California to establish fund for victims of Bankrupt Dealerships

[XDCX]

According to Consumer Reports, the State of California is setting up a fund to assist consumers that are victims of Bankrupt Dealerships. The fund will be established to assist owners in situations where a dealership has failed to pay-off a lien on a trade-in vehicle and then goes bankrupt.

The report indicates that the problem is so widespread that it has affected hundreds of California consumers for millions of dollars.

Here's a link to the story: http://blogs.consumerreports.org/money/2008/02/autoloans_payof.html

A couple of questions for the California Dealers:

Is the problem really that widespread?
Where is the State going to get the money for the fund?

[XDCX]

I guess that this shouldn't be a big surprise, I just read a report indicating that the dealers are paying for the Bankruptcy Protection Fund.

Apparently the law requires that the dealers pay $1 per vehicle sale to a maximum of $2500/year until the Fund reaches $5 Million. The law, which will go into effect in July, also stipulates that the dealers cannot pass this fee along to the consumer.

Here's a copy of the news report: http://www.insidebayarea.com/trivalleyherald/localnews/ci_8623348