Warranty Gold goes bankrupt

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AUSTIN, Texas -- Austin-based Warranty Gold, which claims to be the country's leading seller of extended car warranties on the Internet, has filed bankruptcy filings in the Austin area, turning 67,000 customers across the country into unsecured creditors.

The filing in U.S. Bankruptcy Court estimates the company's assets between $10 million and $50 million and put liabilities in the same range.

Customers made their frustrations heard on chat rooms and via e-mails. "I am so mad!" said a furious Melissa Walter, a Lakeland, Fla., resident who paid $1,500 for her policy in February 2003. "You have no idea how upset I am right now."

Warranty Gold blamed National Warranty, the company that it hired to pay claims on the service contracts, and plans to file a lawsuit against the Lincoln, Neb.-based company, which entered into bankruptcy-type proceedings on June 7.

Already, the company has told the bankruptcy court it won't have any money to pay unsecured creditors, which include customers who are out as much as several thousand dollars each for premiums and repair costs they had to pay out of their own pockets.

A lawyer representing Warranty Gold estimated that it would cost the company more than $30 million to refund all of the policies handled by National Warranty.

Despite the filing, Warranty Gold continued to sell policies last week.