You are here: Home - Credit Cards & Loans - News -

What should you do if a firm goes bust?

0
Written by:
28/02/2018
As Toys R Us and Maplin go into administration, here are the consumer rights and protections you need to be aware of.

When a retailer goes bust, the key thing is to act quickly. The longer you wait, the harder it becomes to get your cash back, according to James Walker, founder of complaints help site, Resolver.

He said: “When a firm goes bust owing you money, goods or services, then you join a queue of people known as creditors. As a consumer, you’re generally last in the queue for cash and in practice, once investors, insolvency fees and employees have been paid, there’s little money left.”

It can be better to use other options available to you, such as statutory protection or credit card schemes. For financial services, this might be the Financial Services Compensation Scheme (FSCS), but at the moment there is no scheme to compensate shoppers when a firm goes bust.

How to get your money back

Walker gives the following tips:

Paid by credit card?

You’ve got lots of statutory protection if you pay for goods or services using a credit card, thanks to the Consumer Credit Act. It states that if you pay for things on a card that cost over £100 and less than £30,000 you could claim the money back from the card provider.

You don’t even need to have spent the whole amount on the card as long as the deposit falls within the limits. This is known as making a claim under ‘section 75’. Credit providers aren’t really thrilled about this as they can end up forking out for businesses that go bust. But it’s your first line of defence. They may try to recall your payment first – which is just as good.

Paid by debit card?

It’s not a legal right, but the card providers run a scheme called ‘chargeback’ which means you might be able to ask them to recall your money if there’s a problem. The schemes all have slightly different rules depending on the service provider. But act quickly: if a firm has already gone bust it may be too late. Give the debit card provider a call and ask them to charge back the money as soon as possible.

Paid electronically (eg via PayPal or Skrill)? 

Using electronic money services like PayPal also gives you some rights, so lodge a claim using the firm’s dispute resolution rules. Like credit and debit cards, you can go to the Financial Ombudsman Service for free if you’re still unhappy with the way the claim is handled.

Insurance

The majority of insurance policies don’t cover firms going bust – which comes as a surprise to many people. And where there is cover, you may be bounced back to card providers first by their insurers. While you should try this regardless, if you have a warranty or other insurance policy that does seem to cover bankruptcy, there’s no reason why you can’t claim on your insurance policy so don’t be dissuaded.

Other payment methods

If you’ve paid by cash, cheque or direct transfer, you’ve got no rights to recall your money if a firm goes bust. Always question businesses that ask for payments this way and don’t pay if you can’t afford to lose it.

Vouchers and gift cards

If a firm goes bust, then often vouchers you may have with them become invalid. They are generally treated as cash you are owed. Some firms that have gone in to administration have honoured their vouchers. But if you hear rumours that a business is in trouble, don’t delay – use your vouchers and gift cards before it’s too late.

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

  • According to @YourMoneyUK the #Govt is considering a Care ISA’ which would be exempt from #inheritancetax. Could th… https://t.co/hPVZZfdyDr
  • RT @unitetheunion: “We need tough action against unscrupulous debt collection agencies who prey on people’s misery to ramp up the debt thro…
  • RT @unitetheunion: “We need tough action against unscrupulous debt collection agencies who prey on people’s misery to ramp up the debt thro…
Read previous post:
2343817-pension-file
Pension contributions hit record high in last tax year

Personal pension contributions hit a record high in 2016/17 at £24.6bn, up from £24.3bn in 2015/16.

Close