Taxi medallions purchases have left hundreds of drivers in deep debt and facing uncertain futures. Once a guaranteed way to earn financial security, it now has resulted in hundreds of medallion-related foreclosures and bankruptcies, as medallion lenders looked to collect on their drivers’ medallion debts and seize other assets the drivers may have had. into medallion foreclosure lawsuits brought forward by lenders. Many cab owners in Chicago are facing foreclosure and bankruptcy due to the sudden changes in taxi cab demands.
To drive a licensed taxi in Chicago, you must have a medallion issued by the city. This issuance will serve as a license, and up until recently, it was a highly regulated and coveted asset. To get into this once-lucrative business, several individuals and family-owned businesses took out loans to pay for their medallion.
For decades, medallions were hailed as a great investment and a way for immigrant families to earn a middle class life in America. However, since the advent of Uber, Lyft and other rideshare companies, these medallion values have plummeted up to 90% in large cities like Chicago, New York, San Francisco. Unfortunately, many of these drivers signed personal guarantees on the medallion debt, meaning even though their corporation defaulted on the loan, the banks could seize their personal assets, such as houses, and other investments.
At Mohammed, Shamaileh & Tabahi, LLC, we recognize this problem and understand how it has affected the livelihoods of many people. Our team of lawyers specializes in tax medallion loan renegotiations. We have consulted and advised hundreds of drivers on how to renegotiate, settle or extinguish their medallion debt. You can trust that MST Law will do everything in its power to achieve the best outcome for you.
What Are Your Options?
Many Chicago taxi drivers struggle to make ends meet as the value of medallions has significantly dropped. What was once a booming business is now threatening the livelihood of many cab drivers.
Drivers face dire consequences for failing to taking steps to renegotiate or settle their medallion debt. The longer you wait, the more difficult it can become. Your lender will file a foreclosure action, obtain a judgment and go after your assets, including your personal residence and any other assets you have.
A common misconception is that the lender will only take back its medallion (known as the “loan collateral” and otherwise leave you alone. That is incorrect. Not only will the lender take the medallion back, but the owner will still owe the difference between the loan balance and the medallion of the value at the time of the seizure. For example, if there is still $200,000 left on loan, and the medallion is worth $25,000, the owner will still owe $175,000.
You do not need to face this stressful situation alone. Hiring an attorney at Mohammed, Shamaileh & Tabahi, LLC will help pull yourself out from under this burden. We promise to handle your case with the utmost diligence and care.
Renegotiate with Your Lender
Your first option would be to refinance your medallion loan. This option means you could obtain a lower interest rate and payment, along with principal forgiveness. This approach would also allow you to continue operating your medallion and earning a livelihood. The renegotiation paperwork can be dense and contain many landmines for the unsuspecting driver. Do not sign anything without speaking to an experienced attorney at Mohammed, Shamaileh & Tabahi, LLC.
File for Bankruptcy
Another option you could consider is a personal bankruptcy. Even though the medallion is owned by your corporation, the bankruptcy will effectively absolve you of personal liability. The lender can continue its lawsuit against your corporation, but your corporation likely owns nothing else that is of value to the lender. In almost all personal bankruptcy instances, the lender leaves the driver and his corporation company alone.
A common misconception is that the driver must give up any other wealth or assets they have accumulated during their life. This is not true, and in fact, our clients have walked away keeping their primary residence and even their investment properties and other assets. There are various bankruptcy options for the taxi driver. Most commonly, the owner can file for either:
- Chapter 7 bankruptcy which leads to debt elimination through a liquidation of any nonexempt assets: or
- Chapter 13 bankruptcy which includes a repayment plan for up to five years for any nonexempt assets that the driver wishes to keep.
An attorney will help you determine if you qualify for these options or if there is a better option out there for you. Because every medallion owner's case is different, and every lender is different, it is critical that you consult with an attorney who knows the medallion issues and the specific lenders.
At Mohammed, Shamaileh & Tabahi, LLC, we will go over all possible options and help you choose the option that is best for you and your family. Get in touch with us today to learn more about how you can get the debt relief you need.
Medallion Purchases and Sales
The attorneys at MST Law also represent lenders and individual buyers and sellers of taxi medallion licenses. A City of Chicago taxi medallion license is an asset that must follow strict City rules to allow for its transfer. For example, unlike other property you may own, it is not simply enough to enter into a contract and then hand the medallion over. Instead, the transaction must adhere to the City of Chicago Taxicab Medallion License Ordinances and otherwise ensure the medallion is “cleared” of any liens, fines and encumbrances before the City will allow the license to transfer. Our attorneys have experience drafting the initial purchase contract, submitting the audit, clearing all liens and fines that may be owed on the medallion, and then finalizing the transfer.