Crystal Cruises closed permanently this week. That's left many consumers wondering what they can do if a cruise line goes bankrupt and owes them a refund.

This is how to get a refund from a bankrupt cruise line

If a cruise line goes bankrupt while holding a customer’s cash, does the money just go down with the ship? That’s what many Crystal Cruises customers are asking this week after the company suddenly stopped operating.

But the fear of bankruptcy and sudden shutdowns is not limited to this particular cruise line. Throughout the pandemic, our team has received a steady stream of concerned messages from cruise ship passengers. These travelers all have large sums of money “invested” in various cruise lines via deposits and future credits.

George Eeds is one passenger who got an unpleasant confirmation about his cruise scheduled for June — and the refund he was hoping to get. He paid Crystal Cruises nearly $6,000 almost three years ago. Now, with the cessation of the cruise line, he’s realizing his cash is in no-man’s land.

So what can a consumer like Eeds do if a cruise line goes bankrupt while holding their cash?  (*Jump straight to steps to get your money back.)

Planning a cruise long before the pandemic

Long before any cruiser had heard about the coronavirus, Eeds booked a cruise from Los Angeles to Vancouver, Canada.

“In December 2019, we booked three cabins on Crystal’s Serenity,” Eeds explained. “The cruise was scheduled for June 14, 2022, from Los Angeles.”

At the time, Eeds put down a deposit of $5,425 for the journey.

The luxury cruise would take the family up the beautiful California coast, ending in Vancouver, Canada.

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Crystal Cruises has ceased operation now that its parent company is bankrupt. This is a sailing that will never happen and the passenger wants his money back.
Now that Crystal Cruises has ceased to operate, the cruise line has canceled this and all other sailings. Passengers want to know how to get their money back.

Because of the pandemic, the cruise line hadn’t required full payment – yet. In January 2022, after reading all the predictions of the fate of Crystal Cruises, the family decided to cancel.

On January 19, 2022, I requested a refund of our deposits totaling $5,425.25. I had heard rumors that Crystal was preparing to declare bankruptcy, which it now has done. Crystal did send us emails confirming our refunds as ‘pending.’ But as of yet, we have not received any refund. According to the terms of our Crystal contract, the cruise line owes us a full refund if we cancel before February 14, 2022. Now I’m not able to contact Crystal through their customer service number. Can you help?

What happens when a cruise line enters bankruptcy protection?

Unfortunately, once a cruise line (or its parent company) declares bankruptcy, it receives legal bankruptcy protection. There’s no way for a consumer advocacy team to negotiate around that. In the case of Crystal Cruises, the company has reportedly fired virtually all of its employees. There’s no one left who has the authority to negotiate.

It appears the company will hand over everything to its legal team and the bankruptcy court.

This behavior certainly isn’t unusual for a bankrupt company. But unfortunately, that has left many would-be passengers wondering how to get their money back from the cruise line.

What you can do to get your money back from a bankrupt cruise line

In the past, we’ve had a flood of requests asking how to get money back from a bankrupt airline. But now, that surge has shifted to how to get a refund from a bankrupt cruise line. The premise is similar. Here’s exactly what you need to know about getting your money back.

  • File a credit card dispute
    The Fair Credit Billing Act (FCBA) protects credit card users against merchants who don’t provide the services as described. If you’ve paid a cruise line for a trip it’s no longer able to provide, your credit card company should protect you. You can file a credit card dispute to reverse the money paid. That company will have 30 days to justify the payment, and if it doesn’t respond, you’ll win the chargeback. It isn’t likely that a bankrupt cruise line will fight a credit card chargeback. The biggest challenge a consumer will hit here is that the many customer service agents responsible for investigating credit card disputes misunderstand the time limits listed in the FCBA. Citing a deadline to report as 60 days from the date the charge appeared on the consumer’s statement, companies reject many valid credit card disputes. As our helpful executive contact at Bank of America explains in this article about bankrupt airlines,  it is “a customer’s responsibility to file a claim within 60 days following the statement containing the disputed transaction. As additional background, the general time frame allowed for chargebacks under the Visa/MasterCard chargeback guide is 120 days from the transaction date. When the merchant is bankrupt, that time frame is generally extended to 120 days from the expected date of service. (Bank of America spokesperson)” So, if you’ve got a cruise scheduled for June 2022, and the company goes bankrupt before giving you a refund, you can file a dispute within 120 days after that date. You can read more about credit card disputes here.
  • Ask your bank for help.
    If you didn’t pay the cruise line with a credit card and instead used a debit card or check, then it’s a bit more complicated. Many banks will provide the same FCBA credit card protections to their debit card holders. But remember, there is no chargeback protection or requirement for a direct bank transfer. This is one of the reasons we always recommend that consumers use a credit card to make significant purchases. Keep in mind, your bank can always protect you – but you may need to be a bit more insistent in this case.
  • Review your travel insurance policy.
    If you purchased travel insurance for a cruise that was canceled by the sudden cessation of a cruise line, you might be in luck. Many travel insurance policies protect travelers if a provider goes out of business. Make sure to review your policy and file a claim if you have such protection. If you’re planning a future trip – cruise or otherwise – use the insuremytrip website to find policies that will protect you against travel providers declaring bankruptcy.
  • Are you located in California or another state with a travelers’ restitution fund?
    If you’re located in California, you may just be in luck. California requires Sellers of Travel to register and to pay into a restitution fund. Consumers who have been impacted by a travel provider’s bankruptcy can file a claim through the TCRC (Travel Consumer Restitution Corporation) here. To find out if your state has a similar program, enter your state plus “travelers restitution fund” or “sellers of travel information” into a Google search.
  • Stay aware of the progress of the bankruptcy proceedings.
    This is the long-term approach. If you have no other option but to wait for the bankruptcy proceedings to conclude, expect a protracted and probably unsatisfactory result. Consumers typically get the short end of the stick in these filings. But the short end is better than nothing. If you’re owed a chunk of money from a bankrupt cruise line, make certain that you keep aware of the progress, as there are often time limits for consumers to respond to any settlements. You can use the Google alerts feature to stay current on the progress. In the search field, enter the name of the cruise line and “bankruptcy information,” your email address, and the frequency you would like updates. You’ll then receive a news alert each time the cruise line and bankruptcy appear on the internet.
  • Hope for the best.
    Your last option is to hope for the best. Yes, I know hoping will not get your money back, but remember, not all companies that go into bankruptcy stay there. Many rise like a phoenix from the ashes and re-emerge better than ever. If you have no other option but to wait it out, you might just be rewarded in the end. (Michelle Couch-Friedman, Elliott Advocacy)
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