What Happens To My Business Credit Card When I File For Bankruptcy?

Maybe you are a small business owner here in Milwaukee with a business credit card from your local bank. Or maybe your employer has you charge certain expenses to a company credit card. But if you have a business credit card, you are probably wondering what will happen to it if you file for bankruptcy. The answer is every lawyer’s favorite answer — it depends. 

Small Business Owner With A Business Credit Card 

If you are a small business owner, and you have a credit card for your business, it may or may not get pulled into your bankruptcy estate if you file for personal bankruptcy. It depends on how your business is structured and how your business is doing. 

There are so many factors at play in this scenario that you really need to consult with an experienced bankruptcy attorney to figure out what will happen in your specific situation. 

The Corporate Credit Card 

If your employer wants you to use a credit card to pay for work-related expenses, what happens to that card if you file for bankruptcy depends once again on your specific situation. 

There are two basic types of corporate credit card accounts — authorized user accounts and obligor accounts. 

An authorized user account is an account that is in your employer’s name. You are authorized to make business-related purchases with it, but the employer is the one paying the bill. If you file bankruptcy, you probably won’t have to list the account in the paperwork you file with the court since it’s not in your name. You should be able to continue using this card during your bankruptcy for work-related expenses and after your case is over since the card is owned and paid for by your employer. 

If you have a credit card that you use for work-related expenses on your company’s behalf, but the card is in your name and you are personally responsible for paying the bill (and then submitting paperwork to get reimbursed by your company), the account is an obligor account. 

This card will likely need to be disclosed to the court when you file your bankruptcy case. If there is a balance on the card, it will need to be reported as a debt you owe even if all of the debt will eventually be reimbursed by your company. 

The bank that backs this credit card will probably shut it down, so your company will need to either give you a new card where you are just an authorized user or work out some other arrangement. 

Your bankruptcy attorney can help you figure out what kind of card you have and what actions need to be taken to move your bankruptcy forward. 

Do you need to tell your employer you are filing for bankruptcy if you have a company credit card? 

It’s really none of your employer’s business if you file for personal bankruptcy, but if you have a company credit card it becomes of interest to them. In most cases, it is better for you to tell your employer what is going on than for them to find out from the court or from the credit card company. 

Looking for advice? 

Working with an experienced bankruptcy attorney will smooth the bankruptcy process and ensure that your business credit cards are treated appropriately. If you are looking for advice on this topic, please contact our office in Milwaukee to schedule an appointment.