Corporate Credit Cards and Bankruptcy
Whether you are a small business owner yourself and have business credit cards, or you work for a large corporation and have been issued a corporate credit card, any plans you have to file for bankruptcy are likely resulting in concerns about business credit cards and the bankruptcy process. To be sure, you are likely wondering: what will happen to a business credit card or corporate credit card if I file for bankruptcy? Our West Palm Beach bankruptcy lawyers can tell you more about what you might be able to expect when it comes to business and corporate credit cards in a bankruptcy case.
Considering the Type of Credit Card
First, when you are wondering how bankruptcy is likely to impact an existing business credit card, it is important to be clear about the type of credit card you are talking about. Do you mean a credit card that you use as a sole proprietor in your own small business? Or, similarly, are you referring to a credit card you applied for so that you could make charges for a small business that is currently structured as a partnership or a limited liability company (LLC)? Or, much differently, are you thinking about a corporate credit card that was provided to you by your employer for paying for business expenses when you travel on business trips or need to make related purchases?
Depending on the kind of business credit card you are referring to, the consequences of a bankruptcy case can be quite different. If you are not personally liable for the debt on the card, and there is no personal guarantee, then your bankruptcy case may not impact this credit card at all.
How the Type of Bankruptcy Can Impact a Small Business Credit Card
Even though what a person is calling a “small business” is not likely to be structured as a corporation, the term “corporate credit card” might be a colloquial one you are using to mean a business credit card that you are using for your small business. In short, if you took out a personal credit card for business purposes, the type of bankruptcy you are filing for will impact what happens to that credit card.
Even a credit card you have been using solely for business purposes, even for a partnership or LLC where you made a personal guarantee, is your personal debt, will become part of the bankruptcy case. (If you own a sole proprietorship, you and your business are already considered the same entity for bankruptcy purposes, and any personal debt is also business debt, and vice versa).
If you are filing for Chapter 7 bankruptcy, the credit card debt may be eligible for discharge but the account usually must be closed. Depending on the circumstances, it may be possible to reaffirm the debt and keep the credit card account open, but you should discuss this possibility with a lawyer. If you are filing for Chapter 13 bankruptcy, you are more likely to be able to keep the credit card and account open, and to include any debt in your repayment plan, but you should not expect to be able to use it for taking on additional business debt during the period of your repayment plan.
Contact Our West Palm Beach Bankruptcy Attorneys Today
The relationship between personal and business debt can be complicated in some cases, but an experienced West Palm Beach bankruptcy lawyer at Kelley, Fulton, Kaplan & Eller can help. Contact us today for assistance with your personal or business bankruptcy case.
Sources:
law.cornell.edu/uscode/text/11
bankrate.com/loans/small-business/personal-guarantees/
