cnbc.com

https://www.cnbc.com/2020/02/12/student-loan-borrowers-announce-a-strike-refusing-to-pay-their-debts.htm

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.

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

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/

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 

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 

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.

Copyright 2020 NPR. To see more, visit https://www.npr.org.

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.

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

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.

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. 

1. 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

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

Zack FriedmanSenior Contributor 

Personal Finance

Author, The Lemonade Life. I write about leadership and greatness.

• 
  

Getty

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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.

PROMOTED

In plain English, the Brunner standard says:

1. the borrower has extenuating circumstances creating a hardship;
2. those circumstances are likely to continue for a term of the loan; and
3. 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).

Bankruptcy would be easier option for consumers under Warren's plan

From: cnbc.com
By: Sarah O'Brien
 https://www.cnbc.com/2020/01/07/bankruptcy-would-be-easier-option-for-consumers-under-warren-plan.html

Shenwick & Associates website

Visit our new website at: https://sites.google.com/site/jshenwick/home

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/

Abating (remove or eliminate) IRS Tax Penalties

Many clients have contacted us regarding the discharge of taxes in bankruptcy,
offers in compromise and installment agreements with IRS and recently  penalties
assessed by IRS.

The IRS offers 3 types of penalty relief:

1. Reasonable Cause-this appears to be our best chance  to abate penalties
2. Administrative Waiver and First Time Penalty Abatement
3. Statutory Exception for example a taxpayer  got bad advice from IRS


Reasonable cause is relief we may grant when a taxpayer exercises ordinary business care and prudence in determining
their tax obligations but is unable to comply with those obligations due to circumstances beyond their control.

Reasonable Cause is based on all the facts and circumstances in your situation. 
The IRS will consider any reason which establishes that you used all ordinary business care and prudence to meet your
Federal tax obligations but were nevertheless unable to do so.

Typical fact patterns involving reasonable cause for failure to file a tax return, make a deposit, or pay tax when due include:

1. Fire, casualty, natural disaster or other disturbances
2. Inability to obtain records
3. Death, serious illness, incapacitation or unavoidable absence of the taxpayer or a member of the taxpayer’s immediate family

Jim Shenwick, Esq. has an LLM in Taxation from New York University Law School

The Epic Rise and Hard Fall of New York's Taxi King from the New York Time

The Epic Rise and Hard Fall of New
York's Taxi King
By Brian M. Rosenthal
.
Dec. 5, 2019

Evgeny A. Freidman in his garage in Long Island City, Queens. Sasha Maslov
The man known as the Taxi King arrived at his 2014 holiday party in a $384,000 Ferrari, wearing a custom Italian suit. He told the guests
whom he had invited to an upscale Manhattan club - including executives, politicians and celebrities - that he had flown in from SaintJean-
Cap-Ferrat, a town in the French Riviera where he owned two villas.
Five years later, that man, Evgeny A. Freidman, stood in a mostly empty courtroom in Albany, N.Y., as a judge sentenced him to probation
for tax fraud. In a hushed voice, he said he had lost everything.
"I'm trying to be remorseful and understanding for anybody I might have harmed;' he told the judge at the hearing in October. "I'm very
humbled by what has happened."
For more than a decade, New York taxi industry leaders got rich by creating a bubble in the market for the city permits, known as
medallions, that allow people to own and operate cabs.
In several articles this year, an mvest1gat10n by I he New York limes found that government officials stood by as mdustry leaders
artmciio~tiji\laAe~~$Uiffia§atr!d5:hanneled immigrant drivers into loans they could not afford to purchase the permits. The lea(iers
reaped hundreds of millions of dollars before the bubble burst, wiping out thousands of buyers who are still mired in debt today.

And no one embodies the glittery rise, unfettered recklessness and spectacular collapse of the industry more than Mr. Freidman.

A Russian immigrant and a cabdriver's son who got his nickname by building the city's biggest fleet, Mr. Freidman was a primary
architect of some of the tactics used to build the bubble, according to records and interviews. At the height of the market, he had
accumulated $525 million in assets. He befriended the filmmaker Spike Lee, the baseball star Mo Vaughn and Mayor Bill de Blasio. His
outsize antics and lavish spending often landed him on Page Six, the New York Post's gossip column.
As a generation of cabdrivers became trapped in overwhelming debt, Mr. Freidman created offshore trusts that protected some of his
money when the bubble burst, records show. While his business partners lost millions because of his tax fraud, Mr. Freidman avoided
prison by cooperating with a federal investigation into one of his partners, Michael D. Cohen, President Trump's former lawyer.
"He hurt so many people in so many different ways;' said David Pollack, the former head of the Committee for Taxi Safety, an association
of fleet owners that once included Mr. Freidman. "Your headline could be: 'The man who brought down the taxi industry.'"
Mr. Freidman did not respond to repeated requests for comment. Government officials declined to answers questions on why they did not
intervene sooner.
This account is based on interviews with more than 20 of Mr. Freidman's former associates and a review of thousands of pages of court
records and other documents.
Mr. Freidman is now cooperating with prosecutors who started investigating the taxi industry after The Times published its series this
year on the exploitative tactics that drove medallion prices to soar past $1 million by 2014 from $200,000 in 2002. He has met with them
three times so far.
'I'm in , you 'r e out'
Mr. Freidman, 49, who is known as Gene, likes to portray himself as a scrappy fighter who rose from first-generation immigrant to
multimillionaire solely through his wits and fists.
But like everything involving Mr. Freidman, the reality is more complicated.
He was born in St. Petersburg, Russia, in 1970, an only child. Six years later, his family emigrated to New York, he has said in interviews.
His father, who Mr. Freidman said had been a thermonuclear engineer, got a job as a cabdriver but soon began buying medallions and
building a fleet, records show.
Mr. Freidman attended the Bronx High School of Science, Skidmore College and Cardozo Law School. Afterward, he has said, he moved to
Russia to work in private investing.
Mr. Freidman has said in speeches that he returned to the United States in 1996 at the request of his father, who had become a successful
and respected fleet owner. During the flight home, he crafted a plan to use what he learned in Russia to revolutionize the taxi industry.
His idea was straightforward: He wanted the industry to take more risks to increase profits.
Specifically, Mr. Freidman has said he wanted lenders to allow medallion purchasers to borrow more money, with smaller down payments
and longer repayment periods. Former associates said he believed this strategy would allow him and others to buy more medallions,
enable lenders to increase profits and, mostly, drive up medallion values. He believed that would spur more purchases, more loans, more
profits and even higher medallion values.
"I walked in and took over;' he later recalled. "I told my dad, 'I'm in, you're out.'"
Prominent - and polarizing
Mr. Freidman was 26. He was cocky, but he needed help. He turned to the small nonprofit that had lent to his father, Progressive Credit
Union, and its chief executive, who had become a family friend, Robert Familant.
Between 1997 and 2004, Progressive's loans enabled Mr. Freidman to buy about 100 medallions to expand his fleet, according to city
records and former associates.
At the same time, Mr. Freidman became a licensed broker and helped some drivers purchase medallions, mostly using loans from

Other industry leaders used similar tactics. But few were as aggressive as Mr. Freidman.
More Mr Freidman's success emboldened others, and helped encourage lenders to push low-income
drivers to take on massive loans to buy medallions.

"He changed the market:' said Ira Goldstein, a former chief of staff at the city commission that oversees the industry. "People copied him,
and it affected everybody, including the driver-owners."
Mr. Familant did not respond to requests for comment.
As Mr. Freidman expanded his fleet, he became increasingly prominent - and polarizing.
To his allies, Mr. Freidman was charming and passionate, with a perspective that improved a long-stagnant industry. He put his fleet in
several neighborhoods, making it more accessible for his drivers. He worked long hours. He embraced energy efficiency, becoming the
first to use hybrid cabs.
Others saw him as vindictive and vulgar. Lawsuits have accused him of cheating his drivers, clients and partners. Last year, he was
ordered to pay $1.3 million to an assistant who sued him for sexual harassment. On his desk, he kept a snow globe sprouting a middle
finger.
The highest bidder
Mr. Freidman unleashed his most radical idea on June 16, 2006, at an auction where the city sold new medallions.
At the time, a medallion cost $350,000 on the private market, according to a Times analysis. But at the auction, Mr. Freidman and his
associates bid $477,666.50 apiece.
They won all 54 medallions sold.
The results reshaped the small medallion market. In effect, Mr. Freidman single-handedly had increased the value of all medallions,
including ones he had owned for years - and also increased prices for everyone, making it harder for drivers to buy without enormous
loans.
Years later, Mr. Freidman admitted he had intentionally overpaid to inflate the values of medallions he owned. He said in a 2012 speech
that he used the values to persuade lenders to loan him more money.
"I would bid crazy prices. People would look at me like I'm crazy, and I wouldn't care:' he said, "because I would look at the prices and say,
'This is market value."'
Mr. Freidman repeated the strategy at three other auctions, records show. In all, he bought more medallions at auctions than anyone else
in city history.
Riches and power
The medallion bubble turned Mr. Freidman into a remarkably rich man.
His fleet had about 900 of the city's 13,587 medallions. Most were owned by others who charged him a fee for the right to operate their cabs
and keep the profits. He personally owned about 250 permits, and at the height of the market, each was worth $1.3 million, although they
were mortgaged, records show.
Mr. Freidman knew the prices would not last, according to five former associates. So he used the medallions as collateral to borrow money
that he invested elsewhere.
He bought 20 commercial properties, records show. He opened locations of a French whimsical pajama store in New York, Arizona,
California, Georgia and Washington state. He acquired medallions in Chicago and Philadelphia, helping to spike prices in those cities.
He bought a 4,000-square-foot townhouse on Manhattan's Upper East Side, an estate in the Hamptons and a condo in Chicago, in addition
to the French villas.
He also invested in politics. He donated to former Representative Anthony Weiner's 2013 mayoral campaign and to Mr. de Blasio. Later, he
bragged to associates that Mr. de Blasio placed one of his friends at the taxi commission.
Mayoral spokeswoman Freddi Goldstein rejected that notion. "Any suggestion that we hired anyone at his request is a blatant lie;• She said that "The mayor ceased contact with Gene Freidman as soon as he realized he was a bad guy."

Mr. Freidman also began managing Mr. Cohen's medallions. They became friends; during Mr. Freidman's divorce.

Several of Mr. Freidman's former associates said as he became wealthier, he stopped paying his debts.

During the bubble, when Mr. Freidman was worth millions, he was sued or otherwise accused of failing to fully pay his drivers, employees,
clients, partners, lawyers, contractors, landlords, lenders, an accountant and a car dealer as well as child support payments, association
dues, insurance premiums and taxes.
Between 2013 and 2016, the state ordered him to pay nearly $1.5 million for cheating drivers. But he has failed to fulfill that order, too,
records show.
The aftermath
Now that the bubble has burst, Mr. Freidman is awash in lawsuits and eviction notices.
A judge ruled in 2016 that he transferred more than $60 million into trusts in Belize, Nevis and the Cook Islands in order to avoid paying
creditors. Mr. Freidman had defended the transfers as part of estate planning. "It is impossible to conclude that the timing of the transfers
is merely coincidence;' the judge wrote in ordering the trusts to pay the creditors.
The tax fraud case, filed in 2017, involved two surcharges collected by cabs that Mr. Freidman owned and ones he managed for others: a
50-cent fee for regional transit improvements, and a 30-cent fee for more wheelchair-accessible taxis.
Officials initially accused Mr. Freidman of pocketing more than $30 million.
But after agreeing to cooperate against Mr. Cohen, he ultimately repaid $1 million to the state and $826,000 to the city. In addition to five
years of probation, he had to exit the industry and authorize officials to seek $4 million more in the future. (Mr. Cohen is now serving a
three-year sentence for campaign finance violations and other crimes.)
"He no longer has any involvement whatsoever in taxi operations in New York City. He's done;• said Allan J. Fromberg, a spokesman for
the city Taxi and Limousine Commission.
The city and the state have also demanded millions from the owners who entrusted medallions to Mr. Freidman's fleet, even though they
did not know about the scheme or benefit from it. The taxi commission did not respond to questions about the collections. The state
attorney general's office, which prosecuted the tax fraud case, declined to comment, citing its ongoing investigation into the industry.
"It's unbelievable;' said one owner, Robert Rosen, 72.
Mr. Rosen, who said he committed his medallion to Mr. Freidman because he knew his father, lost $30,000. "The things the government
has let this crook get away with. It's shocking!'
Susan Beachy contributed research.