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Student Loan Debt “Relief” Companies Sued for Fraud and Violation of Federal Laws
CFPB FILED LAWSUIT AGAINST CHOU TEAM REALTY, LLC, MONSTER LOANS, DOCUPREP CENTER, DOCS DONE RIGHT, AND SEVERAL MORE ENTITIES. ALSO, BILAI ABDELFATTAH, BILL ABDEL, THOMAS CHOU, SEAN COWELL, ROBERT HOOSE, EDUARDO MARTINEZ, JAWAD NESHEIWAT, FRANK ANTHONY SEBREROS and DAVID SKLAR
As described in the complaint, the Bureau alleges that between 2015 and 2017, Monster Loans violated the Fair Credit Reporting Act (FCRA) by obtaining consumer-report information for millions of consumers with student loan debt from a major credit bureau on the pretense that the company planned to use the information to offer mortgage loans to consumers when, in fact, Monster Loans provided the reports to the student loan debt-relief companies to use in marketing their services. The Bureau also alleges that, between 2017 and at least early 2019, Lend Tech Loans similarly violated the FCRA by obtaining consumer report information for millions of consumers for use in marketing student loan debt-relief services.
The Bureau further alleges that, while offering and providing student loan debt-relief services, certain defendants violated the Consumer Financial Protection Act of 2010 (CFPA) and the Telemarketing Sales Rule (TSR) by making deceptive representations about the companies’ services. Specifically, the Bureau alleges that certain defendants misrepresented to consumers that they would have their interest rates reduced, have their credit scores improved, and that the U.S. Department of Education would become their servicer. The Bureau also alleges that certain defendants unlawfully charged and collected at least $15 million in fees before consumers received any adjustment to their student loans and made any payments toward their adjusted loans.
The Bureau filed its complaint in the U.S. District Court for the Central District of California on Jan. 9, 2020. The Bureau’s complaint seeks an injunction against the defendants, as well as damages, redress to consumers, disgorgement of ill-gotten gains, and the imposition of civil money penalties. The complaint also names several defendants in order to obtain relief and seeks disgorgement of those relief defendants’ ill-gotten gains.
Student Loan Debt “Relief” Companies Cannot Charge Upfront Fees
CHARGING ADVANCED FEES FOR DEBT-RELIEF SERVICES IS IN VIOLATION OF THE FEDERAL LAW
Under the TSR (“Telemarkarting Act, 15 U.S.C. Sections 6101-6108), it is an abusive act or practice for a seller or telemarketer to request or receive payment of any fee or consideration for any debt-relief services unless and until (A) the seller or telemarketer has renegotiated, settled, reduced, or otherwise altered the terms of at least one debt pursuant to a settlement agreement, debt-management plan, or other such valid contractual agreement executed by the customer; and (B) the customer has made at least one payment pursuant to that settlement agreement, debt management plan, or other valid contractual agreement between the customer and the creditor or debt collector. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).
In the course of providing, offering to provide, or arranging for others to provide debt-relief services, the Student Loan Debt Relief Companies, Docs Done Right, Nesheiwat, Sklar, Hoose, Sebreros, and Martinez charged and received fees before consumers’ applications for loan consolidations, loan repayment plans, and loan-forgiveness plans were approved, and before consumers had made the first payments under the altered terms of their student loans, in violation of the TSR. 16 C.F.R. § 310.4(a)(5)(i)(A)-(B).
MUSINGS FROM DIANE:
student loan repair scam
Anyone can be scammed – you, me, governments and the smartest person you ever known. Cons have no sympathy and consider stealing to be “their right”. In their world, no one can be trusted, not even a fellow thief. What a world they live in!! No, I am not trying to excuse their outrageous behavior. I am merely saying that they live without knowing the peace and love we have. What the thieves don’t understand or even care about, is the people they con have to live with those mistakes. They lose their home, their family, their sanity. Many end up on the street, staving and sick, fearing to ask anyone for help because they may be scammed again.
What can we do? If you see something, say something. Encourage everyone to question offers from others – even friends.
How Can I Help You?
The post Beware Student Loan Debt Relief Scams appeared first on Diane L. Drain - Phoenix Arizona Bankruptcy & Foreclosure Attorney.
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.
IRS and Treasury issue guidance for students with discharged student loans and their creditors
IRS Ruling for certain discharged debts
IR-2020-11, January 15, 2020
WASHINGTON — The Internal Revenue Service and Department of the Treasury issued Revenue Procedure 2020-11 (PDF) that establishes a safe harbor extending relief to additional taxpayers who took out federal or private student loans to finance attendance at a nonprofit or for-profit school.
Relief is also extended to any creditor that would otherwise be required to file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure.
The Treasury Department and the IRS have determined that it is appropriate to extend the relief provided in Rev. Proc. 2015-57, Rev. Proc. 2017-24 and Rev. Proc. 2018-39 to taxpayers who took out federal and private student loans to finance attendance at nonprofit or other for-profit schools not owned by Corinthian College, Inc. or American Career Institutes, Inc.
Closed School, Defense to Repayment or Settlement
The Revenue Procedure provides relief when the federal loans are discharged by the Department of Education under the Closed School or Defense to Repayment discharge process, or where the private loans are discharged based on settlements of certain types of legal causes of action against nonprofit or other for-profit schools and certain private lenders.
Taxpayers within the scope of this revenue procedure will not recognize gross income as a result of the discharge, and the taxpayer should not report the amount of the discharged loan in gross income on his or her federal income tax return.
Additionally, the IRS will not assert that a creditor must file information returns and furnish payee statements for the discharge of any indebtedness within the scope of this revenue procedure. To avoid confusion, the IRS strongly recommends that these creditors not furnish students nor the IRS with a Form 1099-C.
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How Chapter 7 Real Estate Sales Benefit Insiders Randa filed Chapter 13 bankruptcy in March 2019. She was hoping to be able to save the family home, by catching up the mortgage over five years. Her husband was recovering from a long illness and was able to work full time again, making the catch up […]
The post How Chapter 7 Real Estate Sales Benefit Insiders by Robert Weed appeared first on Robert Weed - AE.
How Chapter 7 Real Estate Sales Benefit Insiders Randa filed Chapter 13 bankruptcy in March 2019. She was hoping to be able to save the family home, by catching up the mortgage over five years. Her husband was recovering from a long illness and was able to work full time again, making the catch up […]
The post How Chapter 7 Real Estate Sales Benefit Insiders by Robert Weed appeared first on Robert Weed - .
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 [email protected]
Wynn at Law, LLC, assures clients that a bankruptcy filing isn’t an ending, it’s a beginning and the beginning, while sometimes a little rocky, starts right after a judge discharges your bankruptcy.
A Chapter 7 bankruptcy filing stays on a FICO record (aka ‘credit score’) for 10 years from the date you file your bankruptcy. It’s seven years from the date of filing for a completed Chapter 13. Either may sound like a very long time. But first and foremost, it beats the bind that led to the filing. The creditor calls (see related article on the Automatic Stay) are a thing of the past. The stack of bills next to your checkbook might be considerably shorter and probably better matches your paycheck.
Credit scores react first
A bankruptcy filing is serious business and should be given serious thought prior to filing. That being said, it does have some potential bright spots as a new beginning.
Hidden among the bad news that your credit score likely will go down upon filing bankruptcy is the fact that your score probably was in bad shape before the filing anyway. And heading for worse. Another silver lining is that many of your debts are gone; therefore, the bankruptcy will make your debt to income ratio much better. In both Chapter 7 and Chapter 13, delinquent accounts before filing remain on your credit report. In Chapter 7 cases, they will stay on the report for seven years. Chapter 13 debts are often paid off according to the bankruptcy payment schedule in three to five years. Since these debts are repaid all or in part, the records will be removed from your credit report sooner than Chapter 7 debts, which aren’t repaid at all.
You can get credit again
It isn’t going to happen overnight, but you will have an opportunity to rebuild credit. More, shall we say ‘aggressive,’ lenders swoop in first with high interest credit card and auto loan offerings right after filing. Resist the temptation, if possible. As you rebuild a steady track record of paying on-time things like mortgage payments, car payments, and student loan payments, better chances to rebuild credit will come. Usually a secured credit card opportunity is going to come your way first.
Once you establish a good payment record and are living within your means, lenders will see you as a decent risk. Why? They know you can’t file another Chapter 7 bankruptcy again for eight years after your previous Chapter 7 filing.
You know your pitfalls
The best outcome in a bankruptcy filing is that you’ve learned from and implemented corrections to previous money errors or have been able to put a horrible life event behind you like a medical emergency or car repossession. You’ll know the consequences of paying late, for example. You also learn to budget. And stick to it.
Image by Andrew Lozovyi, used with permission
The post What happens in life after bankruptcy? appeared first on Wynn at Law, LLC.
Wynn at Law, LLC, assures clients that a bankruptcy filing isn’t an ending, it’s a beginning and the beginning, while sometimes a little rocky, starts right after a judge discharges your bankruptcy.
A Chapter 7 bankruptcy filing stays on a FICO record (aka ‘credit score’) for 10 years from the date you file your bankruptcy. It’s seven years from the date of filing for a completed Chapter 13. Either may sound like a very long time. But first and foremost, it beats the bind that led to the filing. The creditor calls (see related article on the Automatic Stay) are a thing of the past. The stack of bills next to your checkbook might be considerably shorter and probably better matches your paycheck.
Credit scores react first
A bankruptcy filing is serious business and should be given serious thought prior to filing. That being said, it does have some potential bright spots as a new beginning.
Hidden among the bad news that your credit score likely will go down upon filing bankruptcy is the fact that your score probably was in bad shape before the filing anyway. And heading for worse. Another silver lining is that many of your debts are gone; therefore, the bankruptcy will make your debt to income ratio much better. In both Chapter 7 and Chapter 13, delinquent accounts before filing remain on your credit report. In Chapter 7 cases, they will stay on the report for seven years. Chapter 13 debts are often paid off according to the bankruptcy payment schedule in three to five years. Since these debts are repaid all or in part, the records will be removed from your credit report sooner than Chapter 7 debts, which aren’t repaid at all.
You can get credit again
It isn’t going to happen overnight, but you will have an opportunity to rebuild credit. More, shall we say ‘aggressive,’ lenders swoop in first with high interest credit card and auto loan offerings right after filing. Resist the temptation, if possible. As you rebuild a steady track record of paying on-time things like mortgage payments, car payments, and student loan payments, better chances to rebuild credit will come. Usually a secured credit card opportunity is going to come your way first.
Once you establish a good payment record and are living within your means, lenders will see you as a decent risk. Why? They know you can’t file another Chapter 7 bankruptcy again for eight years after your previous Chapter 7 filing.
You know your pitfalls
The best outcome in a bankruptcy filing is that you’ve learned from and implemented corrections to previous money errors or have been able to put a horrible life event behind you like a medical emergency or car repossession. You’ll know the consequences of paying late, for example. You also learn to budget. And stick to it.
Image by Andrew Lozovyi, used with permission
The post What happens in life after bankruptcy? appeared first on Wynn at Law, LLC.
Wynn at Law, LLC, assures clients that a bankruptcy filing isn’t an ending, it’s a beginning and the beginning, while sometimes a little rocky, starts right after a judge discharges your bankruptcy.
A Chapter 7 bankruptcy filing stays on a FICO record (aka ‘credit score’) for 10 years from the date you file your bankruptcy. It’s seven years from the date of filing for a completed Chapter 13. Either may sound like a very long time. But first and foremost, it beats the bind that led to the filing. The creditor calls (see related article on the Automatic Stay) are a thing of the past. The stack of bills next to your checkbook might be considerably shorter and probably better matches your paycheck.
Credit scores react first
A bankruptcy filing is serious business and should be given serious thought prior to filing. That being said, it does have some potential bright spots as a new beginning.
Hidden among the bad news that your credit score likely will go down upon filing bankruptcy is the fact that your score probably was in bad shape before the filing anyway. And heading for worse. Another silver lining is that many of your debts are gone; therefore, the bankruptcy will make your debt to income ratio much better. In both Chapter 7 and Chapter 13, delinquent accounts before filing remain on your credit report. In Chapter 7 cases, they will stay on the report for seven years. Chapter 13 debts are often paid off according to the bankruptcy payment schedule in three to five years. Since these debts are repaid all or in part, the records will be removed from your credit report sooner than Chapter 7 debts, which aren’t repaid at all.
You can get credit again
It isn’t going to happen overnight, but you will have an opportunity to rebuild credit. More, shall we say ‘aggressive,’ lenders swoop in first with high interest credit card and auto loan offerings right after filing. Resist the temptation, if possible. As you rebuild a steady track record of paying on-time things like mortgage payments, car payments, and student loan payments, better chances to rebuild credit will come. Usually a secured credit card opportunity is going to come your way first.
Once you establish a good payment record and are living within your means, lenders will see you as a decent risk. Why? They know you can’t file another Chapter 7 bankruptcy again for eight years after your previous Chapter 7 filing.
You know your pitfalls
The best outcome in a bankruptcy filing is that you’ve learned from and implemented corrections to previous money errors or have been able to put a horrible life event behind you like a medical emergency or car repossession. You’ll know the consequences of paying late, for example. You also learn to budget. And stick to it.
Image by Andrew Lozovyi, used with permission
The post What happens in life after bankruptcy? appeared first on Wynn at Law, LLC.
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.