Realizing that personal bankruptcy is in a person’s near future can be one of life’s worst feelings. But bankruptcy laws help maintain a healthy economy and improve people’s lives. More than 750,000 Americans make use of the legal process annually.
Temporarily giving up all access to credit cards is often part of the process. But for some, their livelihoods may seem to be at stake since they use a corporate “expense” credit card from their employer to do their job. How can a person tell their boss they can’t pay for travel expenses due to bankruptcy?
Where the card company sees responsibility
A lot of factors can affect what bankruptcy will mean for a corporate card. Since people considering bankruptcy typically benefit from legal advice, it can be a good first question to ask an attorney.
But to think through some possibilities, it helps to focus on financial liability from the point of view of the company issuing the card. Who is responsible for paying, as far as the issuing credit card company is concerned? How many people, and which people, can they lean on to get their money back?
Corporate cards paid by the company
Consider a “company payment card,” where the employee is an authorized user of the account and the employer pays bill. From the card company’s point of view, the employer has all the money and maybe all the financial liability. The employee’s bankruptcy might not affect such a card.
However, card company policies differ. Or the employee may have accumulated debt to the employer for personal expenses that wound up on the card.
Corporate cards paid by the employee
For an employee not considered an authorized user but the account holder, things may be less simple. But here too, the answer depends on many variables. If the employee has no balance on the card, it stands a much better chance of not being affected.
Even in a bad-case scenario, bankruptcy rarely means an employee will be fired and their career destroyed.
Talking to the employer can often lead to pleasant surprises. A debit card might be able to substitute for the current card, or a company payment card option may already exist. In any case, there is rarely much downside to confiding in an employer, especially after exploring options and discussing game plans with an attorney.