Your debts have spiraled out of control, and bankruptcy appears to be your best option for a fresh start. However, your employer requires you to use a company credit card to pay for rental cars, hotel stays, and other expenses associated with your role at the business.
Now you have questions. Do you have to include this corporate credit card in your bankruptcy filing? And, perhaps more importantly, can you keep using it for employment-related expenses? There is no single answer for this scenario. It all depends on the type of account and whether your employer has assigned you any responsibility for the card balance.
What are the different types of corporate credit card?
If your company issued you a credit card to buy office supplies or cover travel expenses, it is under one of two conditions:
- You are an authorized user on the account
- You are an obligor on the account
What is an authorized user account?
If the corporate card was issued in the name of the employer and your manager lists you as an authorized user, all charges are billed to and paid for by the employer.
When you file for bankruptcy, you likely won’t have to include the card in your list of debts because the account is not in your name. You should be able to continue using it during your bankruptcy unless your boss says otherwise.
What is an obligor?
If the credit card issuer sends the bill directly to you, and your employer reimburses you, you’re likely an obligor and you and your employer are jointly responsible for any balance on the card. If there is a balance on the account, you’ll need to list it with your bankruptcy schedules. If the balance is zero, you may be able to keep it if the issuer doesn’t close the account after learning of your bankruptcy filing.
Gray areas involving corporate credit cards
Perhaps, with your employer’s permission, you used the company card (for which you are only an authorized user) to make some personal purchases. In this case, you will likely have to include your employer as a creditor when you file for bankruptcy. If you want to repay this debt prior to filing, speak with a New York bankruptcy attorney, as your Chapter 7 trustee could reclaim the funds if you pay over a certain amount.
Corporate credit cards can be straightforward to deal with in a Chapter 7 filing, or they could be intensely complicated. Your bankruptcy attorney will help you identify what type of account holder you are and explain your obligations accordingly so that you don’t accidentally jeopardize your discharge.
Jayson Lutzky is a bankruptcy lawyer with an office in the Bronx, New York. He is admitted in both the Southern District of New York and the Eastern District of New York. If you have questions regarding bankruptcy, then contact his office at 718-329-9500. He offers free in-person consultations.