A Los Angeles Times article reports that many car owners receiving California lemon law settlement checks from Chrysler are getting an unpleasant surprise when they cash them at the bank. Due to bankruptcy proceedings and other financial complications, many of these checks are bouncing.
In recent weeks the financial bailouts of the Big Three automakers have been the subject of intense media attention. Amid all of the coverage, very little attention has been paid to the economic “ripple-effect” created as these large companies struggle for their existence.
During bankruptcy proceedings, pre-existing expenses such as outstanding lemon law claims cannot be paid unless given “the okay” by the judge in charge of the proceedings. The sources cited in the Los Angeles Times story state, that up to this point, Chrysler has not asked for court approval so it can begin making payments.
The result is clear to see—buyback checks that do not clear the bank and innocent consumers bewildered and frustrated by an automaker’s failure to uphold its obligations. For many of those consumers waiting for rebate checks, Chrysler’s inaction on this issue affects them on multiple levels. For example, the auto manufacturer has taken their defective vehicle and these consumers may not have access to a working vehicle. Without a lemon law refund check, these same unfortunate consumers are also unable to purchase another car. Although they have the option of pursuing their claim as a creditor, under bankruptcy proceedings, the consumers may only recover a fraction of the amount owed.
The irony of this situation is that car manufacturers cannot afford the public relations damage resulting from failing to pay lemon law settlements. Manufacturers and dealers need Californians to buy new cars. However, the knowledge that a car company may not have the financial means to replace defective vehicles, heightens the uncertainty that most consumers are feeling about making large purchases.
The California lemon laws are meant to protect consumers by holding auto manufacturers accountable for the quality of their products. Unfortunately, the current economic downturn has taken a severe toll on manufacturers. As the future unfolds, more American car manufacturers could be placed in the same dire economic straits as Chrysler. If more car companies file Chapter 11, the protections that the California car buyer currently enjoys could be sharply curtailed by economic pressures.
If you have any questions about how consumers can deal with auto manufacturers who are unable to meet their lemon law buyback obligations, please contact the Law Offices of Howard D. Silver and discuss your situation with an experienced California lemon law attorney. Call (855) 341-2611 today for a free evaluation.