Government Guarantee Of Warranties – A Lemon Law Perspective In San Diego

Government Guarantee Of Warranties - A Lemon Law Perspective In San Diego

With GM and Chrysler on the edge of bankruptcy, they have been showed some tough love by declining to bail them out – at least for the time being.

GM is given 60 days of government funding for operational costs, and Chrysler was offered up to $6 billion in financing if it agreed to a merger or sale with Fiat within 30 days.

The Administration said that it would guarantee all warranties on new automobiles sold by GM and Chrysler during a restructuring period, addressing the understandable risk that these two corporations would end up in bankruptcy court, something GM’s new CEO appears to understand. The length of the restructuring period has not been specified. But it is expected to last until the government is restructured.

This warranty assurance does not apply to vehicles purchased before March 30, 2009. I recently explored what would happen if a significant manufacturer went bankrupt. Your warranty could theoretically be canceled if the manufacturer of your vehicle files for bankruptcy. Realistically, allowing that to happen would be politically disastrous for the Obama administration – and that might not happen. 

Even in a liquidation bankruptcy, restructuring is more likely. I have a strong feeling that either the bankruptcy court would create a trust fund from residual assets to cover warranty expenses. Or Congress would develop legislation to protect affected manufacturers’ customer warranties.

From the standpoint of the Magnusson-Moss Warranty Act and state lemon laws, it is uncertain whether the government guarantee on new sales applies to legal claims against manufacturers for breach of warranty.

Warranty repairs may be compensated in the end, but in bankruptcy court, breach of warranty claimants may be lumped in with the rest of the manufacturer’s unsecured creditors.

Even if warranty claims filed before March 30, 2009, are locked in bankruptcy court and those filed after March 30, 2009, are covered, you must do so in the United States Court of Claims if you need to prosecute them.

In most situations, the state will act as a middleman between you and the automaker. Arranging for the car to be fixed, replaced, or for your money to be repaid. Don’t become stranded with a vehicle you can’t operate. Instead, arm yourself with knowledge.

You can learn how to maintain proper records, tell the manufacturer that the car is defective, file a Lemon Law complaint, and get reparation by following the steps outlined above.

We’ll tell you precisely what qualifies as a lemon, what the burden of proof is in your state, and how long you have to submit a claim. With such a large purchase, you mustn’t miss any deadlines or fail to include all essential papers in your file.

If you need a professional lemon lawyer for your case, contact us right away!

Scott Law Group P.C.

(619) 345-5599