The Guaranty Fund and Bankruptcy
A colleague recently sent me the following information about the Guaranty Fund:
"A homeowner who is precluded by the Bankruptcy Court from pursuing legal action against the contractor may still be eligible for compensation from the Guaranty Fund.The homeowner can file a Request for Special Access to the Guaranty Fund. To receive this application, call the Office of Consumer Affairs at 888-283-3757. The application must be submitted to the Office of Consumer Affairs and Business Regulation within two years and six months of the contract date. Special Access to the Fund only applies if the contractor's debts have been discharged and the bankruptcy case is closed."
However, this option is no longer available. Even if the contractor files for bankruptcy, the consumer must obtain a judgment in order to collect from the Guaranty Fund. I just filed a case against a contractor and he filed for bankruptcy. As a result, I have to file a motion with the bankruptcy court in order to continue with the case against the contractor and obtain the judgment.
It is unfortunate that my client has to spend the funds to obtain the judgment, but that is currently what is required. It is still worth it for the client to obtain the $10,000.00 from the Guaranty Fund.
Please keep in mind that I am not a bankruptcy attorney, and I am not able to give advice regarding bankruptcy law.