Bankrupt Businesses leave Consumers Holding the EMPTY Bag

As a good, trusting human being you pay a company upfront for a particular service. Then suddenly, without warning, you arrive to find little more than a taped note on the front door that says “sorry, we’re closed.” You’re left with nothing for your money. With the economy the way it is, it’s happening a lot lately. I just got yet another e-mail from a woman who prepaid almost $500 for piano lessons for her daughter through December. But she got only a month’s worth of lessons before the business closed. I don’t know yet whether that business went bankrupt, but that is often the case.

If that doesn’t work, or you did NOT pay with a credit card, you can try to recover what you are owed by filing a claim with the U.S. Bankruptcy Court located in the region where the business filed. A local retailer or company would likely file in our region— Here’s a link to the government’s website. http://www.uscourts.gov/bankruptcycourts.html

But the problem for consumers-- bankruptcy laws clearly spell out who gets paid first from any assets. Consumers are typically pretty close to the BOTTOM of the list! So you really need to weigh the amount lost against the expense and inconvenience of pursuing a claim that probably will get you cents on the dollar if anything.

And keep in mind, you usually have to file any claim within 90 days from the bankruptcy filing date. You’ll need a "proof of claim" form which you can download here: http://www.uscourts.gov/bkforms.