I Filed Bankruptcy What Happens To My Frequent Flier Miles and Reward Points When I file Bankruptcy?

J Thomas Black
Board Certified, Consumer Bankruptcy Law- Texas Board of Legal Specialization

When you file bankruptcy, you must list all of your assets, including bank accounts, brokerage accounts like ETrade, or TD Ameritrade, deposits with landlords and others, and yes, amounts that you have in a Paypal account, reward points and frequent flyer miles.

Actually, there could be a question about frequent flyer miles and reward points, whether they are even an asset of your bankruptcy estate. Most of them have complicated provisions that say tha they cannot be assigned, traded or otherwise transferred, except with the consent of the program. So this can prevent them from being taken by a bankruptcy trustee.

Some of the agreements say that the member does not have a property interest in them. But in an abundance of caution, I recommend listing them in the bankruptcy schedules, and claiming them as exempt under the federal "wildcard" exemption if you are able to claim the federal exemptions.

There is big difference between airline and hotel loyalty programs and credit card reward points. If you owe the credit card bank money, you will have to list them in the bankruptcy, and your points that are with them are gone. You may want to use them or cash them out or transfer them to airline or hotel loyalty programs before filing bankruptcy or defaulting on the card, or you will likely lose them.

Some of the programs are "co-branded" and the credit card bank controls the points, only until you are paid up for that billing period, then they transfer them to their travel partner. On other programs, the credit card bank controls the points until you use them or if you default on the credit card, you forfeit them.

But as to the airline and hotel loyalty program, if they are nontransferable and the trusteedoes not take them, you should be able to retain those after your bankruptcy for your future use.