I have a co-worker who has accrued over 100,000 ff miles by using a Citibank Visa card over the past 12 months, and due to personal problems, is now considering filing for Chapter 7 bankruptcy.

She has asked for help & is wondering if she should ticket these miles before filing, and would also like to know if there are any previous cases of cc companies snatching miles upon receiving notice of a bankruptcy petition being filed.

Any info is greatly appreciated.

Cheers.

[This message has been edited by Atomic (edited 09-10-2001).]

is the bankruptcy due to owing citi $100k? sorry, couldn't help myself. my thought is that mi's are personal and i would not record them on a list of assets. however, the last time i updated my will, i left the ff miles in the estate. so i guess that they are valuable. it is possible that citi would want the mi's,if it is a creditor, but , because of restrictions by the a/l's [you can't sell them] are the mi's a transferrable asset to random creditors?

Allow me to clarify the concern for you. The question has nothing, whatsoever, to do with creditors and everything to do with Citibank.

Her concern is whether or not Citibank, after awarding FF miles, can retract said miles because a debt was not paid to them. Is this a common practice or an unheard of rarity when it comes to banks and their approach to dealing with consumer bankruptcies?

Cheers.

OK, so I have no working knowledge of US laws or how Citi handles these issues. However I would expectthat while the points are under Citi's control they are likely to take them.

Are they airline miles or Citi miles that can be transfered to airline miles? Let me talk about Diners because it's one I know, and it's also run by Citibank... so there might be some similarities here...

I can transfer my Diners points to most airlines or hotel programs. While they are Diners points they are at Diner's control... if I was in this situation I'd be moving the points to an Airline or Hotel prgoram where it is harder (but not impossible) for Diners to get them back.

So that's my 2 cents, bearing in mind once again I know not of what I speak.

First of all, let me make the assumption that these are miles in an airline's frequent flier program, which have already posted into her airline account, right?

On the other hand, if these are miles in the credit card issuer's own program, I don't think she should count on getting any free tickets from them after filing

If these are airline miles that have already posted, she shouldn't have anything to worry about. FF miles are non-transferrable, so there is nothing for her to lose. She should disclose them to her attorney before filing the petititon, but I don't think there is any need to list them on the petition.

She should definitely *not* cash in any awards without talking to her attorney first. First of all, depending on the circumstances, it smacks a little bit of a fraudulent transfer, which could make her life very complicated. Also, even though the miles are not considered property, and IMHO would not need to be listed on the petition, an unused airline ticket or award in her possession would probably have to be listed, and could possibly be seized by the creditors.

As long as she is upfront about it and doesn't try to hide anything, she should still be in possession of her miles after bankruptcy.


[Let me add a couple of points after re-reading the original post, which says that she had earned these miles with this credit card in the last twelve months. If a large number of miles had been posted (meaning she'd made a lot of charges, really), in the past few months, I could conceivably see the creditor making an allegation that she made these charges in anticipation of bankruptcy, which is a bad thing!

Also (and this is off topic, I guess), but now that she is thinking about bankruptcy and talking about bankruptcy, she needs to stop using the credit cards, period! If she makes charges after talking about filing, this could cause her big problems!


[This message has been edited by clemlaw (edited 09-10-2001).]

Although not necessarilly legal under the airline's program rules, 100K miles is worth $2K or so on Ebay or through a ticket broker ... certainly something I would consider if in such dire financial straits ...

My Citibank deposits the miles directly into my AA account on a monthly basis. If, in a certain month, I have no charges, but say $200 of returns/credits, Citibank can and will deduct the 200 miles from my AA account.

I think that if Citibank writes off a certain $ amount of her balance, they are entitled to those miles back. Your co-worker has no right to them any more, IMHO.

Let's see. She charges $100,000 during twelve months, takes the merchandise and miles, then files chapter 7. Cool!!

Yeah, I know she did make some payments on the card.

Short of this woman having a pile of medical bills, she should go to jail if she does Chapter VII.

Why, again are you involved?

In another post, some reneiged on his agreement to leave a deposit with an e-bank for the required period to get ff miles. He used these miles before he withdrew his money. UA (I believe) now has his account with a negative balance and his is unhappy. He defrauded both and still feels cheated.

I hope this is not a trend in the type of FT members we are getting!