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Lucy, Esq.
Lucy, Esq., Attorney
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Some of my friend own yellow cab medallion. because of app

Customer Question

some of my friend own yellow cab medallion. because of app based taxi, yellow cab medallion business gradually going under water, what they have normal monthly mortgage payment, now it is going to extremely burdento them for making monthly payment.. to run and keep a yellow taxi medallion in nyc.. owner must have to pay per month car payment $1000+ insurance $750+ w.comp $200. tax stamp $83+ medallion renewal $73.00===$2104+ mortgage payment. those are basic payment if everything is fine.
if they can not make mortgage payment, lender may seize their property, lender may keep hunting for their money. some are individual some are s corp..
what is the normal process for them keep their asset and lender not keep knocking for their money. both party can be happy
Submitted: 9 months ago.
Category: Legal
Expert:  Lucy, Esq. replied 9 months ago.

Hi,

I'm Lucy, and I'd be happy to answer your questions today. I'm sorry to hear about your friend's situation.

If the taxi company is incorporated or an LLC, a bank that holds a mortgage on your friend's house in his name cannot legally take any of the company's assets. An LLC is a separate legal entity, and a company who sues one legal entity cannot take assets from another. Also, if the property is worth significantly less than is owed, the bank can only get a judgment against your friend for the difference between the sales price at auction and the fair market value, not the loan amount.

Also, your friend's car is exempt for being taken to pay a judgment if there is less than $4,000 equity in it. There's an additional $3,000 exemption for personal property. The lender can't just automatically grab whatever they want.

If the primary purpose is to keep the house, your friend can seek to negotiate a modification that would extend the life of the loan and give lower monthly payments, or he could look into refinancing if interest rates have dropped since he got the loan. Some people who have trouble paying their bills find relief in bankruptcy, but your friend would only be able to keep the house and the car if he still made the monthly payments, so it sounds like that may not be the best option at this point.

If you have any questions or concerns about my response, please reply WITHOUT RATING. It's important that you are 100% satisfied with my courtesy and professionalism. Otherwise, please rate my service positively so I am paid for the time I spend answering questions. If you are on a mobile device, you may need to scroll to the right. There is no charge for follow-up questions. Thank you.

Customer: replied 9 months ago.
it is not about house.. It is for yellow cab medallion...the car use for taxi Is a part of the medallion..
Customer: replied 9 months ago.
one time yellow cab medallion was $1.1 million... now no one buying, zero market value
Expert:  Lucy, Esq. replied 9 months ago.

The same is true in reverse. When a company forecloses on a mortgage held by a business, they can only attach property held by the business. They can't attach any property or bank accounts held by your friend.

With that high debt, though, your friend may want to talk to a local attorney that specializes in business bankruptcy, especially if the business does not have any assets. The company will lost the property held by the mortgage, but he still could benefit from a clean slate in the form of canceling that debt. He may still be able to start a new business.

Customer: replied 9 months ago.
to own and operate a one yellow taxicab medallion, owner's monthly fundamental expense is around $2500 without medallion loan payment. if lender foreclose the taxi medallion, will not do any good for lender. as long as app based taxicab's are flooding the street..
what is the alternate to for closure ? if bankruptcy chapter11, or 13?
Expert:  Lucy, Esq. replied 9 months ago.

The alternative to closing is to continue moving forward as long as they can.

Which type of bankruptcy to file for requires an in-depth analysis of the company's income and assets, and that would require a consultation with a local attorney. But, generally, in a Chapter 7, assets are taken to pay debts and most debts are cancelled. Ch. 13 allows for restructuring of debts, so some debts are cancelled, but most are paid out over a few years. The company would need ongoing income to do a Ch. 13.

Customer: replied 8 months ago.
what do you mean by?. ' The alternative to closing is to continue moving forward as long as they can.;
Expert:  Lucy, Esq. replied 8 months ago.

I mean, if they don't want to shut down, they can keep operating as long as they have the means to do so.

Please rate my answer positively to ensure I get credit for the time I spend helping. If you are on a mobile device, you may need to scroll to the right. Thank you.

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