Company I had monthly membership with went out of business

I had a one year contract with a gym where they automatically deduct the montly payment out of my bank account. They went out of business and informed me that a new gym will be deducting the payment out of my bank account and to use their service instead. The new gym has the same equipment and is actually closer to me but I would rather go to a different gym if I had the opportunity.

Am I obligated to fulfill the rest of the one year contract once the company goes out of business?

Check.  In the case of them going out of business the new gym should give you the option to cancel the contract.  We just had this happen here in Atlanta.  The gym we had a membership sold out to a corporate chain.  The chain did allow those with contracts to cancel within 72 hours.  Don't delay. 

Phillong84:

Am I obligated to fulfill the rest of the one year contract once the company goes out of business?

Depends on a few things.

1 - What does your contract say about the contingency of the gym going out of business?

2 - It's possible that the successor gym was assigned the contracts or bought them. In which case the successor gym would be just as contractually obligated to you as you would be to them.

3 - Your state might have some statutory requirements regarding that issue. Look up the CA Business and Professions Code and see if gyms and health clubs are regulated:

http://www.leginfo.ca....

4 - Go to the gym and ask if you can get out of the contract. Get any cancellation agreement in writing.

Thank you both for your replies, I ended up calling and they said they actually didn't have access to my account they would just honor the price I had with the other gym and that I didn't have to use them if I didn't want. I guess it does help to just pick up the phone and call Thanks again for your replies!

Phillong84:

I ended up calling and they said they actually didn't have access to my account they would just honor the price I had with the other gym and that I didn't have to use them if I didn't want. I guess it does help to just pick up the phone and call

True.

But you still can't rely solely on the phone call.

Make sure you read your contract and take some precautions.

Or you could end up like a lot of our other posters who didn't take precautions and ended up writing about how the collection agencies are coming after them.

Also be careful about your bank account.

If you had automatic payments out of your bank account with the other gym, the bank might continue the payments unless you go to the bank and make sure you put a stop to the payments.