Business closed, how to get $1200 of unused hours back?

[Joli]

Hi folks,

I would like to hear what others would do in my situation.

1- Context: purchased some hours for flight instruction at a school that had been in business for a while. Total amount I have prepaid was $1200, this was immediately prior to the start of the pandemic.

2- Early August: I receive an email that is addressed to every student stating that they are unable to stay afloat due to gas and hiring costs.
Two days later I email them and call them but both phone and email return not found/phone disconnected. Their website was deleted.

3- My goal: I would like to have the $1200 back.

4- What I have done so far: I checked the small claims court requirements. It seems this would be a case for there. They ask for the name and address of the person's to notify. I am unable to get this information so small claims court seems to be out of the picture.

5- My question: what would you do? (I am not hurting for the $1200 but I expect better behavior from business owners.)


Thank you.

[Rob5TCP]

If they are going bankrupt -- you would just be another unsecured creditor. If they abandon the business that is a whole other issue.
Worth pursuing -- see if any other students would join with you ??

[J295]

Step one is for you to identify the person or entity that you did business with.

[jebmke]

If this was paid on a credit card you might be able to get a credit back from the CC since these hours were not delivered. A friend of mine did this on a prepaid tour months after original charge.

[CaptainT]

On the credit or gift card was there a expiration date? 4 years to have not used a credit is a long time.

[Workinprogress]

Probably thank your lucky stars you are not in some student's shoes, like this one here. She lost 100K. It's likely the same school the OP is talking about.

https://www.aopa.org/news-and-media/all ... s-students

[toddthebod]

You are welcome to file suit. You are probably out of luck, though. Sorry.

[OnTrack2020]

Did you pre-pay with a credit card (possible chargeback prior to them filing bankruptcy???) or by having your checking account debited (small claims court, even then you would still have to collect)?

The entire process may be difficult.....

[Joli]

Probably thank your lucky stars you are not in some student's shoes, like this one here. She lost 100K. It's likely the same school the OP is talking about.

https://www.aopa.org/news-and-media/all ... s-students

I had not seen this article. Yes, this is the school. $100k, wow!

[Joli]

On the credit or gift card was there a expiration date? 4 years to have not used a credit is a long time.

Yes, paid with credit card in late 2018. There is no expiration date in those hours.

[Joli]

Did you pre-pay with a credit card (possible chargeback prior to them filing bankruptcy???) or by having your checking account debited (small claims court, even then you would still have to collect)?

The entire process may be difficult.....

Got it. It was paid with credit card in late 2018.

Just to clarify and for my understanding: could I only use the small claims court only if a checking account was used directly to pay the business? Or assuming the credit card company won't give me credit due to being a 2018 transaction could I still trigger a small claims court case? (Given the business went bankrupt per the aopa link posted by another member, I am just asking for future reference).

[Joli]

If they are going bankrupt -- you would just be another unsecured creditor. If they abandon the business that is a whole other issue.
Worth pursuing -- see if any other students would join with you ??

Do bankruptcy lawyers do the due diligence and see the hours ledger and contact the students who are creditors? Or should I just reach out to the lawyers identified in the aopa link posted by workinprogress above?

[bluebolt]

Small claims will likely not help if they are insolvent/declaring bankruptcy. You will be behind secured creditors and in line with all other unsecured creditors. It stinks, but that's how it works. Sorry that you're going through this.

[Joli]

Small claims will likely not help if they are insolvent/declaring bankruptcy. You will be behind secured creditors and in line with all other unsecured creditors. It stinks, but that's how it works. Sorry that you're going through this.

Thank you Bluebolt. Always learning. I rarely pay in advance but this one time got me .

[jumppilot]

Not much to add, other than “welcome to aviation.”

It’s been good the last few years, but make no mistake, this career is cutthroat and not for the faint of heart.

All you need now is 4 different uniforms in your closet representing bankruptcies and furloughs .

[bluebolt]

Small claims will likely not help if they are insolvent/declaring bankruptcy. You will be behind secured creditors and in line with all other unsecured creditors. It stinks, but that's how it works. Sorry that you're going through this.

Thank you Bluebolt. Always learning. I rarely pay in advance but this one time got me .

Here's some info on how this works.

https://www.nolo.com/legal-encyclopedia ... uptcy.html

Googling will get you more info.

[Joli]

Not much to add, other than “welcome to aviation.”

It’s been good the last few years, but make no mistake, this career is cutthroat and not for the faint of heart.

All you need now is 4 different uniforms in your closet representing bankruptcies and furloughs .

Understood, sorry to hear it is cutthroat. In my case was just an attempt to get a new hobby.

[Joli]

Small claims will likely not help if they are insolvent/declaring bankruptcy. You will be behind secured creditors and in line with all other unsecured creditors. It stinks, but that's how it works. Sorry that you're going through this.

Thank you Bluebolt. Always learning. I rarely pay in advance but this one time got me .

Here's some info on how this works.

https://www.nolo.com/legal-encyclopedia ... uptcy.html

Googling will get you more info.

Thank you Bluebolt. Starting my research on this. Likely is too much hassle for $1200 but will do some research before making a decision. Thank you again.

[ResearchMed]

It was paid with credit card in late 2018.

Here is a possibility. Which charge card? Some are more consumer friendly... some not.

My understanding (and IANAL) is that in cases where someone pre-pays (e.g., a excursion during a future vacation), the "clock" on "desputing the charge" might not be too late if filed as soon as one learns there is actually a failure to provide the goods/services.

Ordinarily, I'd suggest speaking with an attorney, but unless someone chimes in here more definitively, with $1,200 at stake, you don't want to use up most of it with fees... or why bother, etc.

And that poor other student... and perhaps more like that...!??
That sounds more like outright fraud... did the owner really think in May that they were going to be able to provide all of those lessons, plus plane access/etc.? The "wire it now" sounds very suspicious.

RM

[Scotttheking]

4 years later? In my opinion, you don’t.

[jebmke]

My understanding (and IANAL) is that in cases where someone pre-pays (e.g., a excursion during a future vacation), the "clock" on "desputing the charge" might not be too late if filed as soon as one learns there is actually a failure to provide the goods/services.

Right; this may be spelled out in the card Ts&Cs. In the case I cited there was a 60-day period so the claim had to be made as soon as he became aware that the business had closed; that is, the failure was deemed to have occurred when he learned of the business closure.

[muddgirl]

I had airline tickets with a bankrupt airline that I had refunded through my credit card chargeback process, we had bought them more than 60 days before but the termis are way more complicated then that when it comes to future delivery of services. That would be my first step, and I would do it ASAP.

My understanding is the credit card company likely already has a part in the bankruptcy claim so if they refund you, it gets rolled up for them with all the other transactions.

[ResearchMed]

My understanding (and IANAL) is that in cases where someone pre-pays (e.g., a excursion during a future vacation), the "clock" on "desputing the charge" might not be too late if filed as soon as one learns there is actually a failure to provide the goods/services.

Right; this may be spelled out in the card Ts&Cs. In the case I cited there was a 60-day period so the claim had to be made as soon as he became aware that the business had closed; that is, the failure was deemed to have occurred when he learned of the business closure.

Right.
The context I am thinking of, cruises with excursions that are charged at the time of booking, can easily be 2-3 years in advance.
We do not have personal experience with a claim of that sort, that far back, so I can't speak (er, write) from personal experience.

RM

[jebmke]

My understanding (and IANAL) is that in cases where someone pre-pays (e.g., a excursion during a future vacation), the "clock" on "desputing the charge" might not be too late if filed as soon as one learns there is actually a failure to provide the goods/services.

Right; this may be spelled out in the card Ts&Cs. In the case I cited there was a 60-day period so the claim had to be made as soon as he became aware that the business had closed; that is, the failure was deemed to have occurred when he learned of the business closure.

Right.
The context I am thinking of, cruises with excursions that are charged at the time of booking, can easily be 2-3 years in advance.
We do not have personal experience with a claim of that sort, that far back, so I can't speak (er, write) from personal experience.

RM

me neither; only details told to me. Apparently the key is to be careful how you explain the sequence of events and avoid any discussion of when the business closed and focus instead on highlighting "I just learned"

[Joli]

It was paid with credit card in late 2018.

Here is a possibility. Which charge card? Some are more consumer friendly... some not.

My understanding (and IANAL) is that in cases where someone pre-pays (e.g., a excursion during a future vacation), the "clock" on "desputing the charge" might not be too late if filed as soon as one learns there is actually a failure to provide the goods/services.

Ordinarily, I'd suggest speaking with an attorney, but unless someone chimes in here more definitively, with $1,200 at stake, you don't want to use up most of it with fees... or why bother, etc.

And that poor other student... and perhaps more like that...!??
That sounds more like outright fraud... did the owner really think in May that they were going to be able to provide all of those lessons, plus plane access/etc.? The "wire it now" sounds very suspicious.

RM

Yes, very hard for the student who prepaid $100k worth of hours. I will look into the option of disputing via credit card company. My credit card provider is one of the big ones, will call them on Tuesday and see what they say.

[Joli]

My understanding (and IANAL) is that in cases where someone pre-pays (e.g., a excursion during a future vacation), the "clock" on "desputing the charge" might not be too late if filed as soon as one learns there is actually a failure to provide the goods/services.

Right; this may be spelled out in the card Ts&Cs. In the case I cited there was a 60-day period so the claim had to be made as soon as he became aware that the business had closed; that is, the failure was deemed to have occurred when he learned of the business closure.

Right.
The context I am thinking of, cruises with excursions that are charged at the time of booking, can easily be 2-3 years in advance.
We do not have personal experience with a claim of that sort, that far back, so I can't speak (er, write) from personal experience.

RM

me neither; only details told to me. Apparently the key is to be careful how you explain the sequence of events and avoid any discussion of when the business closed and focus instead on highlighting "I just learned"

Thank you folks, will look into this as an option.

[runningshoes]

The article listed a court date within the next few days, so you might have some luck by attending the hearing. If there already is a process for the BK filing, your attempt through small claims court might be a waste of effort.

[beernutz]

https://www.aopa.org/news-and-media/all ... ces-prison

Owner of defunct Virginia flight school faces prison
Agrees to tax evasion plea

[ResearchMed]

https://www.aopa.org/news-and-media/all ... ces-prison

Owner of defunct Virginia flight school faces prison
Agrees to tax evasion plea

There is an interesting section in the above link:

"...
Christian Brielmaier might be one of the few students who was able to recover at least some of his deposit, $5,000. He argued with his bank that under Virginia’s consumer protection law, the no-refund policy was illegal if there was a failure to provide service. In his case, Rychlik had guaranteed the completion of Brielmaier's training by a certain date, but due to unresolved maintenance issues and cancellation of flight training, the deadline was missed.
..."
[emphasis added]


It's not clear (to me, anyway) how CB benefited from this. Did he recover the money from the bank itself, perhaps from a check he wrote?
I'm not familiar with how a bank would be involved in a consumer protection law in a case that is against some other business.
Does this mean the *bank* refunded some of his money?

But for OP, maybe this adds something to a case with your charge card vendor?
Perhaps it is specifically a Virginia law of some sort?
Worth a call to the Virginia Attorney General's Office (consumer affairs type group) to ask about this?

RM

[Marq1]

Life lesson learned!

[glitchy]

https://www.aopa.org/news-and-media/all ... ces-prison

Owner of defunct Virginia flight school faces prison
Agrees to tax evasion plea

Ouch. "[T]he court does not anticipate there will be sufficient assets to repay creditors" does not sound hopeful if the credit card angle doesn't work out.

Sounds like the guy had a number of businesses running on a shoestring that broke. It's easy enough to be critical of him but I think a lot of ultimately-successful small businesses go through some very lean times before making it. Also not the first time I have seen reports of not paying payroll taxes--are the feds at all lenient about late payments? Delaying them seems like a desperation move but not paying them at all only results in, well, this.

I knew a local ice cream place that had a gofundme after the business was seized for not paying payroll tax, but I don't think criminal charges resulted. (In that cae I was amazed that people donated to get them back in business.)

[Caduceus]

Most likely you are out of luck. Do you really want to go through the aggravation just to get a fraction of $1200 back? I'd write this one up as a loss and move on.

I used to be the kind of person who would spend hours on the phone trying to get $15 back just for the principle of it. Life's too short for this type of crap and you have to decide what your cut-off point is for pursuing these things.

Thinking out of the box: if there's aviation equipment/stuff that you don't mind having and you can contact him, you might ask if can settle the debt with goods. My father once got a personal debt paid off with Tupperware; our home looked like a Tupperware store for ages until we convinced my mother that, no, we had run out of creative ways to use Tupperware!

[Joli]

But for OP, maybe this adds something to a case with your charge card vendor?
Perhaps it is specifically a Virginia law of some sort?
Worth a call to the Virginia Attorney General's Office (consumer affairs type group) to ask about this?

RM

Thank you

[Joli]

Thinking out of the box: if there's aviation equipment/stuff that you don't mind having and you can contact him, you might ask if can settle the debt with goods. My father once got a personal debt paid off with Tupperware; our home looked like a Tupperware store for ages until we convinced my mother that, no, we had run out of creative ways to use Tupperware!

That would not be a bad deal in this situation.

[Harmanic]

I had airline tickets with a bankrupt airline that I had refunded through my credit card chargeback process, we had bought them more than 60 days before but the termis are way more complicated then that when it comes to future delivery of services. That would be my first step, and I would do it ASAP.

My understanding is the credit card company likely already has a part in the bankruptcy claim so if they refund you, it gets rolled up for them with all the other transactions.

I had a similar issue with an airline. The credit card company told me that the clock for claims starts when the airline cancels your flight, not when you book the flight. I am not sure if this applies to the OP's issue, but a quick call to the credit card company should resolve the question.

[Joli]

Thank you, everyone for their input and feedback.

Credit card answered they can only act if it had been up to 535 days.

The office of the attorney general (consumer protection) would pursue my case if it had been up to 3 years since the transaction. They did recommended another office to see if they can assist during bankruptcy procedures. Given that the owner is paying $3.5M to IRS (per articles above) plus the note in one of the articles that states no other funds available to pay creditors, I am not taking any other action.

Thank you again for all the feedback.

[ResearchMed]

I had a similar issue with an airline. The credit card company told me that the clock for claims starts when the airline cancels your flight, not when you book the flight. I am not sure if this applies to the OP's issue, but a quick call to the credit card company should resolve the question.

This pretty much matches what our "unofficial understanding" has been.
Perhaps we should double check with the charge cards to see if they each have different policies, which wouldn't be too surprising. And... precisely what they each are!
Then we could use the best card for "advance purchase" things.

Credit card answered they can only act if it had been up to 535 days.

And also find out to what extent the different card flavors/vendors have different policies about this.

Very helpful, including helping with how to phrase the questions.
Thanks!

RM

[bluebolt]

But for OP, maybe this adds something to a case with your charge card vendor?
Perhaps it is specifically a Virginia law of some sort?
Worth a call to the Virginia Attorney General's Office (consumer affairs type group) to ask about this?

RM

Thank you

My understanding of this situation where the person got a refund was that the time had passed when the services were promised to be delivered. Don't know if that's the case with OP, but certainly an angle to work with a credit card dispute.

[bluebolt]

Thinking out of the box: if there's aviation equipment/stuff that you don't mind having and you can contact him, you might ask if can settle the debt with goods. My father once got a personal debt paid off with Tupperware; our home looked like a Tupperware store for ages until we convinced my mother that, no, we had run out of creative ways to use Tupperware!

That would not be a bad deal in this situation.

If he's already declared bankruptcy, he can't use assets of the business to settle debts/disputes because it will be seen as favoring that party over the rest of the creditors.

[LotsaGray]

You are welcome to file suit. You are probably out of luck, though. Sorry.

Don’t need to sue. Need to file a bk claim. Still probably. Out off luck

[lstone19]

While I doubt there will be any recovery from the creditor, I think he can then deduct the $1,200 on his tax return as a bad debt. I don't believe this can be done until it becomes totally worthless which would be at the end of the bankruptcy process.

[N10sive]

You will need to read your credit card terms but the CC route is probably your best bet.

Unfortunately it sounds like you didn’t receive a timeline for the goods/services to be provided so it might be hard to claim.

As an example I prepaid for a heli ski trip a year prior that the provider ultimately cancelled however they were saying I did due to the pandemic. I ended up going the CC route. I had 90 days to file after the date in which the service was to be provided.

I think American Express has more lenient terms. My experience was with BoFa and it worked out well for me.