Can I Keep My Frequent Flyer or Credit Card Rewards Points in Bankruptcy in New York?

Many clients considering bankruptcy protection have accumulated a wide variety of frequent flyer miles and credit card points.  Some of our clients have a substantial amount of points that have a significant value, and they want to know if these points can be protected in their bankruptcy.

The fine print of all reward point, and frequent flyer programs clearly state that points and miles have no monetary value, and that they cannot be sold or transferred in any way.  Many programs also indicate the points are property of the program, not the property of the member. Therefore, flyer miles and reward points are not your assets, and do not need to be listed as such on your bankruptcy petition.  It is important to remember that frequent flyer and hotel loyalty programs are quite different from credit card reward points and are protected in bankruptcy. You earned your flyer miles without acquiring any underlying debt that would be discharged in your bankruptcy.  You have no obligation to inform frequent flyer or hotel loyalty programs of your bankruptcy.

In the words of the credit card reward programs the points have no monetary value, cannot be sold or transferred, and are not even yours.  This is good on the one hand, but on the other hand since the card companies have complete control and ownership of the reward points they can strip them from you if you fall behind on payments, which is likely if you are considering bankruptcy. If you are still current with your payments it may or may not be a good idea to redeem your points before filing for bankruptcy.  This is where the advice of a qualified bankruptcy attorney is critical.

Unlike racking up a credit card before bankruptcy, you have already earned reward points through past purchases.  Your debt trouble should have no bearing on how and when you use them.  You are completely safe in redeeming all of your points before falling behind on payments or filing for bankruptcy.  The relative value of these points in relation to what you have spent in acquiring them is very small to a credit card company and certainly not worth a legal expense in fighting for them as well.

While you are safe in redeeming your points from any penalty or consequence in your bankruptcy, how you redeem them may have an effect.  If for example you redeem your credit card points for merchandise or gift certificates, you have now acquired assets that would need to be listed in the bankruptcy petition.  If possible, transferring these credit card reward points to frequent flyer programs or hotel loyalty programs may be the best way to go, but your best results will come from the advice of a qualified bankruptcy attorney who will know the best way to protect your points for your specific financial situation.

If you live in New York City and have questions about how your credit card reward points or frequent flyer miles will be affected in your bankruptcy please give the Law Offices of William Waldner a call at 212.244.2882 to arrange a free consultation today.  We know how to protect our client’s assets in bankruptcy and have a 99% Chapter 7 Bankruptcy discharge record as of 8/31/16.


This article is intended for educational purposes only.  By reading this article no attorney-client relationship has been created.