QUESTION
What happens to gift cards bought before bankruptcy once bankruptcy is filed?
Asked on Jul 16th, 2014 on Bankruptcy - California
More details to this question:
A few months ago, I bought a couple gift cards (to a store, paid with my store credit card) and sold them for some extra cash. Forward to today where I am having financial trouble and am considering bankruptcy. If I file bankruptcy and that store credit card gets shut off, can the store go back and deactivate the gift cards I bought months earlier with that store credit card? I don't want to be accused of fraud if the gift cards I got paid for suddenly have no value to them.
6 ANSWERS
The sale of the gift cards must be disclosed in your Statement of Financial Affairs. Certain creditors have a right of setoff, meaning the creditor can apply funds held in your name to your debt. If the gift cards are held in your name, the store may be entitled to setoff the gift card account to its debt.
Answered on Jul 23rd, 2014 at 2:59 PM
Consumer Bankruptcy Attorney serving Los Angeles, CA
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Orantes Law Firm
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That is a good question. It should be governed by the terms of the contract between you and the credit card as well as by law. I honestly do not know the answer to that question, but I cannot imagine that the gift cards would be deactivated. As long as your honest belief was, like mine, that the gift cards cannot be deactivated, you should not be guilty of fraud.
Answered on Jul 21st, 2014 at 2:19 PM
The gift cards will remain valid. Once the credit card has paid for something, they are not going to undo a transaction months later. These store credit cards are always backed by a major national bank.
Answered on Jul 18th, 2014 at 3:49 AM
Bankruptcy Chapter 7 Attorney serving Los Angeles, CA
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The Law Offices of Peter M. Lively
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You should be able to determine that answer by looking at your contract with the store. Based upon your facts, the store may object to your bankruptcy discharge alleging that you didn't intend to repay the charges at the time you incurred them. If you weren't having financial trouble when you sold the store cards, why would you have done such a transaction? It would be best if you consult with a bankruptcy attorney regarding all of your facts and circumstances before filing a case.
Answered on Jul 18th, 2014 at 3:48 AM
Bankruptcy Attorney serving Santa Rosa, CA
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Law Offices of Craig Burnett
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While what you did may be considered fraud, the gift cards themselves are still valid. The fraud issue is not with the person to whom you sold the gift cards, but with the creditor to whom you charged them.
Answered on Jul 18th, 2014 at 3:48 AM
Family Law Attorney serving Indianapolis, IN
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Arany & Associates
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You will be able to discharge the "contingent" claim of the buyer of the gift cards. You didn't intend, at the time you sold the cards, to be in this mess. Second, I doubt the store will cancel the cards. Full speed ahead!
Answered on Jul 18th, 2014 at 3:48 AM