Spend Those Gift Cards - A Retail Bankruptcy May Leave You Empty-Handed

Did you receive a handful of gift cards in your stocking this year? If you did, you are certainly not alone. The prevalence of gift cards has grown tremendously since 2001. In fact, according to the TowerGroup, a research and advisory firm, gift card sales last year totaled about $70 billion.

Why should you spend them as soon as you get them? Well, with the ever-growing number of retail bankruptcies (Sharper Image, Linens 'n Things, Circuit City), you could be out of luck and stuck standing at the end of a long line as an "unsecured creditor." In a nutshell, you basically loaned the retailer money and they in return did not give you collateral to secure that debt. In 2008, consumers lost about $100 million in gift cards due to retailers going out of business, according to the TowerGroup.

When a store files for bankruptcy protection, there is no industry standard for dealing with unredeemed gift cards. Some stores continue to accept them (Circuit City), and some stores refuse. So don't be left out in the cold, go out and spend those gift cards!

This publication is for general information only. The information contained is not intended as formal legal advice. If you have any questions or need assistance, please call your attorney at Curtis & Curtis, P.C.

Curtis & Curtis, P.C. is a full service law firm located in Jackson, Michigan providing superior legal services and advice to individuals, families and businesses throughout mid-Michigan since 1901.

Categories: Firm News