Who would ever think this could happen? At one time, purchasing a taxi medallion was a great investment. Taxi owners would purchase these medallions typically by putting some money down and borrowing the rest. Banks and lending institutions would lend $1 million to the taxi cab owners.
Owners of medallions purchased these as a long-term investment for their future and their family’s future. The average medallions cost more than $1.3 million in 2013; now worth only about $241K.
My clients tell me that there are too many drivers trying to get too few rides.
Business changes over time but the taxi medallion owners never expected this at all. No one predicted that Uber and Lyft would practically bankrupt the individual tax cab owners.
This drop in value has caused my clients to file for bankruptcy. They have no choice; the debts on their medallions are tremendous compared to the values.
Some of my clients have owned over 4 medallions in their families. They have gone from being millionaires in their business to bankruptcy.
With filing bankruptcy, at least they can start over.