Chrysler agrees to lemon law changes to bankruptcy plan

As reported in the Detroit News, Chrysler LLC said today it would honor lemon law claims from existing owners.

Under state and federal laws, owners of defective new vehicles can demand repairs or replacement vehicles if a new vehicle can’t be fixed. Chrysler will agree to “recognize, honor and pay liabilities under lemon law for additional repairs, refund or replacement of a defective vehicle,” the company said in a legal filing today. Chrysler had already agreed to honor existing warranties.

CHRYSLER SEEKS TO LEAVE LEMON LAW CONSUMERS HIGH AND DRY

In the wake of Chrysler’s bankruptcy, many individuals have been effected. Most thoughts go first to the automakers themselves, then the suppliers, on down to the individual car dealerships and their employees. There is one group that remains forgotten – and now it seems Chrysler is seeking to keep it that way.

Those persons who have brought Lemon Law and Breach of Warranty suits for their defective vehicles are in a state of limbo. All cases that are currently filed in state and federal courts are stayed. Anyone who had settled a lawsuit but had not yet been paid at the time Chrysler filed for bankruptcy has yet to see their recovery. This means that in addition to countless persons being owed money by Chrysler for unpaid claims, there are others whose vehicles were to be bought back by the manufacturer or replaced, and are now stuck with defective vehicles, or in the worst cases left without vehicles that the manufacturer had taken possession of and without the money to replace them.

Normally when a company emerges from bankruptcy those cases that were stayed may be re-listed by courts; the settled matters, if part of a bankruptcy sale, will be paid, giving consumers a light at the end of the tunnel. Chrysler, in its agreement of sale to Italian automaker Fiat, appears to oblige the purchaser to honor warranties and warranty based claims, their conduct however, appears a complete contradiction.

Having advocated for consumer rights for years, this is a troubling sign of things to come. Should Chrysler have all claims filed prior to the bankruptcy discharged, those consumers who purchased these defective products will be without any recourse. If General Motors files for bankruptcy June 1, we could see the same issues emerge. I urge all consumers to contact their state representatives and tell them to fight for their rights.

This is what we love to see…Another happy lemon law client!


Dear David Gorberg and Staff,

You recently helped me with a lemon law claim, I called about with my 2005 Mazda 6. I honestly wasn’t expecting any kind of money, I was just looking to not be stuck with a “lemon” and getting stuck with payments. But everyone in your office was so courteous and friendly, it was just a pleasure to talk to Nicole and all the girls who helped me. It a good feeling to know that nice friendly people like all of you are still out there. Please please enjoy this card, hope it makes everyone smile. Thank you all very much.

Melissa D.
Philadelphia, Pennsylvania

Click Here to see the Melissa’s lemon law thank you note to our firm.

Spring Rain Causes Lemon Law Pain

With the heavy rain we experienced today, our lemon law firm was inundated, or better yet, flooded with cases, 20 and counting, from Pennsylvania and New Jersey consumers requesting free lemon law help for car water leaks. So we decided to address this possible lemon law condition.

For most people, heavy rain results in congested rush hour roadways and perhaps increased travel time. However, for some unlucky car owners, driving in heavy rain means having to deal with annoying water leaks. Rainwater dripping steadily down from the bottom of the dash and causing water damage to the carpet and underlying pad. The water leak is not only aggravating, but if allowed to persist, can turn into a hazardous mold condition.

At 1-800-MY-LEMON we have discovered that water leaks are usually caused by 2 problems..defective seals and/or defective drains.

1. Seals – Window seals and weatherstripping are designed to keep interior air in and the outside air out. A hissing or whistle condition is a sign that the seal or weatherstripping is damaged. Inspect the windows for missing or damaged seals. Specifically, lumps or other imperfections may be preventing a seal and letting water in. There are 2 ways to check if the seal is working properly:

a. Chalk – Rub chalk on the surface of the weather strip. When you close the door, chalk will transfer from the strip to the door on areas that are sealed properly.

b. Dollar – Place a dollar bill in between the door and the car. Shut the door and then try and pull the dollar out. If your car is properly sealed, you will not be able to pull the dollar out.

2. Drains – Cars are made to channel water to places that are designed as drains. You may not realize it, but water flows all over the inside of a car body. Water can run inside the C pillars, the inside of doors, and through the cowl vents. Therefore it is important that you inspect your car for debris that can block the drains. This is especially true in cowling shields.

Needless to say, it is very important to service your car for any leaks at the dealer. By following the above you may be able to isolate the auto water leak and inform the dealer as to the location. Should the dealer fail to repair the leak, you should contact a lemon law firm, such as 1-800-MY-LEMON (1-800-695-3666) to obtain a refund or new car under the Pennsylvania Lemon Law or New Jersey Lemon Law.
posted by David Gorberg

MyLemon hangs out with BenFM at Suburban Square, Ardmore


To our surprise BenFM showed up at the court yard of Suburban Square. Being big fans of the radio station, our lemon law crew rushed out to greet and welcome them to our lemon law headquarters.

Congrats to Kristy, Nicole, Jackie and Anne for winning gifts and appearing on BenFM’s website video.

Click here to see the Lemon Law gang on the BenFM video.

Bankruptcy for Chrysler Probably Averted as Banks Agree To Reduce Debt

Chrysler LLC and the U.S. Treasury Dept. have formed a tentative agreement with banks and private equity firms holding $6.9 billion of the automaker’s debt. The entities have agreed to accept $2 billion and a small equity interest in the new company, paving the way for Chrysler to avoid bankruptcy and merge with the Italian automaker Fiat.

The agreement to reduce debt was confirmed by a Treasury official who said: “The agreement from Chrysler’s principal banks is an exceptional accomplishment in line with the President’s firm commitment that all stakeholders sacrifice to make this deal succeed.”

A deal with Fiat is now expected to proceed forward, with the Italian automaker owning 35% of Chrysler, while the United Auto Workers will own up to 55%, and the Federal government up to 10%.

The Chrysler deal with bond holders is significant, not only for Chrysler, but also for GM, since it could be a model for a deal at GM, whose restructuring to avoid bankruptcy is also dependent on debt holders taking an enormous “cram-down” on what they are owed.

1-800-MY-LEMON Jingle ringtone on Crackberry.com

We are proud to announce that our famous lemon law jingle is now available as a ringtone download on Crackberry.com. Crackberry.com is the #1 shop for blackberry users. Click here to download our lemon law ringtone.

GM on a course to bankruptcy? How to Protect Lemon Law Claims.

Is GM heading for bankruptcy? According to the New York Times, a plan being worked out by the administration, G.M. would file for prearranged bankruptcy. It would then use a sale authorized under Section 363 of the bankruptcy code to quickly sell off the desirable assets to a new company financed by the government. These good pieces might include Cadillac and Chevrolet, as well as assets the company needs to run the business.

Less desirable assets, brands like Hummer and underperforming factories, would be left in the old company. Proceeds from the sales, including stock in the new company, would be given to the old G.M., helping to settle claims.

1-800-MY-LEMON, PA and NJ’s Lemon Law Lawyers, urge the government to include all lemon law buybacks (both pre and post bankruptcy) as well as compensation to consumers for breach of warranty claims for all brands of gm cars, to be included with the new company. Failure to do so, may result in lengthy delays of payment, and or, a reduction of payments to consumers.

Obama Administration’s New Warrantee Commitment Program

Today, the Treasury Department announced an innovative new program to give consumers who are considering new car purchases the confidence that even in this difficult economic period, their warrantees will be honored. This program is part of the Administration’s broader program to stabilize the auto industry and stand behind a restructuring effort that will result in stronger, more competitive and viable American car companies.

The Administration has committed to working with both GM and Chrysler during a finite period to develop improved restructuring plans. The goal in both cases is to help these companies emerge with a fresh start toward becoming competitive businesses without taxpayer assistance. During this period of restructuring, the Administration is committed to standing behind the process. The Administration is confident that GM will emerge as stronger company and is hopeful that Chrysler can reach an agreement with Fiat that leads to a viable future. However, no matter what the outcome, consumers should have confidence that if they buy new cars from either company their warrantees will be honored.

The warranty program will cover all warranties on new vehicles purchased from participating auto manufacturers during the period in which those manufacturers are restructuring. Both General Motors and Chrysler have agreed to participate in the program. Specifically, the program will:

• Create a separate account that will be funded with cash contributed by the manufacturer and a loan from the US Government to pay for repairs covered by the manufacturer’s warranty on each new vehicle sold by a participating domestic auto manufacturer during its restructuring period. The cash contribution will be 125% of the costs projected by the manufacturer to satisfy anticipated claims under the warranty issued on that vehicle; and

• In the event of a failure of a participating auto manufacturer, appoint a program administrator who, together with the US Government, will identify an auto service provider to supply warranty services.

The program will help provide much needed certainty to consumers, and a boost to the auto industry, during the restructuring period. While the Administration recognizes that general economic uncertainty may continue to impact new vehicle sales, and that the ultimate solution for a healthy auto industry is a broad restructuring of the industry and a general economic recovery, the program will support and encourage the continued viability and restructuring of the auto industry by mitigating consumer uncertainty that is depressing demand for new vehicles.

What does the program mean for consumers?

• If you buy a new GM or Chrysler car during this restructuring period you will be eligible.

• You do not have to do anything to receive the U.S. commitment to your warrantee. It is automatic.

• The U.S. Treasury will work with the auto companies to back-stop your warrantee, and will commit to honoring that warrantee in the event that the manufacturer cannot.

Program Operation:
As part of their normal business operations, auto manufacturers establish an accounting reserve for each new vehicle sold, which reflects the expected cost of providing warranty services on that vehicle. Under the Warranty Commitment Program, the participating auto manufacturer will contribute cash to a separate special purpose company whose sole purpose is to pay covered warranty claims. The total amount of cash to be contributed will equal to 125% of the expected cost of paying for warranty service on each covered vehicle. The manufacturer will contribute 15% of the projected cost from its own funds, and Treasury will provide additional funds to cover 110% of the projected cost. The company holding the funds will be run separately from the auto manufacturer and will be able to continue paying warranty claims even if the auto manufacturer goes into bankruptcy or goes out of business. In that case, the special purpose company will use the funds in that account to facilitate the transfer of warranty obligations from the issuing manufacturer to a new warranty services provider.

The program will be run by a third party program administrator with the backing of financial resources allocated from the Treasury Department’s Troubled Asset Relief Program (TARP).

Eligible Auto Manufacturers:
Any domestic auto manufacturer is eligible to participate in the program. If a manufacturer decides to participate, it will work with the third party administrator to establish a warranty support program. Participating auto manufacturers will contribute 15% of the cash reserve for each new warranty they issue. The US Government will provide the remainder of the funding for the cash reserve on each new warranty issued by the participating auto manufacturer during the period in which it is enrolled in the program.

If the auto manufacturer goes out of business, the program administrator and the US Government will conduct a process to identify a qualified third party warranty service provider to assume responsibility for all of the manufacturer’s warranties covered by the program, in exchange for the assets of the program. Because of the significant funding of the reserve account, Treasury is confident that qualified third parties will be interested in taking over the warrantee obligations.

Eligible Warranties:
The program will cover the participating manufacturer’s warranty on every new car sold during its restructuring period

American Holding On To Their Cars

Americans are holding onto their cars for longer periods. According to a recent report by the research firm R. L. Polk & Company, the median age of cars in operation hit a record 9.4 years in 2008, up from 9.2 in 2006 and 2007, while the percentage of cars taken out of circulation fell to 5.1 percent, from 5.5 percent in 2007.

“People are hunkering down,” said Dave Goebel, a consultant with R. L. Polk. “There is great uncertainty about what the future holds, so people are going to avoid anything out of pocket.”

A separate survey of 713 vehicle owners by R. L. Polk found that 64 percent of them were “very likely” or “extremely likely” to keep their vehicles longer and 81 percent said they were going to take better care of their vehicles so they would last longer.

The overall results of Americans holding onto their cars, may result in a future drop in lemon law claim, since less new cars are being sold. Presently, 1-800-MY-LEMON has actually experienced a rise in overall lemon law and breach of warranty claims this year and has seen a significant increase in new clients, seeking lemon law help, over the last several months.