Filing Bankruptcy as an Uber Driver in New York

In today’s challenging economy, many New Yorkers have turned to Uber as a full-time or part-time source of income. Whether it is a primary source of income or to supplement existing wages, driving for Uber has become a lifeline for thousands. But for many, especially after COVID-19, financial pressures have only grown, making bankruptcy a potential option for debt relief.

The Post-COVID Financial Strain on Uber Drivers

Uber drivers in New York are facing various economic challenges. While demand for rideshare services has seemed to have returned, the situation for drivers has changed dramatically:

  • Increased competition: As more people turn to rideshare work, there is more competition for rides and less income available per driver.
  • Higher operating costs: Vehicle maintenance and car insurance cost have gone up.
  • Reduced earnings: Uber has increased fees and taken a larger share of fares, leaving drivers with less take-home pay.

Uber drivers today are facing a number of financial challenges that are cutting into their earnings. As more people turn to gig work in a difficult economy, competition for rides has intensified, making it harder for individual drivers to earn a consistent income. At the same time, operating costs have climbed. Vehicle maintenance is more expensive, and the cost of insurance has significantly increased for many drivers. Furthermore, many drivers are leasing or financing a car with higher monthly payments. On top of that, Uber has raised its fees, taking a larger share of each fare, leaving drivers with less pay despite working the same, or even longer hours.

Bankruptcy: A Financial Reset for Uber Drivers

If you are an Uber driver dealing with unmanageable debt, bankruptcy may offer a way to reset your finances and move forward. Depending on your situation, there are two main types of bankruptcy that may apply. Chapter 7 bankruptcy provides a relatively quick discharge of debts such as credit cards, personal loans, and personally guaranteed Small Business Administration (SBA) loans. If Chapter 7 is not an option, Chapter 13 bankruptcy involves a structured repayment plan over 3 to 5 years in which the debtor pays back at least a percentage of the debt that they owe. The exact amount the debtor will need to pay in the plan is determined by a number of factors including: the results of the bankruptcy Means Test (an income and expense test under the bankruptcy code), the debtor’s monthly budget, and the assets owned by the debtor. This option is ideal for drivers who have a disposable income or who have valuable assets they want to protect.

Can SBA EIDL Loans Be Discharged in Bankruptcy?

Many Uber drivers relied on SBA loans such as Economic Injury Disaster Loans (EIDL) and Paycheck Protection Program (PPP) loans to get through the covid pandemic. While most PPP loans were forgiven, many EID loans are still owed. Many Uber drivers are struggling to meet the obligations of repaying these loans. This mounting pressure is leaving some drivers financially overwhelmed and looking for a solution.

The good news is that EID loans from the SBA can typically be discharged in bankruptcy. There are two situations where an Uber driver can discharge their SBA loans in a personal bankruptcy filing. First, if the driver signed personally for the loan for an unincorporated business, which is more common. Second, if the driver took out a loan for a corporation and was required to sign a personal guarantee for the loan. Such a personal guarantee was typically only required when the loan was for more than $200,000.00.

Special Considerations for Uber Drivers Filing Bankruptcy

Since Uber drivers are considered to be self-employed, filing for bankruptcy comes with additional complexities:

  • Income Reporting: Accurately reporting income requires tracking both gross earnings and expenses.
  • Vehicle Protection: Since an Uber driver’s car is essential to their livelihood, protecting it during bankruptcy is critical. We help clients use bankruptcy exemptions to safeguard their vehicles.
  • Business-Related Expenses: Maintenance, insurance, fuel, toll, and lease or car loan payments must be accounted for properly.

Bankruptcy is not one-size-fits-all. Every case is unique, and the laws can be complex. The right legal advice can help you:

  • Determine if you qualify for Chapter 7 or Chapter 13
  • Understand which debts, including SBA loans, can be discharged
  • Protect your vehicle and other essential assets
  • Avoid mistakes that could delay or jeopardize your case

For those struggling with debt, including SBA loans, bankruptcy may be an option to obtain a fresh start.

Contact The Law Offices of David I. Pankin, P.C.

At the Law Offices of David I. Pankin, P.C., we have helped over fifteen thousand New Yorkers get a fresh start through bankruptcy. If you are an Uber driver struggling with debt, you are not alone, and you do not have to face it without help. Call us today at (888) 529-9600 for a free consultation. We will review your financial situation and help you understand your options, including how bankruptcy can give you the relief you deserve.

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