A business closes. What happens to customer refunds?
You paid a deposit for furniture, prepaid for a service, or placed an order online. Then the business closed, or announced it was filing for bankruptcy. The product never arrived, and no one is answering the phone.
Getting your money back is sometimes possible, but the path depends mostly on how you paid and whether the business has filed for bankruptcy. This explainer covers the main options and the deadlines that matter. It is general information, not legal advice.
KEY TAKEAWAYS
- How you paid matters most. Credit card buyers have a federal right to dispute charges for goods or services that were never delivered.
- A credit card dispute must reach your card issuer in writing within 60 days after the statement showing the charge was sent.
- If the business files for bankruptcy, you generally cannot sue it directly. Instead, you may need to file a proof of claim in the bankruptcy case.
- Consumer deposits for undelivered goods or services get priority in bankruptcy up to $3,800 per person, but payment is not guaranteed.
First, find out what kind of closure it is
A business can stop operating without any court case, or it can file for bankruptcy. The difference affects what you can do next:
- Closed without bankruptcy. You can usually still request a refund, dispute a card charge, file complaints, or bring a claim in small claims court, though collecting from a closed business can be difficult.
- Chapter 7 bankruptcy. The business is generally liquidated. A trustee collects and sells what assets exist and pays creditors in the order set by law.
- Chapter 11 bankruptcy. The business usually keeps operating while it reorganizes. It may continue to honor some orders, refunds, or gift cards, depending on what the court allows.
Check the company’s website and email for notices, search news coverage, and look for the bankruptcy case number. Notices to customers usually name the court and explain whether customers need to take any action.
If you paid by credit card
Credit card buyers often have the strongest option. Under the federal Fair Credit Billing Act, a “billing error” includes a charge for goods or services that were not accepted or not delivered as agreed. You can dispute that charge with your card issuer.
- Send written notice within 60 days after the issuer sent the statement that first showed the charge. Many issuers accept disputes online, but follow the instructions on your statement for billing-error notices.
- The issuer must acknowledge your dispute within 30 days of receiving it and resolve it within two complete billing cycles, and in no case later than 90 days.
- Include your evidence: the order confirmation, receipt, any delivery date you were promised, and any closure notice or failed contact attempts.
Because the 60-day window runs from the statement date, not from when you learn about the closure, it is worth acting as soon as you suspect the order will not be filled.
If you paid by debit card, cash, or check
The federal billing-error rules above apply to credit cards. Debit card purchases are handled differently: many banks offer a dispute process through their card network, but the rules and timelines vary by bank. Contact your bank quickly and ask what dispute options it offers for goods or services that were never provided.
For cash, check, or bank transfer payments, start with a written refund request to the business. If it has filed for bankruptcy, your main option is usually a claim in the bankruptcy case.
| How you paid | Main option | Timing to watch |
|---|---|---|
| Credit card | Billing-error dispute with your card issuer under the Fair Credit Billing Act | Written notice within 60 days after the statement with the charge was sent |
| Debit card | Your bank’s dispute process, which depends on the bank and card network rather than the same federal billing-error rules | Contact the bank as soon as you know the order will not be filled |
| Cash, check, or bank transfer | Written refund request to the business, then a proof of claim if it files for bankruptcy | In a Chapter 7 case, claims are generally due 90 days after the first date set for the meeting of creditors |
| Online or phone order for goods | Cancellation and refund rights under the FTC’s Mail, Internet, or Telephone Order Merchandise Rule | Refund due within 7 working days of cancellation (one billing cycle for seller-issued credit) |
General summary as of October 2026. Card agreements, state law, and the court handling a bankruptcy case can change the details.
If you ordered goods online or by phone
The Federal Trade Commission’s Mail, Internet, or Telephone Order Merchandise Rule sets shipping and refund requirements for goods ordered remotely. A seller must ship within the time it states, or within 30 days if it gives no time. If it cannot ship on time, it must notify you and give you the option to cancel for a full refund. After you cancel, a refund is due within seven working days, or within one billing cycle if the seller provided the credit.
The rule covers merchandise, not services. A business that is shutting down may not follow it, but it can still help you frame a refund request or a complaint.
If the business files for bankruptcy
A bankruptcy filing triggers an “automatic stay,” which generally stops creditors, including customers, from suing or pursuing collection against the business outside the bankruptcy case. Your claim is handled inside the case instead.
Filing a proof of claim
A proof of claim is the form a creditor files to ask to be paid from the bankruptcy estate. The official form is Official Form 410. Court notices usually explain whether and when to file one:
- In a Chapter 7 case, claims are generally due 90 days after the first date set for the meeting of creditors.
- In a “no-asset” case, where there is nothing to distribute, the court may tell creditors there is no need to file a claim.
- In a Chapter 11 case, the court sets a deadline, often called a “bar date.” Watch the notices and the case website, if there is one.
Consumer deposits get some priority
Federal bankruptcy law gives a priority to individuals who paid money for goods or services for personal, family, or household use that were never delivered or provided. That priority currently covers up to $3,800 per person, an amount that took effect April 1, 2025. Priority claims are paid before general unsecured claims, but only if there is money left after higher-priority claims are paid. Many customers in business bankruptcies receive only part of what they paid, or nothing.
What about gift cards and store credit?
Gift cards and store credit raise their own questions, such as whether a business in bankruptcy will keep honoring them and for how long. Our guide to gift cards, store credit, and unfulfilled orders when businesses close covers those in more detail. As a general rule, if a business announces financial trouble, use gift cards and store credit promptly rather than waiting.
Steps to take now
- Gather your records. Save the receipt, order confirmation, contract, card statements, and every email or text with the business.
- Check for official notices. Look for closure or bankruptcy notices from the company, the bankruptcy court, or a court-appointed claims agent.
- Dispute card charges quickly. If you paid by credit card, send a written dispute within the 60-day window. If you paid by debit card, call your bank.
- File a proof of claim if there is a bankruptcy case and the notices tell you to. Keep a copy of everything you file.
- File complaints. Your state attorney general or consumer protection office tracks business closures and complaints. You can also report problems to the FTC at ReportFraud.ftc.gov.
- Watch for refund-recovery scams. Be cautious of anyone who contacts you offering to get your money back for an upfront fee.
Frequently asked questions
Can I still get a refund if the business is gone?
Sometimes. A credit card dispute is often the fastest route if you are within the deadline. If the business filed for bankruptcy, you may be able to recover part of your money through a claim in the case, though full repayment is uncommon.
How long do I have to dispute a credit card charge?
Under the Fair Credit Billing Act, your written dispute must reach the card issuer within 60 days after it sent the statement that first showed the charge. Some issuers allow more time by policy, but do not count on it.
Can I sue a company that has filed for bankruptcy?
Generally not while the automatic stay is in place. Claims against the business are handled within the bankruptcy case, usually by filing a proof of claim. A bankruptcy attorney can explain exceptions.
What is the consumer deposit priority in bankruptcy?
It is a priority for individuals who paid deposits for personal or household goods or services that were never delivered. It currently covers up to $3,800 per person. It improves your place in line, but does not guarantee payment.
Does it matter if I paid with a buy now, pay later plan?
Yes. Buy now, pay later providers have their own dispute processes, and protections can differ from credit cards. Contact the provider as soon as possible and keep paying any undisputed amounts while the dispute is reviewed, so you do not fall behind.
Sources
- 15 U.S.C. § 1666, Fair Credit Billing Act (billing errors)
- 11 U.S.C. § 507, bankruptcy priorities
- U.S. Courts, Chapter 7 Bankruptcy Basics
- U.S. Courts, Official Form 410, Proof of Claim
- FTC, Business Guide to the Mail, Internet, or Telephone Order Merchandise Rule
More coverage is in our Business & Bankruptcy section. This article is general information, not legal advice. See our Legal Disclaimer. Spot an error? Read our Corrections Policy.
