Recourse for Consumers When Business Closes/Files Bankruptcy

Written by CFB Blogger. Posted in Blog

What do you do when you’ve ordered and paid for merchandise and the retailer from who you purchased the bunk beds or washing machine or sofa goes out of business, whether or not they file bankruptcy? This same scenario holds true for those ubiquitous gift cards they we all send/receive for birthday and Christmas gifts. Kelvin Collins, writing for The Augusta Chronicle, queried the Better Business Bureau (BBB). Here are some of the BBB’s tips: • If the company has closed but not filed for bankruptcy, send a letter and, if possible, visit the site to see if a message has been left on the door. You should also ask neighboring businesses if they have any contact information. If you have merchandise actually in the store, try to contact the landlord who may give you access to the facility to retrieve your goods. Contact the police if nothing else works. • Check your warranties (you keep them, right?) Although warranties vary greatly, often, if a retailer closes, you may be able to rely on the manufacturer’s warranty. Conversely, if the manufacturer goes out of business, you may be able to rely on the retailer’s warranty. “Many extended warranties are administered by third parties and are typically not affected by a retailer or manufacturer closing its doors,” the BBB avers. • Under Chapter 7 bankruptcy law, any money received from the sale of the company goes first to pay back taxes, secured creditors and employees. If any assets remain, they will be divided among unsecured creditors, including customers who did not receive services or goods that have been paid for. If you paid with a credit card you may be able to dispute the charge with their (or your) credit card company to get your money back. If, however, you paid by check or cash, you will need to file a claim with the bankruptcy court administering the process. Go to www.uscourts.gov for additional information. • According to the news report, Chapter 11 bankruptcy allows the company to stay in business while it reorganizes for future stability. If a company files for Chapter 11 protection, they may sometime still redeem gift cards, fulfill services and deliver on previously-ordered goods. However, “some Chapter 11 bankruptcies are unsuccessful and convert into Chapter 7, which leads to complete liquidation. At that point, the chances for the consumer to receive any compensation are greatly diminished”. • Under Chapter 7 bankruptcy law, if you have a gift card from a company that has closed and declared Chapter 7 bankruptcy, you will need to file a claim through the courts. Under Chapter 11 bankruptcy law, courts will decide if the business must honor gift cards. To optimize your chance of being able to redeem your gift cards, the bureau advises that you should redeem your gift cards ASAP. The Client First Bankruptcy attorneys are an unsurpassed staff of the most knowledgeable consumer bankruptcy attorneys across the U.S., representing thousands of clients in consumer bankruptcy matters. Client First Bankruptcy attorneys are current on all of the new Chapter 7 and Chapter 13 bankruptcy laws and, with offices across the country we are familiar with specific bankruptcy law in many states. Client First Bankruptcy attorneys answer their phones Monday through Friday from 8:30 a.m. – 6:00 p.m. (Central Time) so you can get your initial complimentary consultation at a time that is convenient for you. Our aggressive legal representation and extensive experience have earned the Client First Bankruptcy attorneys a national reputation for excellence in the representation of debtors in financial distress. Call us today toll-free at 800-383-6004 and log onto our interactive website at www.clientfirstbankruptcy.com.