What to do with Gift Cards of Stores Who Have Filed Bankruptcy

businesses declaring bankruptcy blog


In recent years, brick and mortar stores have struggled to remain profitable with the growing popularity of online shopping. For the past few months, many of these retailers were also forced to shut their doors due to the spread of COVID-19. With shoppers having less disposable income and quarantine restrictions keeping non-essential stores closed, many well-known businesses will or already have filed bankruptcy as a result of the pandemic.

If you have a wallet full of unused gift cards, you should pay attention to business bankruptcy filings to make sure you aren’t at risk of losing the value of the gift card. In some situations you will still be able to spend your gift card, but could lose the value of the card in others. 

Some Retailers That Have Filed foe Bankruptcy Recently:

This list doesn’t cover every business that has filed bankruptcy due to the coronavirus pandemic, and will continue to grow as more companies file. Larger businesses will likely file Chapter 11, which reorganizes debts with the guidance of a panel of the company’s top creditors. One of the reasons companies opt for Chapter 11 is that this chapter allows the business to continue operating. While the panel of top creditors will have authority over major business decisions, day-to-day activities will remain in the hands of the company. Sometimes a business may still use Chapter 11 even if it intends to close due to the structure of its debts. A business may also file Chapter 7 bankruptcy. Chapter 7 bankruptcy liquidates many debts entirely but doesn’t allow the business the opportunity to continue operating. 

What if I Have Gift Cards for these Businesses?

Using gift cards when a business closes due to bankruptcy If you have a gift card for a business that has filed bankruptcy, you’ll first want to read into which chapter the company filed. If it is a Chapter 7 bankruptcy, the company is definitely going out of business, meaning you need to spend your gift card with them as soon as possible. Once the store is closed, you can’t spend the gift card and the company isn’t obligated to give you the cash value. If the company is filing Chapter 11, this is your yellow light. Some companies do close entirely in a Chapter 11, but the process may be slower than if the company filed Chapter 7. Either way, you will need to spend the gift card to avoid losing its value. Even if the company intends to remain in business, you should probably have something on your shopping list. Companies aren’t guaranteed to survive a Chapter 11 bankruptcy and still may end up going out of business. 

You can always file a claim with the bankruptcy trustee for the value of your gift card, but it’s unlikely that debt will be high priority (and therefore likely to be paid out) in the bankruptcy compared to the debts from other creditors. 

If you have accumulated rewards with the company through a loyalty program, these will also expire when the company goes out of business. You need to use these rewards before the company shuts down to avoid losing their value. The silver lining is that stores typically have going out of business sales and other discounts before shutting down for good. Use these sales as your opportunity if you want to take advantage of your rewards, as you won’t be compensated for their value through a bankruptcy claim. 

What About Credit Cards That I Owe on But the Store Is Going Out of Business?

Your store credit card is usually backed by a bank or other lender. This institution is not going bankrupt with the store where you have a credit card, so you will still be required to pay the balance. In other words, the balance of your credit card isn’t discharged in the company’s bankruptcy. You should pay off the balance of a card for a bankruptcy company as soon as possible to avoid negative effects on your credit. 


Bankruptcy is something that sometimes can not be avoided.  It happens to both people and businesses that main seem to be stable but unforeseen actions quickly cause their demise.  Therefore, if you have a gift card of a store going out of business, USE IT NOW before it is too late and the gift card has no value.  Also, if you owe on a credit card and the company has filed bankruptcy, YOU STILL OWE THE DEBT.  Pay you credit card bills.  Failure to do so will lead to late payment marks on your credit and will create further headaches for you down the road.