Q: In a single member LLC that is filing chapter 7 bankruptcy. What happens to business credit card balances in that case?
Do these affect the personal credit report, or not? Currently the credit card is not reflected on my personal credit report, and I don't remember if I personally guaranteed the card or not.
A: It all depends on your statement and guarantee of the bank credit card. I believe the statement should have both your business name and your name on it a joint debt. If you list the debt in the bankruptcy it comes off your credit as discharged in bankruptcy . If it is only in your business then it applies to your business credit rating especially if your business fails to regularly pay it.
Timothy Denison agrees with this answer
A: If only the LLC files bankruptcy, then you are still on the debt and it will affect your credit if not paid. If you are not guarantor then you are not on the debt for LLC. So then they have no right to ding your credit.
A: It all depends on whether you personally guaranteed the credit cards.
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A:
In bankruptcy cases involving single-member LLCs, business credit card debt treatment largely depends on whether you personally guaranteed the card when applying. Without a personal guarantee, the debt typically remains solely with the LLC and would be discharged through the Chapter 7 bankruptcy process.
If you provided a personal guarantee, which many business credit card issuers require, you could remain personally liable for the debt even after the LLC's bankruptcy. Since you mentioned the debt isn't showing on your personal credit report, this suggests you might not have given a personal guarantee - but you'll want to review your original credit card agreement or contact the issuer to confirm.
The smartest path forward would be gathering all your original credit card documentation and speaking with your bankruptcy attorney about this specific situation. They can review the terms and help determine whether the business credit card debt will remain solely with the LLC or if you hold personal liability. This distinction will significantly impact both the bankruptcy process and your personal financial future.
Timothy Denison agrees with this answer
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