Chrysler Bankruptcy Stops Lemon Law Payments

Chrysler customers who are owed money by Chrysler under lemon laws are finding that, even though they have reached an agreement with Chrysler, they can’t get a refund or settlement. Chrysler’s checks to lemon law customers are bouncing due to the company’s bankruptcy, the L.A. Times reports.

Since Chrysler filed for bankruptcy, all of its checking accounts have been frozen. The bankruptcy judge handling the case would need to order the account the lemon law checks were written from unfrozen in order for Chrysler’s lemon law checks to be cashed. Chrysler has said that it has no plans to ask the judge to do that.

"This is a complex process and there are a lot of issues being discussed," Chrysler spokesman Mike Palese told the L.A. Times. "This could be one of those issues that comes up in the course of the bankruptcy, but I can’t say that we have any plans to present it at this time."

In the most severe lemon law cases, automakers agree to buy back the defective vehicle. Chrysler customers in that situation who have turned in their vehicles to the company are left without a car and without their money until Chrysler pays the money it owes them.

Chrysler has officially advised the customers it sold defective vehicles to that they should join Chrysler’s other unsecured debtors by filing a proof of claim form with the bankruptcy court.

"In that case, you’ll be lucky to get pennies on the dollar,” Alex Simanovsky, a lemon law attorney says.

You might remember Chrysler as the company that took billions of dollars of tax payer money in the form of bailout “loans” it now has no intention of paying back. Or as the company that is working on a way to avoid the $500,000 salary cap for executives of companies that received bailout money.