I thought it would be worth looking at your rights when a firm collapses, in light of an online travel firm going bust recently affecting over 140,000 consumers that was not covered by ATOL or ABTA.

If you have paid by a credit card (even if it is just 1p or a deposit), you can submit a claim against the credit card provider under Section 75 of the Consumer Credit Act 1974 as the credit card provider is jointly and severally liable when things go wrong with retailers.

Things get a bit more complicated if you have booked flights and hotels with a provider such as ‘Lowcostholidays’ (“LCH”) that went bust recently, as the question may arise as to whether Lowcostholidays was an agent or intermediary.

If you have booked a flight and hotel together via Lowcostholidays, this was bought as a package therefore there is a direct link with LCH which validates your claim.

If you used LCH to simply book a hotel and you booked your flights separately, then it’s fair to say that LCH acted as an agent / intermediary and Section 75 may not work as there is no direct link between you and the hotel.

This is what the credit card provider may use to reject your claim if it falls in that remit, so be prepared for a rejection and submit a claim to the Financial Ombudsman Service.  This is a free and impartial adjudicator, and they usually give a decision within 8 weeks of receipt.

If you have used a debit card, you are not entitled to a Section 75 claim although you can submit a chargeback claim within 120 days of the date that your holiday was due to commence.  This is not a legal requirement by the card providers or banks, although it is worth trying.

Travel insurance policies may cover the failure of a travel firm, although it’s doubtful unless you have specifically requested this.

Things can get more complicated if you have booked a package holiday with a firm that has gone bust, as they usually pay for your flights immediately on receipt of your booking and for the hotel 30 days later.  This means that you need to decide if you want to proceed with your flights and try to arrange your accommodation separately, or try to arrange for your flights to be changed.  You can book your hotel again, keep receipts and try to submit a claim in due course.

Registering as a creditor is usually a fruitless exercise, as you are bottom of the heap when it comes to being paid any monies due but it is another option to consider.

I cover Section 75 credit card claims, debit card chargebacks, insurance claims and the role of the Ombudsman in my book now on sale via Amazon as an e-book and paperback priced £2.99 / £7.99.

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