Dealing with Companies in Bankruptcy

If you find out that the merchant you are dealing with is experiencing financial problems or has filed for bankruptcy after you have paid in advance for goods or services, there are steps you can take to protect yourself.

Consumers who are owed money by a company in bankruptcy should file a "proof of claim" form with the bankruptcy court. This form notifies the court that you are owed money and provides other relevant information, like the date the debt was incurred and what kind of claim you are filing. If you do not receive a proof of claim for in the mail, contact any bankruptcy court, or download the form directly from www.uscourts.gov/bankform.

It should be noted that gift certificates and layaways are not given priority in bankruptcy. Do not purchase gift certificates or open layaway accounts with a company that is experiencing financial difficulties. If you learn of any such problems, try to either get a refund or use your gift certificate or money on deposit for goods as soon as possible.

Since it is not always obvious when a business is experiencing financial problems, here are a few important tips to help you avoid becoming a creditor of a bankrupt company.

• Pay with a credit card: If the company files for bankruptcy before you receive goods, you can dispute the charge with your credit card company.
• Make the minimum payment: If you are required to make a deposit, paying the minimum amount will shield your loss should the company file for bankruptcy.
• Document purchases: Keep all paperwork for major purchases. Information like the model and serial number may help recover goods that are held when a company closes its doors.
• Stay informed: You can review the latest bankruptcy news on the American Bankruptcy Institute's website at www.abiworld.org
• Contact the BBB: The Better Business Bureau can provide complaint information about companies. A large number of complaints may be a good indication the company is experiencing problems.

Consumers who want information about this or other consumer-related issues are asked to call the Bureau of Consumer Protection's toll-free hotline 1-800-441-2555.