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Most people don’t know that lazy lawyers will not push an insurance company to pay top dollars.
The insurance company’s first offer is based on the hope you will take the quick money and run. Lawyers who don’t care about their clients’ best interests can make a lot more money settling cheap and moving on to the next case, and the next, and so forth. In order to get pain and suffering the attorney must provide the insurance company or their lawyers details concerning the pain or difficulties their client experienced because of his/her injuries. If this is done properly the insurance company will get the message that the attorney cares about the client. In all situations the attorney must be willing to commit the time needed to set up a proper settlement for their client.
The attorney could make more money settling their cases quickly so they can move on to another client.
An attorney who details why this case supports a higher claim makes it easier for the adjuster or insurance company’s attorney to get authority to settle for more than the amount they will offer a lawyer who is only looking to get a quick settlement. One way they know this attorney is lazy is the initial demand. If the attorney just makes a “standard” demand with no details, then the insurance company knows this is a lazy attorney who will be willing to settle for far less than the case is worth.
Reputation of the attorney is key to a good settlement.
The insurance company and their lawyers know the reputations of many lawyers in the area, or they know the reputation of the firm the lawyer works with. This knowledge will affect the insurance company’s willingness to settle and the amount they will offer.
What about pain and suffering?
The client must have a situation that supports a higher settlement, including pain and suffering. They can only recover substantial pain and suffering damages if the injuries actually caused significant pain, suffering or loss of enjoyment of life. If the client is not able to honestly persuade their own attorney that the accident, injury, treatment and recovery was painful and difficult, the client will not be able to persuade a jury either. It is important that the attorney spend enough time educating the client so that both will understand the view a third party (like a jury or arbitrator) will have about the injury. It is very important that the client be credible and honest or a jury or arbitrator won’t care.
Attorney’s reputation is very important in maximizing the size of the award.
The case value should be based on what a jury or arbitrator is likely to award, not what the insurance company offers. If the insurance company doubts the attorney will take the case to trial, it will steeply discount the value. The insurance company does not want to try cases if there is a significant chance the jury will award more than Plaintiff was willing to accept prior to trial.
If the insurance company believes the attorney will not take a case to court will not offer as much as they would offer if they know the attorney can and will go to trial.
Never assume the attorney is telling you the truth. They may advertise a high “success” rate, but do not tell their clients that this is because they settle every case and rarely, if ever, take a case to trial. The attorney may say that the insurance company is afraid of them because they are “such good litigators”. Ask the attorney for proof of their statements. Look at the court records in the county or state where the attorney practices. How many times does that attorney appear in court? How many cases go through the entire trial? Ask the attorney for references and look at the on-line reviews. Is their office or clothing organized or a pigsty? Their physical appearance tells you a lot about their professionalism.
Do your homework before hiring any professional – doctor, lawyer, plumber or mechanic. Trust your gut.
The post Is Your Attorney Lazy or Willing To Fight For You? appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Saundra Latham writes a good review of the best credit counseling agencies of 2018 in The Simple Dollar website. She correctly points out that the best credit counseling firms to handle a Debt Management Plan are:
Generally speaking, if you are signing up for a Debt Management Plan to consolidate your debts into a payment plan managed by a certified credit counselor that provides lower interest rates and financial counseling, you want to go with an agency certified by the National Foundation for Credit Counseling (NFCC). The NFCC has the toughest certification standards in the credit counseling industry and it is simply unwise to go with an agency not certified by them.
What is lacking in Latham’s review, however, is any statement of whether these plans actually work. Does credit counseling actually work? Do creditors really accept these plans and what is the success rate?
The one big benefit of credit counseling.
There is basically one major benefit of credit counseling programs–they get credit card companies to reduce the interest rate. That’s the big trick. If you can pay back debt at 5% to 10% versus 20% to 30% on credit cards, you pay back the debt faster and with fewer dollars. Yes, credit counseling agencies go through a dog and pony show of reviewing your monthly budget and making suggestions like using coupons to shop, etc, but that is all for show. To be honest, there isn’t a whole lot of real counseling in credit counseling agencies. The name of the credit counseling game is to enroll new customers into a payment plan. That’s how they make their money. The counseling is generally lame, but the interest rate reductions are real and powerful.
But do these plans work? Generally no. Most credit counseling programs fail. The success rate is about 25% to 40%. Cambridge Credit Counseling, Green Path and Incharge Debt Solutions are recommend because their success rates tend to be higher, around 40%. But that still means that 60% to 75% of the plans fail. Would you agree to a surgery if the doctor told you that the survival rate was only 25%?
Credit counseling is a partial solution–it only handles some of the debt. A partial solution is really no solution at all.
Why do credit counseling plans fail?
Credit counseling plans fail for a lot of reasons. First, most folks cannot afford the payment even though the interest rates are lower. Second, there is no flexibility to the payment. If you miss a single payment the entire program crashes and you must start over. Third, many creditors and most collection agencies refuse to participate in the plan. That means that some of your debts are paid in the plan but others continue to sue and garnish wages thus causing the plans to fail. Credit counseling is a partial solution–it only handles some of the debt. A partial solution is really no solution at all. So, credit counseling generally works well for folks who mainly have credit card debt and where their basic problem is overspending and lack of budgeting, but credit counseling does not work well for folks whose general problem is that they lack sufficient income and their debts tend to be more collection agency debts instead of mainline credit card debt. Credit counseling programs just are not equipped to handle garnishments, junk debt buyer lawsuits and local collection agencies.
Credit counselors need to acknowledge that their signature offering — the debt management plan — doesn’t work for everyone.” Liz Weston
Even financial guru Liz Weston has written that there is a lack of real counseling going in in the credit counseling industry. (See Do Debt Management Plans Work?) According to Weston, too many folks are enrolled in debt management plans without even suggesting that bankruptcy might be a better option. Those credit counselors are suppose to be providing professional counseling advice, but Weston rightfully criticizes the industry as emphasizing profits over people.
The bankruptcy option.
The Bankruptcy Reform Act of 2005 required that every person filing bankruptcy take a credit counseling course before their case could be filed. The idea was that a lot of people would chose not to file bankruptcy if they could just speak with a credit counselor about payment options first. That idea proved to be wrong, terribly wrong. I have not met a single person who decided not to file bankruptcy after taking the required credit counseling course–not one single person in the thousands of people I have represented since 2005.
But what if those folks deciding to enter credit counseling had to visit with a bankruptcy attorney first? I wonder how many would chose to file bankruptcy instead? What if a people really had ALL their options explained, not just some of them? I would guess that upwards to 40% to 50% of those entering debt management programs (and probably 80% of those entering debt settlement programs) would opt to file bankruptcy if they had the opportunity to compare the programs side by side.
What consumers lack is access to independent debt counseling professionals whose income is not dependent on the type of debt solution they recommend.
People in financial turmoil are lost. It has become impossible for consumers to figure out who is genuinely an an honest credit counselor from those who are wolves in sheep clothing pretending to be nonprofit counselors. Even the real credit counselors are trying to fatten their revenues by enrolling customers into payment plans when it is perfectly obvious that they would be much better off in the long run by declaring bankruptcy. What consumers lack is access to independent debt counseling professionals whose income is not dependent on the type of debt solution they recommend. And going forward, that is the type of consumer law firm we are trying to become. More on that later.
Image courtesy of Flickr and GotCredit.
Why Was It Legal For a Creditor To Take My Tax Refunds?
(The following is Arizona specific) Most people do not understand that if a creditor sues and obtains a judgment they can take your tax refunds and money in a bank account, to name just a few items. I know this does not sound fair – especially when the creditor is taking your child care or earned income credits. These are monies you need in order to pay rent, buy food, repair your car or take care of health care needs.
Can a creditor really take the money I need to pay rent or buy food?
Each state has certain items “property” that is exempt (creditors cannot take). Unfortunately, Arizona does not protect child care credit or earned income credits. See article in the Arizona Republic (AzCentral). So, if a creditor has the ability to get into your bank account they can take everything except $300 (unless your income is social security or VA benefits – but there are rules governing how to protect those funds).
If I file bankruptcy will I still lose my tax refunds?
Unfortunately, PROBABLY, assuming you use the Arizona exemptions in your bankruptcy. The saddest story I hear is when someone files for bankruptcy not understanding they will lose their tax refunds (money they desperately need in order to survive). Read the AzCentral article about two wonderful families who faced this problem (just two of thousands who face this every year). One family knew they would lose their refunds because they hired a bankruptcy lawyer so they were not surprised. Sadly the other family did not know because they filed bankruptcy on their own and never talked to an experienced bankruptcy attorney (most offer free consultations). That family is living on less than $1,400 per month for a family of 5 and really, really needed the tax credits. They will lose their entire tax refunds of $9,000 (the cost to hire a great attorney is approximately $1,500).
Unlike most other states, Arizona law is very old and does not protect these tax credits. The law needs to be changed in order to protect all Arizona families.
I have a group of wonderful volunteer bankruptcy attorneys (Arizona Consumer Bankruptcy Counsel) who want to change the Arizona law and help protect all Arizona families (even if they do not file for bankruptcy protection). Please contact me if you know a legislator who cares about families or stories that we can share with a legislator in order to change the law.
The post Why Did the Creditor Take My Tax Refund – Arizona Law appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Debtor failed to do almost everything the law, rules and court requires of a chapter 13 debtor.
In re Hindra v. Dockery, US Trustee & Deutsche Bank, BAP No. CC-18-1132-KuTaF (9th Circuit, Jan 29, 2019) In 2016 Etta Hindra filed a chapter 13 bankruptcy and everything went downhill from there. She did not file the proper documents, meet deadlines or pay the amounts necessary in order to cure the arrears owed to her mortgage company, plus much more (this blog is too short to list all the problems). Ultimately the court dismissed her chapter 13 case for failure to comply with the chapter 13 process. Ms. Hindra did not like the court’s ruling so she appealed to the Bankruptcy Appellate Panel “BAP”. Once again, the law and rules governing the legal process were not followed so the BAP supported the bankruptcy court’s decision dismissing her case. She then appealed to the Ninth Circuit, but once again failed. So, she decided to go back to the Bankruptcy Court to try to reopen her case (you guessed it – she failed).
What is my point? Know the law before jumping into the process.
Bankruptcy is like complicated surgery. You would not give a scalpel to your three year old and say “do your best”, at least not if you want to live. So why would anyone think they can walk into one of the most complicated legal processes, either not knowing or ignoring the law and rules; and ignoring advice from those within the process (the judge and the trustee).
But, I cannot afford an attorney to help with bankruptcy.
Believe me – I understand. Having done this work for more than 35 years I have seen people of all walks of life and income levels. There are lots of resources (free and otherwise) there for the asking. Most consumer debtor attorneys offer free consultations (like our office). I started the Self-Help Center at the Arizona Bankruptcy Court in 2005. We have helped thousands learn what to do, and more importantly what not do. Some were able to hire our volunteers or referred to other great attorneys, others were shown how to file their own bankruptcies. Unfortunately, too many visitors to the Center came to us after they filed their own bankruptcy only to find out that they would lose their tax refunds and other non-exempt property.
You cannot help those who won’t listen to good advice
Would a good attorney be able to help Etta Hindra? Perhaps, but looking over the description of her failures, my guess is that she may not have listened to even the more seasoned and patient bankruptcy lawyer. Ms. Hindra actually started out with an attorney, but shortly the attorney bailed. To be honest I don’t know why, the attorney had no idea how a chapter 13 case worked and that is why the whole bankruptcy went sideways.
MORAL: Know the law, please don’t be another debtor who fails to ask for help from an experienced attorney.
The post “The Dog Eat My Homework” Argument by Chapter 13 Debtor appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Chapter 13 Debtor failed to follow the law, rules and court orders
In re Hindra v. Dockery, US Trustee & Deutsche Bank, BAP No. CC-18-1132-KuTaF (9th Circuit, Jan 29, 2019) In 2016 Etta Hindra filed a chapter 13 bankruptcy and everything went downhill from there. She did not file the proper documents, meet deadlines or pay the amounts necessary in order to cure the arrears owed to her mortgage company, plus much more (this blog is too short to list all the problems). Ultimately the court dismissed her chapter 13 case for failure to comply with the chapter 13 process (according to the court – Ms. Hindra’s case was dismissed upon Trustee’s request for numerous reasons including, among others, her failure to make disclosures and provide information regarding her previous cases). Ms. Hindra did not like the court’s ruling so she appealed to the Bankruptcy Appellate Panel “BAP”. Once again, the law and rules governing the legal process were not followed so the BAP supported the bankruptcy court’s decision dismissing her case. She then appealed to the Ninth Circuit, but once again failed. So, she decided to go back to the Bankruptcy Court to try to reopen her case. According to the court she filed a motion to vacate the dismissal and reopen her bankruptcy case which is connected to this appeal. Her motion was based on the following: her computer was stolen which prevented her from filing her motion to vacate and reopen sooner (you guessed it – she failed).
What is my point? Know the law before jumping into any process, especially bankruptcy.
Bankruptcy is like complicated surgery. You would not give a scalpel to your three year old and say “do your best”, at least not if you want to live. So why would anyone think they can walk into one of the most complicated legal processes, either not knowing or ignoring the law and rules; and ignoring advice from those within the process (the judge and the trustee).
But, I cannot afford an attorney to help with bankruptcy.
Believe me – I understand. Having done this work for more than 35 years I have seen people of all walks of life and income levels. There are lots of resources (free and otherwise) there for the asking. Most consumer debtor attorneys offer free consultations (like our office). I started the Self-Help Center at the Arizona Bankruptcy Court in 2005. We have helped thousands learn what to do, and more importantly what not do. Some were able to hire our volunteers or referred to other great attorneys, others were shown how to file their own bankruptcies. Unfortunately, too many visitors to the Center came to us after they filed their own bankruptcy only to find out that they would lose their tax refunds and other non-exempt property.
You cannot help those who won’t listen to good advice
Would a good attorney be able to help Etta Hindra? Perhaps, but looking over the description of her failures, my guess is that she may not have listened to even the more seasoned and patient bankruptcy lawyer. Ms. Hindra actually started out with an attorney, but shortly the attorney bailed. To be honest I don’t know why, the attorney had no idea how a chapter 13 case worked and that is why the whole bankruptcy went sideways.
MORAL: Know the law, please don’t be another debtor who fails to ask for help from an experienced attorney.
The post “The Dog Ate My Computer” Argument by Chapter 13 Debtor appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
Audit of Student Loan Servicers Indicates Years of Errors
February 12, 2019 – An audit report released by the Education Department Office of Inspector General described the outrageous mismanagement of federal student loan servicers, like Navient and FedLoan, that are not being held accountable for significant and long tolerated “errors”. Even though these servicers can be fined for their lack of proper management they were not because they are self-regulating (somewhat like asking the teenager to discipline themself for taking the family car without permission). Ultimately this adds increased cost for taxpayers and borrowers (the current student loan debt is over 1.5 trillion dollars).
What will not surprise anyone – in a written response included in the report, James F. Manning, the acting chief operating officer of the agency’s Federal Student Aid office, said his department was dedicated to giving borrowers “world-class service” and strongly disagreed with the report’s conclusion.
One of the dirty little secrets is that servicers make more money putting a student loan into forbearance than they make doing income based repayment programs.
The audit found servicers continually made mistakes when informing borrowers about their payment options and in how they calculated payments for borrowers on income-based repayment plans.
I applied for a public service program which is supposed to eliminate most of my student loan debt.
According to the New York Times – a Government Accountability Office investigation last year revealed that a loan forgiveness program for public servants had rejected more than 99 percent of those who applied, largely because of mistakes and confusion in its implementation. For those of you who like numbers: borrowers with 49,669 loans have applied for Public Service Loan Forgiveness as of September 30, 2018. 206 borrowers with 423 loans have been approved – thus 99% denial.
President Trump successfully Strangles Consumer Financial Protection Bureau
According to the New York Times, the report infuriated some consumer advocates like Seth Frotman, a former student loan ombudsman at the Consumer Financial Protection Bureau who quit last year after complaining that the Trump administration was protecting lenders at borrowers’ expense.
“The rampant breakdowns and lack of accountability this shows should be Exhibit A as state legislators and state law enforcement officials demand justice for student loan borrowers,” he said.
Credit Slips – Student Loan Servicing Fails
Talk to anyone who has or had a student loan and tried to get help – they will share their never-ending nightmare of trying to find someone who can either help or at least give them competent advice.
The post Navient & FedLoan Mismanagement of Student Loans appeared first on Diane L. Drain - Phoenix Bankruptcy & Foreclosure Attorney.
I continued to be amazed at the inability of banks to produce a copy of the actual credit card agreement signed by their customers when suing on a defaulted account. The inability or unwillingness to produce a signed agreement is truly astounding. How can a bank obtain a judgment for a debt on a written contract without production of the contract itself?
The answer to that question is that banks are allowed to rely on the monthly billing statements they send their customers as proof of the debt without having to produce a signed copy of the written agreement. This action is called an Account Stated lawsuit, and for the first time the Nebraska court system has issued a ruling specifically allowing these lawsuits to proceed in the case of American Express Centurian Bank v. Scheer, 25 Neb. App.784 (2018).
In Scheer the trial court awarded American Express a judgment on 3 credit card accounts totaling $72,197.11. It is important to note that Scheer was sued not by a junk debt buyer that purchases a list of delinquent accounts with little supporting documentation other than the name, address and amounts owed by various individuals. Rather, Scheer was sued by American Express Centurion Bank itself and they still could not or would not produce a copy of the written contract in court.
Sheer responded to the lawsuit and offered 17 affirmative defenses included claims of being charged a usurious interest rate. Unfortunately, Sheer did not offer any evidence to the court and did not appear to demand production of any documentation from American Express during the lawsuit. It appears that Scheer merely responded to the lawsuit and did nothing more.
American Express filed a Motion for Summary Judgment and offered affidavits attaching monthly billing statements and account histories. Scheer’s attorney filed no objections to admitting these affidavits into evidence. The trial court awarded judgment on the motion and Sheer filed this appeal.
The Court of Appeals provided a summary of the legal history of account stated lawsuits in Nebraska:
- An “account stated” is an agreement between persons who have had previous dealings determining the amount due by reason of such transactions. Sherrets, Smith v. MJ Optical, Inc., 259 Neb. 424, 610 N.W.2d 413 (2000).
- An account stated creates a new cause of action in which pleading and proof of the original items of indebtedness are unnecessary.
- The creditor in a valid account stated may recover thereon without pleading and proving the original items of the indebtedness. In re Estate of Black, 125 Neb. 75, 249 N.W. 84 (1933).
- The failure to object to an account stated is admissible in evidence as tending to prove an acknowledgment of its correctness. Proof of an express promise to pay is not required. John Deere Co. of Moline v. Ramacciotti Equip. Co., 181 Neb. 273, 147 N.W.2d 765 (1967).
A glaring omission in this case history cited by the Court of Appeals is the case of B.C. Christopher & Co. v. Danker, 196 Neb. 518 (1976). In that case the Nebraska Supreme Court stated that “an account stated should be set aside if the case is to be tried on the original claims upon which it is based.”
The Danker was relying on the case of Andrews Electic Copany v Farm Automation Inc. 188 Neb. 669 (1972), a case involving a written agreement between a general contractor and a subcontractor. The subcontractor (Andrews) sued under various theories including breach of contract, account stated and an open account. The Nebraska Supreme Court stated that “An account stated is a contract to pay a stated sum. It must ordinarily be set aside in order for the original claims upon which it is based to be tried.‘
Got that? In two Nebraska Supreme Court opinions the court said that an account stated cause of action should be set aside in order to try the case upon the original claims. And what is the original claim? The breach of the written contract. In other words, if an express written contract exists between two parties, the case should be tried upon the contract, not upon the stated account.
Neither the Danker nor the Andrews Electric opinions are cited by the Nebraska Appeals Court in the Scheer case. How did that happen? The two most relevant and controlling cases governing account stated lawsuits in Nebraska are not even referenced in the Scheer opinion nor in the briefs filled by the parties. Amazing.
The Danker and Andrews Electric cases make it clear that the account stated theory of recovery should only be utilized when an express agreement between two parties does not exist and liability must be determined by reference to an ongoing record.
To make matters worse, the Appeals court went on to make several more incredible statements.
“Because an account stated creates a new cause of action in which pleading and proof of the original items of indebtedness are unnecessary, American Express was not required to prove the underlying transactions.”
Wait. It gets worse.
“An account stated is not subject to the usual defenses attacking the original items of indebtedness, but is subject to the defenses of usury, fraud, and mistake.”
What does this statement mean? It is not subject to the usual defenses attacking the original terms of indebtedness? Does this mean that the terms of a written contract are disregarded if a debtor fails to object to the stated account? The stated account triumphs over the written contract when no objection to the statement is registered? For example, if my written contract with the bank calls for interest at the rate of 9% but an employee erroneously enters the rate as 90% percent and I fail to notice this error on my statement, am I now stuck paying 90% interest even though my contract says 9%?
And, it gets even worse.
“Therefore, once American Express presented a prima facie case of an account stated, the burden of proof shifted to Scheer to prove that no agreement as to the amount owed existed. Absent evidence to dispute the existence of an account stated, Scheer was left to his affirmative defenses of usury, fraud, and mistake.”
The burden of proof shifted to the defendant to prove that no agreement as to the amount owed existed? How exactly does one prove that an agreement does not exist? How can any defendant prove that “no agreement as to the amount owed existed?” How does one prove a negative?
The effect of this decision is to take away a defendant’s right to prove that a billing statement is not in compliance with the underlying written contract, and that is exactly what the court in Danker and Andrews Electric did not allow.
The court also seems to be oblivious to the highly regulated nature of credit card agreements. Federal and state laws require credit card agreements to be in writing and they specifically prevent banks from charging fees in excess of the written agreements. The court has effectively cancelled the federal Truth in Lending Act by declaring that monthly billing statements govern and that written contracts don’t matter. Defendant Scheer was not even allowed a trial to demonstrate how the monthly statements may conflict with actual contract between the parties.
I sign a contract with you to cut your grass for $20. I perform the service and then I mail you a statement for $200. You fail to object to my statement. Maybe you don’t even open the mail. Maybe you are depressed or are going through a divorce or perhaps you even moved away. Do you owe me $20 or $200?
Image courtesy of Flickr and Jason Rogers.
The January 2019 New York City Taxi & Limousine Commission (TLC) sales results have been released to the public. And as is our practice, provided below are Jim Shenwick’s comments about those sales results.
1. The volume of transfers fell from December. In January, there were 94 unrestricted taxi medallion sales.
2. 79 of the 94 sales were foreclosure sales (84%), which means that the medallion owner defaulted on the bank loan and the banks were foreclosing to obtain possession of the medallion. One sale was an estate sale. We disregard these transfers in our analysis of the data, because we believe that they are outliers and not indicative of the true value of the medallion, which is a sale between a buyer and a seller under no pressure to sell (fair market value).
3. The large volume of foreclosure sales (approximately 84%) is in our opinion evidence of the continued weakness in the taxi medallion market.
4. The 14 regular sales for consideration ranged from a low of $135,000 (one medallion) to $175,000 (one medallion), $210,000 (one medallion), $228,000 (one medallion), $340,000 (two medallions), $350,000 (six medallions) and a high of $373,337.02 (two medallions) for a median value of $350,000, a 106% increase from December’s median value of $170,000.
5. The fact that 84% of all transfers in January 2019 were foreclosure sales shows continued weakness in the taxi medallion market and no sign of a correction.
6. At Shenwick & Associates we believe that the value of a medallion is approximately $162,000+ and dropping.
Please continue to read our blog to see what happens to medallion pricing in the future. Any individuals or businesses with questions about taxi medallion valuations or workouts should contact Jim Shenwick at (212) 541-6224 or via email at j[email protected].
Uber filed a lawsuit on Friday to overturn New York City’s first-in-the-nation law capping the number of ride-hail drivers that operate on its streets. The law, which went into effect last August, paused the issuance of new licenses to drivers for 12 months. But Uber wants the law overturned for fear that the city will ultimately make the cap permanent.
The law was part of a sweeping legislative package passed by the New York City Council last summer to give regulators more control over e-hail companies. In addition to the cap, the city council also approved a minimum pay standard among drivers, with the goal of reducing how much time empty cars spend on the road.
Supporters claimed the cap is necessary to examine the impact of app-based cars on worsening traffic congestion in the city. But the cap amounts to a “ban first, study later” approach, Uber argues. According to the suit filed in the New York Supreme Court:
Rather than rely on alternatives supported by transportation experts and economists, the City chose to significantly restrict service, growth and competition by the for-hire vehicle industry, which will have a disproportionate impact on residents outside of Manhattan who have long been underserved by yellow taxis and mass transit. The City made this choice in the absence of any evidence that doing so would meaningfully impact congestion, the problem the City was ostensibly acting to solve.
While wildly popular among riders, Uber and Lyft have been a source of almost constant grief for policymakers, disability advocates, taxi medallion holders, and driver groups. Critics complain that Uber and Lyft have been allowed to dominate the market without having to follow many of the same rules that apply to taxis. This has led to a glut of drivers that has outstripped demand, driving down wages and increasing traffic congestion. At the time, New York City’s law capping the number of drivers was held up as a potential model for other cities that want to rein in the ride-hail industry.
For NYC mayor Bill de Blasio, the cap was also an opportunity for a do-over. He first proposed to limit the number of new Uber and Lyft vehicles in 2015, but ultimately dropped it after a bruising public relations battle with the app companies. Finding success his second time around, de Blasio has said publicly he’s inclined to keep the cap in place after the 12-month period expires.
“We’re going to put ongoing caps in place on the for-hire vehicles and we’re going to work to increase the wages and benefits [of] the drivers,” he said in a recent radio interview. Uber says this amounts to a “‘post hoc rationalization’ of a remedy the City appears to have already selected,” according to the suit.
A spokesperson for de Blasio did not immediately respond to a request for comment. A spokesperson for the city’s Law Department declined to comment until the lawsuit had been filed.
An Uber spokesperson said the cap blocks new drivers from receiving the benefits from the wage hike. “The City Council’s new law guarantees a living wage for drivers, and the administration should not have blocked New Yorkers from taking advantage of it by imposing a cap,” the spokesperson said. “We agree that fighting congestion is a priority, which is why we support the state’s vision for congestion pricing, the only evidence-based plan to reduce traffic and fund mass transit.”
The number of new app-based vehicles in New York City has surged in the past few years, growing from 63,000 in 2015 to over 100,000 today. These new vehicles have added an unprecedented number of new miles driven in New York City, according to a recent analysis by traffic analyst Bruce Schaller. Trip volumes have tripled in the last year and a half, and 600 million driving miles were added citywide. In addition, Schaller found evidence that ridership was shifting from public transportation to ride-hailing apps.
Meanwhile, taxi medallion owners have seen the value of their licenses drop steadily since Uber’s arrival. Saddled with debt, some taxis drivers have committed suicide — six in as many months.
“Uber thinks it is above the law,” said Bhairavi Desai, the executive director of the New York Taxi Workers Alliance. “The company wants the right to add more and more cars to our streets without limit. But there is a very human cost to Uber’s business practices.”
The cap was originally presented along with a proposal to increase wages for ride-hail drivers. That law, which went into effect on February 1st, mandates the wage floor of $17.22 per hour after expenses for drivers, or $26.51 per hour before expenses. Lyft filed a lawsuit to block the implementation of the wage law, but it later confirmed it would pay its drivers the increased rates.
Uber’s lawsuit came a day after Amazon stunned the city by pulling out of its deal to build a second headquarters in the borough of Queens. Julie Samuels, executive director of Tech:NYC, a nonprofit that helps grow tech companies in the city, said she’s concerned that these combined events will send the message that New York’s elected officials are “putting a target on tech’s back.”
“I’m not worried about Uber,” Samuels said. “I’m worried about the next company that will think twice before coming here.”
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Do I have to pay taxes if I file bankruptcy?
What is forgiveness of debt income?
When you owe money and do not pay the full amount of the debt the lender is required to file a 1099 form with the IRS showing that you had phantom income in the amount the creditor forgave. This is referred to as ‘forgiveness of debt’.
Exceptions to forgiveness of debt:
Certain instances of “forgiveness of debt” cannot be taxed – typically bankruptcy is one of those exceptions. These exceptions are listed on IRS form 982, which you must fill out and file with your tax returns. Make sure to read and follow the directions when filling out the form.
Negotiating a settlement of debt vs bankruptcy
Negotiating a settlement of a debt will lead to tax obligations. Many of my clients tried to settle their own debts (either by hiring a company or doing it on their own), unfortunately no one warned them about the tax problems. These tax issues cannot be discharged in bankruptcy; at least for several years. Had my client filed bankruptcy to discharge the debt then, in most consumer cases, there are no tax consequences.
I filed bankruptcy then received 1099 Income Statement from a creditor.
When you receive a 1099 form after filing for bankruptcy then file the 982 form (discussed above). Mark the box that you filed bankruptcy and file the form with your tax returns. Keep a copy for your records.
Note – if the creditor forgave the debt prior to you filing for bankruptcy protection you may be faced with tax issues. But there might be another exception that protects you – check the ‘insolvency’ description on the 982 form to see if you qualify for that exception.
Taxes, like bankruptcy, are far too complicated to do without competent guidance. This is similar to jumping off a cliff and then deciding to check below for rocks or sharks. Ask for experienced help before jumping.
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Learn more about how Bankruptcy works and what you need to know.