What Happens to my Store Card if a Retailer Goes Bankrupt?

Although the last few months have been a struggle for everyone, few have arguably had it worse than retailers. Many stores have either gone into administration or had to make large job cuts, such as Debenhams, Monsoon, and Laura Ashley.

If you have a store card with one of these organisations – or another business which has gone bankrupt – you may be wondering what happens to your debt. Unfortunately, it isn’t written off. Learn exactly what can happen to your store card debt here.

Has the retailer gone into administration?

If you believe a retailer is going into administration, you should confirm this before closing your account. After all, a company will usually do everything it can before ceasing trading. For example, they might stop operating a physical store and move products online, start working through a sister company, trade under a different name, or they may be bought by another retailer.

Once a retailer goes into administration, you’ll receive an update from the group advising what to do next. Here’s what will probably happen:

What happens to my store card debt?

Your store card debt isn’t written off in the event a retailer goes into administration. This is because stores don’t generally control your account and will instead rely on a third-party to manage these financial matters.

That means another company owns your store card debt. As this firm is still trading, it’s largely business as usual. However, in the unlikely event a retailer manages their store cards directly, you will still be responsible for the account.

Once a company enters administration, their assets are largely up for grabs. This means another firm will buy your debt – along with the accounts of many others – and then you’ll have to pay them instead of the retailer.

What about my rewards/benefits?

Although you’ll still have to pay your store card debt, you likely won’t be able to enjoy your rewards or benefits as usual. During the administration process, the retailer will typically set an expiry date for these incentives. After that, you won’t be able to claim these bonuses anymore.

However, this is assuming the company is ceasing trading completely. If they are moving across to a sister store or operating through online, your rewards may still be valid.

We advise clearing your store card debt as soon as possible

If you own a store card for a business which is entering administration, then you should pay this debt as soon as possible. Otherwise, you could be left making payments on a high-interest piece of plastic which you can’t actually use.

However, if you’re juggling multiple debts to different lenders, paying off your store card is easier said than done. If you don’t see a way you can reasonably afford to do this, then click the button below to identify a solution which could help you.

Whether you choose to apply for it is completely up to you.