September 25, 2024
How can I get my money back from an auto broker who is declaring bankruptcy?
Dear Consumer Ed:
I hired an auto broker to find a vehicle for me and paid him $9,800 upfront, as we had agreed. The broker cashed my check, but when it came time to finalize the deal and get my car, the broker informed me that he no longer had the money I had paid him. He said that if I wanted to get the car, I would need to write him a second check, which I did. He said he would repay the money he owed me within a week. It has now been 18 months. The broker has slowly paid back some of the money he owes me, but he has missed the last five payments and has stopped responding to my texts. He has told me that he is filing for bankruptcy and implied that if I push him, he will include what he owes me in his bankruptcy. I have his admission in writing that he owes me money. What recourse do I have for getting my money back?
Consumer Ed says:
Unless or until the auto broker actually files for bankruptcy, you may continue your efforts to collect your money, including filing a lawsuit or filing a claim against the broker’s surety bond. You may also wish to file a complaint with the Secretary of State’s Licensing Board for Used Motor Vehicle Dealers. Once the broker files for bankruptcy, you will need to cease your collection efforts and, if you choose to pursue the matter further, you should then consult with an attorney about your rights in the bankruptcy case.
Bankruptcy is a federal proceeding that allows debtors to get relief from financial difficulty. Once a petition for bankruptcy is filed, a statutory injunction called an “automatic stay” is in place, which prevents creditors, such as yourself, from taking actions (such as lawsuits) to collect debts from the debtor. Depending on the type of bankruptcy case filed, you may be able to recover your money, or a portion thereof, by filing a proof of claim. Bankruptcy cases may proceed swiftly and can be complicated to navigate, so you should consider promptly consulting with an attorney experienced in bankruptcy to determine how you should proceed.
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