If you enter into a contract with a company and they go out of business, what happens if you are still be charged for services that were never rendered?

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If you enter into a contract with a company and they go out of business, what happens if you are still be charged for services that were never rendered?

My mom made a contract with rejuvination salon. She received 1 treatment and they then went out of business. She has called corporate and informed them However she is still paying for services that she has not received. They continue to deduct money her bank account. Does she have to keep paying them? After they left and gave her notice of them leaving.

Asked on January 10, 2011 under General Practice, Arizona

Answers:

M.T.G., Member, New York Bar / FreeAdvice Contributing Attorney

Answered 11 years ago | Contributor

This is truly why I hate direct debit from an account. Banks will continue to debt even after the contract is over or has been breached and nullified.  You Mom does not have to pay for services that she did not - or likely will not - receive. But she does need to read her contract.  Is there another salon in the area that is within a reasonable distance for her to continue services?  Probably not. So what she needs to do is to send a letter to the corporate offices and advise them that her contract has been breached and is thereby rendered void and that they continue to debit her account and that she wants full reimbursement and for it to end immediately.  Then she needs to contact her bank and let them know what is going on and to stop the debit.  I have heard of people even closing accounts and then opening new ones to get it to stop. Good luck.


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