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Now what? Your tour operator went out of business

  • Story Highlights
  • If you paid with a credit card, you can contest charges for the missed trip
  • If you bought travel insurance, see if the policy covers "operator default"
  • Watch out for companies that make urgent requests for payment
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By Brooke Kosofsky Glassberg
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Budget Travel

(Budget Travel) -- When tour operators such as Traveland implode, their customers get burned. Here's what to do if ...

You paid with your credit card

Notify the credit card company right away. It's within your rights to ask for a refund for any services that were never rendered, as long as you contest the charges within 60 days of the charges appearing on a statement (and some credit card companies extend this period to 90 days). The more money you've paid way in advance, the less you'll get back. So avoid paying anything but basic deposits very far out.

You paid with cash or a check

Your sole recourse is filing a claim in bankruptcy court. Few businesses file for insolvency, but if they do, you become a creditor and stand a chance of recovering some of your lost funds -- just be prepared to wait a while, at least two or three years. It'll help your claim if you have a receipt and if you noted on each check exactly what the payment was for.

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The operator was a member of a professional organization

The big three groups -- United States Tour Operators Association, National Tour Association and American Society of Travel Agents -- may be able to help you rebook through a different operator (at additional cost). The USTOA has a consumer protection plan requiring members to keep $1 million in reserve so customers can recover at least some of their money.

You bought travel insurance

See if your policy covers "operator default." You may be able to get the insurance company to recoup any losses that the credit card company hasn't already taken care of. If you purchased the insurance policy through the operator, direct your questions to the plan administrator.

You used a travel agent

You have an advocate who can arrange a backup plan. Agents are unlikely to guarantee company solvency, however, and they won't be too helpful when it comes to recovering lost money. Sometimes they'll offer restitution to maintain a valuable relationship. While your odds of success are low, you could also try suing the agent in small claims court.

You still want to go on the trip

Contact the NTA even if your outfitter wasn't a member. The organization might match you up with an operator who will be willing to accommodate you, at a discount, on short notice. Also, look closely at your itinerary and approach the individual hotels, airlines and tour guides directly. Hotels should honor any paid reservations, and airline tickets are valid even if the middleman folds.

You don't want to go

Make those phone calls anyway. You never know who'll take pity on you and refund some or all of your money.

Watch out for these red flags

  • There's no direct phone number
  • Only the answering machine picks up
  • Urgent requests for payment
  • Few trip specifics
  • A corporate shake-up
  • Better Business Bureau complaints
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