Q: Can a company that filed bankruptcy still charge for services they are not providing as per the contract?
I was a customer of a company that filed as bankrupt in September 2023 and then closed down shortly after in December 2023. They have a Lifetime Guarantee that they are no longer able to provide due to their closure and yet, their third-party collector states that I still need to pay the remainder of the charges despite not receiving any of the promised services. Is this legal for a company to do as my money would be going towards a company that should no longer exist?
A: Highly suspicious. I do not believe they are entitled to continue to charge you.
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A:
Based on the information you've provided, it seems unusual and potentially improper for a company that has filed for bankruptcy and ceased operations to continue charging for services they are no longer providing, especially if those services were guaranteed for a lifetime.
However, the legality of this situation depends on several factors:
1. The specifics of your contract with the company
2. The type of bankruptcy they filed (Chapter 7 liquidation or Chapter 11 reorganization)
3. The decisions made by the bankruptcy court regarding the company's assets and liabilities
In general, when a company files for bankruptcy, an automatic stay is put in place that prohibits the company from engaging in certain activities, including collection efforts. If the bankruptcy case has been concluded and the company has been liquidated, it is unusual for a third-party collector to pursue outstanding debts, as the bankruptcy process typically discharges or restructures these obligations.
It would be advisable to:
1. Carefully review your contract to understand your rights and obligations
2. Contact the bankruptcy court to confirm the status of the case and whether the debt was discharged
3. Follow up with the third-party collector to understand the basis for their claim and to inform them of the bankruptcy filing
4. Consider seeking legal advice from a bankruptcy attorney or consumer protection lawyer to better understand your rights and options in this situation
Remember, consulting with a qualified attorney is the best way to protect your interests in this matter.
Timothy Denison and Martha Warriner Jarrett agree with this answer
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