How your credit card can protect you if your favorite store goes bankrupt

It's been a rough few years for retailers, and the last few months are no exception. With retailers such as Barneys filing for bankruptcy and Topshop already filing and closing its U.S. stores, the retail apocalypse isn't showing any signs of slowing down.

This begs the question: If your retailer goes out of business, what happens to your store card? In addition, are you entitled to any purchase protection benefits for retailers that aren't accepting returns?

Let's break this down bit by bit. We will start off saying that we (usually) never recommend signing up for a store card to begin with. While additional discounts sound appealing, most of the cons outweigh the pros. Typically, it really only makes sense to get one if you don't have much of a credit history, since they are easier to get. That said, if that ship has already sailed and you have one in your wallet, here's what to expect.

Unfortunately, it's not going to be all rainbows and sunshine. You'll lose one of your lines of credit, as well as any rewards that you might have amassed over the years. The former especially is bad news for your credit score, according to CreditCards.com. That said, you still have to pay what you owe — it's not Monopoly money all of a sudden.

Let's say you have some purchases you planned on returning, but the retailer has gone belly-up and isn't accepting returns. What's next? The good news is that getting your money back may be possible; the bad news is that it's easier said than done.

First, you'll want to contact your credit card issuer and submit a claim within 90 days from the date of purchase. When I contacted American Express, I was told the Purchase Protection benefit applies to all cards, although coverage levels may vary depending on which card you have. To file a claim, go to americanexpress.com/onlineclaim or call (800) 322-1277. Of course, it isn't a given that you'll get your money back, but it's definitely worth a shot.

Chase has a similar policy. According to their terms of service, "eligible personal property that has been damaged, stolen, or involuntary and accidental parting with property within 120 days from the date of purchase" is covered, although you can only receive up to a maximum of $500 per claim and up to $50,000 per account. Again, you'll want to file a claim sooner rather than later.

Citi was the frontrunner for purchase protection benefits... until this past June. The issuer announced that it will be removing a lot of these protections as of September 22. As of now, the official policy states: "If you try to return an item within 90 days of purchase and the merchant won’t take it back, We may refund You the purchase price up to $300 per item and $1,000 per year. To be eligible for coverage, You must pay for the item in full with Your Citi Card and/or ThankYou Points. We will only reimburse the lesser of the actual amount paid for with Your Citi Card (including ThankYou Points) or the maximum coverage per item. The item must be purchased in the United States and its territories." Coverage is limited to $1,000 per calendar year per account. Bottom line here is that if you purchased something with any Citi card in the last 90 days, and need to return it to a bankrupt retailer, file a claim ASAP.

If you're a Capital One cardholder, you might be out of luck a bit. The issuer unfortunately doesn't offer purchase protection on any of its cards.

The other thing to keep in mind here is that once a retailer files for bankruptcy, all sales should be considered final. Yes, you may end up getting your money back thanks to your credit card, but it's better to be safe than sorry here and not purchase anything from a bankrupt store to begin with. If you already have some items that you want to return, though, your credit card may be able to help you out a bit here.

This is why we don't pay for things in cash, right?