What to do if a company goes bustYour rights

If a company goes bust, for example, after you've booked a luxury holiday or ordered a new three-piece suite, all might not be lost. There are precautions you can take to minimise how much you might be out of pocket, and regulations that will protect you if the worst comes to the worst.

If you paid using credit

If you pay using credit, for example, finance arranged by a retailer, or on a credit card, the Consumer Credit Act 1974 gives you protection if a company goes bust. If you've paid for the goods (even part of them) on credit, you're entitled to a full refund from the credit company. The law covers goods worth between £100 and £30,000, but you're completely covered even if you paid as little as £1 deposit with your credit card and the remainder some other way.

However, this protection applies only to credit cards, and not to debit cards, such as Maestro and Visa Delta.

If your holiday company goes bust

There are special rules that mean that, in most cases, you shouldn't be left in the lurch if a holiday company goes bust. Under the Package Travel, Package Holidays and Package Tours Regulations (PTR) 1992, all package holidays must be bonded, so money you have paid is protected. For example, most flights and package holidays that include a flight should be covered by an Air Travel Organiser's Licence (ATOL). This means that ATOL will give your money back, or pay for you to get home, if the holiday company goes bust.

However, there are some types of booking for which you won't have ATOL protection:

• if you buy a ticket for a scheduled flight and you receive the ticket straight away, or:
• you book a flight direct with the airline, rather than with a travel firm.

Also, if you book from outside the UK, your holiday probably won't be ATOL protected. If you're in doubt, ask if what you're buying is ATOL protected before you book. Check websites, brochures and advertisements for the ATOL logo. Travel firms have unique licence numbers, which you can be check at ATOL website or by calling 020 7453 6430.

If your insurance or investment company goes bust

If you're buying insurance, a pension or some other kind of financial product, the company you buy from will be regulated by the Financial Services Authority (FSA). If a company that is a regulated by the FSA goes bust, or can't pay your claim, you are protected by the Financial Services Compensation Scheme (FSCS) if you have suffered financial loss. There are different rules and limits for different types of claim. For more information visit the FSCS website.

Other protection if a company goes bust

If the company that you've ordered goods or services from goes bust (and you don't have protection in any of the ways above) there's no guarantee you'll get your money back.

If a company goes bankrupt the receivers will be called in to deal with any outstanding debts. But it's likely that you will be one of many, and the company probably won't have the resources to repay everyone.

If your goods (such as a kitchen or items of furniture) are sitting in a warehouse clearly labelled with your name, then the company is obliged to honour the order and give them to you as, technically, ownership of the goods will have passed to you.

If your order was still being processed when the company went bust, you will have to register your claim with the receivers and wait to see what you get. You might get a proportion of your money back, but you're unlikely to get the whole amount.