When Robert and Donna Zarb traded in their 2005 recreational vehicle for a newer model last year, they said Walt Michal’s RV Superstore in Belleville, Mish., promised to pay off the loan on their old RV.

But the store never did. The dealership now is out of business, leaving the Waterford, Mich., couple on the hook for the $179,700 balance on their trade-in, plus the $256,874 cost of the new RV, according to the Detroit Free Press.

Now, the Zarbs and an Ypsilanti couple — also stuck with an outstanding $113,266 loan on an RV they traded in last year — are suing Walt Michal in Wayne County Circuit Court in an uphill battle to force him to pay off the debts.

Michal wouldn’t comment on the suits.

But consumer experts say the Michigan couples are among thousands of people nationally whose trade-ins weren’t paid off as promised by dealerships — many of which went out of business during the recession. The problem is known as car-kiting.

It’s unclear how serious the problem is in Michigan because the two state agencies that handle such incidents — the attorney general and secretary of state offices — said they don’t code complaints in a way to identify such cases.

However, Southfield consumer lawyer Adam Taub, who has handled a half-dozen such cases over the past few years, said: “The problem is more common than people might think.”

Although failing to pay off the outstanding loan when required by a purchase agreement is illegal, consumer experts say prosecutors rarely charge dealers with a crime, forcing consumers to sue to get their money back.

“It’s terrible what he did to us,” said Robert Zarb, 51, a supervisor at a Wayne County steel mill. “We trusted him.”

Buyers left on the hook for old debt

The Zarbs said they started getting a funny feeling about Walt Michal a week after driving off his lot in a shiny 2007 Fleetwood recreational vehicle in May 2008.

“We were sitting around talking about the deal and all of a sudden, I started wondering if we should call the bank to make sure he paid off our trade-in,” said Donna Zarb, 53, a human resources staffer for a major car firm.

Zarb said she called Flagstar Bank and was surprised to learn that Michal hadn’t paid off the $179,700 balance on the couple’s trade-in. She said Michal’s staff told her he was making periodic payments on the trade-in note and not to worry.

Eventually, Michal sent the couple a letter apologizing for the delay, blamed it on financial problems and personally guaranteed that he would pay off the loan as soon as possible.

But he never did.

Last fall, Michal’s lenders seized the inventory at his 32-acre lot on I-94 in Belleville, effectively shutting him down.

A former Michal’s staffer said the dealership was done in by soaring gas prices and the credit crunch that prevented potential buyers from getting loans.

Michal had continued paying the monthly installments on about 10 trade-ins and got eight of them paid off by the time his business crashed, the former staffer said, leaving the Zarbs and Thomas and Sally Quehl of Ypsilanti in the lurch. The Quehls owed $113,266 on their trade-in.

The Zarbs and the Quehls are suing Michal in Wayne County Circuit Court. The Quehls wouldn’t comment on their suit.

Michal wouldn’t talk. He sent letters to both couples promising to pay off the vehicles when he could and told a Michigan Secretary of State representative the same thing, an agency spokeswoman said.

One of his lawyers, Stanley Bershad of Southfield, said: “We’re working out the problems, and it won’t help anybody to talk about it.”

“In essence, Walt Michal stole their vehicles,” said Birmingham consumer lawyer Dani Liblang, who is suing on behalf of both couples. She said their trade-in vehicles are gone.

The Zarbs, who have stopped paying the trade-in note, said Michal damaged their credit.

According to Rosemary Shahan of the Consumers for Auto Reliability and Safety group in California, when a dealer fails to honor a pledge to pay off a trade-in, the dealer creates two victims: The purchasers wind up being legally responsible for cars they traded in, and anyone who buys the trade-in soon discovers that they can’t get title for the vehicle, which usually is repossessed to satisfy the original note.

“People go into these deals and come out with their credit completely trashed,” she said.

She said the only sure way for consumers to avoid the problem is to pay off their trade-ins before buying a newer vehicle.

The Michigan Secretary of State and Michigan Attorney General’s Office said they don’t code complaints in a way to tell how many residents are victimized. But Liblang and Southfield consumer lawyer Adam Taub said they have sued eight car dealers since 2000 over the issue.

“The defense in all of these cases is the same — that the dealer screwed the customer fair and square,” Taub said.