Land Travel did not belong to any bonding scheme that would have ensured that customers were compensated for losses. If a bonded company fails, holidaymakers who have paid but not yet taken their holiday get their money back. Those stranded abroad will be brought back without extra cost.
A spokesman for the Consumers' Association said: 'We always advise people to book bonded holidays. Alternatively, book using your credit card.
'If the tour company collapses you can then claim equally against the tour operator and the credit card company.'
Under the Consumer Credit Act the card companies are bound to reimburse payments over pounds 100 made to the tour operator.
Where the voucher is made out to the travel agent the situation is far less certain. A spokesman for Barclaycard said: 'While Barclaycard does not accept any legal liability in such cases for flights or holidays purchased in the UK by whatever means, we will ensure that the amount debited to your Barclaycard statement will be refunded if the tour operator or airline collapses.'
Barclaycard will consider 'sympathetically' claims under pounds 100 made by Land Travel holidaymakers. The other credit card companies should also be approachable.
If you intend paying for your holiday by gold card, check with the card issuer in advance. Only a handful of gold cards are bound by the Consumer Credit Act. But American Express says that, although under no legal obligation, it will reimburse.
Most debit cards, used like a cheque, do not offer protection.
One or two holiday insurance policies will pay out if a tour company or carrier collapses. However, it is the exception rather than the rule.
The Accident & General Travel Guard policy, which is sold through travel agents or can be bought direct, provides pounds 5,000 of cover. You can only claim on the policy if the money cannot be recovered elsewhere.
Abbey National has produced a guide to buying travel insurance. Limited numbers are available from:
Travel Check, Abbey National, Department 8060, Winterhill, Milton Keynes, MK6 1HQ.