Buying From Bankrupt Stores

**Ed. Note: On Monday, in a story about retailers and bankruptcy we reported in error that Talbots is "on the list of stores that remain open for business, even though they've filed bankruptcy in recent months."

Talbots has not filed for bankruptcy.**

On Monday, beleaguered electronics chain Circuit City filed for Chapter 11 bankruptcy protection, joining a long line of retailers that have struggled to stay solvent amid the worsening economic downturn. The company had already announced it would close 155 stores in a last-ditch effort to stay afloat, but this filing has left many consumers confused about how (or if) they should approach companies that are open for business even if they’re headed toward – or already in – bankruptcy.

Will the warranty on that digital camera be honored? Can you get a refund on a product that was never delivered? What about that gift card lying around from last Christmas?

Not surprisingly, consumers tend to get the short end of the stick when it comes to bankruptcy filings. Legally, if you hold a warranty to a gift card you’re considered an unsecured creditor, which means the company only has to honor you once it’s done paying off all its other debts.

The best ways to protect yourself, according to Carmen, are to use a credit card with purchase protection at any store that’s either in Chapter 11 or could be headed there. If it’s too late, you can file a claim with the store or send a proof of claim to the law firm handling the bankruptcy case. To find the bankruptcy court handling a particular company, go to You have 90 days to file the claim.