Taxi Medallion owners have been wrestling for solutions to refinancing demands of the lender. Chapter 7 bankruptcy requires that you be willing to surrender your medallion. Under the right facts, you will not have to repay the loan and can get your life back.
I have helped many taxi medallion owners get rid of the pressure of these loan payments which are higher than they can afford to pay, even if they lease out the second shift. Please review the checklist below to help me figure out if a chapter 7 bankruptcy would be a good option for you.
Are you eligible?
Prior Bankruptcy: You cannot file chapter 7 if you previously filed another case within the last 8 years.
Too Much Household Income: In general, we have to count the income of both husband and wife. If you make too much together, you may not be eligible to file bankruptcy, even if you file bankruptcy without your spouse. This depends upon the number of people in your household. If you live alone, the ceiling is about $51,000 per year in NY; $66,000 for a household of 2; $75,000 for a household of 3; $92,000 for a household of 4; $100,000 for a household of 5.
But for medallion owners whose taxi loans are larger than their mortgages, we can avoid this problem.
Before I file a bankruptcy case, I look for hidden risks that the client probably does not even realize exist. Here is a list of problems that make chapter 7 a bad idea. If none of them apply to you, then you should consider scheduling a free interview.
- Too much equity in your house. I can protect only $165,500 of equity in your residence (value above mortgage) for each person on the deed.
- Recent deed transfer. Many people think that they are safe if they took their name off the deed to a home or other property. Actually, a bankruptcy trustee can reverse a deed transfer within the last 6 years. This would also include adding your wife’s name to your house.
- Investment property. If you own another home or investment property, even if it is in the name of a corporation or an LLC, your share of that property can be taken by a bankruptcy trustee to pay your creditors.
- Can’t account for cash from refinance. If you received money from a loan or a refinance within the last 6 years, you will have to explain what you did with it. If you gave it to another person or used it to buy property, that would be a problem. If it was used to pay for your children’s education, your regular living expenses, to buy a new taxi, to pay your mortgage (up to $165,500 in equity), for medical expenses, or to buy another medallion,that would not be a problem. You will have to prove (usually with bank statements or other documents) what you did with the money.
- Made large withdrawals or closed bank or brokerage accounts within 6 years.
The perfect chapter 7 client would be someone who :
- bought his medallion in 2013 or 2014, at a high price, and has never refinanced
- took his name off a deed (or added a spouse to a deed) more than 6 years ago.
- has no bank accounts or brokerage accounts worth more than $1,000, and has less than $165,500 of value in their home (per owner) in excess of mortgages
I have been helping individuals and business owners deal with financial problems for 40 years. These problems are usually caused by circumstances beyond their control; they are the victims of these outside events. I would be happy to help you develop a strategy to manage your problems: so you can spend some time with your family; pay your bills and have a life again. Call for your free bankruptcy evaluation.
In some circumstances, a chapter 13 repayment plan can help, where you are not eligible for chapter 7, or if chapter 7 has too much risk. Basically, that you require you to make monthly payments for 5 years. The amount you have to pay over that time must be at least the amount of your equity in the property that is not exempt. For example, assume you are the sole owner of your house and it is worth $500,000. You have a $200,000 mortgage, leaving 300,000 in equity. I can exempt $165,000. That leaves $135,000 in non-exempt equity. Including the commission due to the Chapter 13 Bankruptcy Trustee, your monthly payment must be at least $2,500.