What Happens to Business Credit Cards In Bankruptcy

TL;DR

If you file for personal bankruptcy, most business credit cards will be considered personal debt and will be eliminated through the bankruptcy process.

Transcript

hey everybody john skiba here from the consumer warrior youtube channel in today's video i'm going to talk about what happens to business credit cards if you end up filing for a personal bankruptcy but if this is your first time here in my youtube channel please go ahead click subscribe check on that little bell that way you'll be notified each and... Read More

Key Insights

• 💳 Business credit cards are often personal cards with the business name on them, making the individual personally liable for the debt.
• 🎴 Chapter 7 bankruptcy can eliminate the debt owed on business credit cards as it is considered unsecured debt.
• 💳 Personal guarantee provisions on business credit cards can make the debt personal and collectible even during bankruptcy.
• 💳 It is important to understand the setup and terms of business credit cards to determine liability in bankruptcy.
• 💳 Big corporations may have different types of business credit cards with varying liability scenarios.
• 👨‍💼 If a business credit card is set up under the business and not just the business name, the business may have liability even after personal bankruptcy.
• 💳 Clear understanding of who has liability is crucial in determining the impact of business credit cards in personal bankruptcy.

Questions & Answers

Q: What happens to business credit cards in personal bankruptcy?

In a Chapter 7 bankruptcy, the debt owed on business credit cards is typically eliminated as it is considered unsecured debt. However, it is important to check if there is a personal guarantee on the card that would make the debt personal and still collectible.

Q: Are business credit cards truly specific to the business or just personal cards with the business name on them?

In most cases, business credit cards are actually personal cards with the business name on them. They have a larger available balance for business use but still hold the individual personally liable for the debt.

Q: Can the business be held liable for the debt on a business credit card after personal bankruptcy?

If the business credit card is set up under the business and not just using the business name, there may be potential liability for the business. It is crucial to have a clear understanding of the card setup and liability terms.

Q: Are there any scenarios where business credit cards are strictly considered business debt?

In cases of big corporations with hundreds of thousands of employees, there may be different scenarios where true business credit cards exist. However, for small businesses filing for Chapter 7 bankruptcy, business credit cards are typically considered personal debt.

Summary & Key Takeaways

• Business credit cards often have the business name on them, but they are usually personal cards with a larger available balance.

• In a Chapter 7 bankruptcy, the debt owed on business credit cards will be eliminated as it is considered unsecured debt.

• Even if a business credit card is set up under the business name, it may still have a personal guarantee provision that makes the debt personal and collectible during bankruptcy.