While providing a source of income for thousands, there is no denying that companies such as Lyft and Uber have adversely affected the taxi industry. Once quite lucrative, taxi medallions may no longer be as profitable as they were before Uber and Lyft became major players in the transportation arena. This outcome is more than just unfortunate for owners of taxi medallions- it can be financially devastating. This is especially true for medallion owners who may have made the initial investment with an expectation of supplementing their future retirement income.
Bankruptcy May Be A Solution
If the taxi medallion is no longer profitable and there are outstanding unpaid security interests or liens, the owner may opt to surrender the medallion in a chapter 7 bankruptcy. This, of course, assumes that the medallion owner otherwise qualifies to file a chapter 7 (the medallion owner may qualify for chapter 13 otherwise). By surrendering the medallion, the owner essentially agrees to give up any financial or equitable interest in it. This means that the owner may lose the medallion as either the chapter 7 trustee or the holder of a secured interest in the medallion may move to sell it. Once the owner receives his or her chapter 7 discharge, he or she would no longer be personally responsible for any outstanding balances, or deficiencies etc. This allows the medallion owner to get a “fresh start” by walking away from the debts and other financial obligations arising from the taxi medallion.
When there is a security interest that is greater than the value of the taxi medallion, the owner may also choose to keep the medallion and make use of a “cram down” through a chapter 13. The cram down allows the medallion owner to reduce or bring down the amount of the security interest to correspond to the current fair market value of the medallion. This is a great way to make the medallion more financially feasible to retain. However, there many things to consider in adopting this approach and we recommend that you seek the assistance of an experienced bankruptcy firm before choosing to proceed.
Contact Us For Help With Bankruptcy
At Loan Lawyers, we have helped over 5,000 homeowners in South Florida with bankruptcy assistance. Our skilled bankruptcy attorneys in Fort Lauderdale are fully committed to guiding our clients and helping them make the best financial decisions. Contact us today to schedule a consultation.