Business credit card debt

Read the card agreement. Most cards issued to small businesses make the person who applied liable along with the business, often through a personal guarantee in the fine print. Some cards for larger companies put liability on the company alone, but that is less common for small firms.

If you are personally liable, the issuer can pursue you when the business stops paying, including after the business closes.

Mostly not. Regulation Z, the federal rule that carries the credit card protections consumers rely on, does not cover credit extended primarily for a business purpose (eCFR, opens in a new tab). So the consumer limits on rate increases and payment allocation generally do not reach business cards.

A few rules apply to every card, business or not. Under 12 CFR 1026.12 (eCFR, opens in a new tab), no card may be issued that nobody asked for, and the limits on liability for unauthorized use also reach business cards, with special terms when a business has 10 or more cards from one issuer.

Which option fits depends on whether the business is still open, whether you personally guaranteed the card, and how many other debts are pressing at the same time.

It depends on how the issuer reports. Issuers differ: some report a business card only to business credit bureaus while it is in good standing, then to your personal file once it goes seriously late, and others report to your personal file all along.

Either way, a settled or charged-off card is likely to hurt the credit of whoever is liable for it. Negative items can stay on a consumer credit report for up to seven years (CFPB, opens in a new tab).

Settlement means the issuer agrees to accept less than the full balance to close the account. Issuers usually consider it only once an account is well behind, and each issuer has its own policies. Interest and fees can keep adding up until then.

Get any offer in writing before paying, and make sure it releases both the business and you. A forgiven balance may be taxable income (IRS, opens in a new tab) to whoever owed it, so ask your accountant how it will be reported.

Clear Financial Company negotiates business card balances alongside the rest of the business's debt, as part of business debt relief. If a card was used for household spending and is in your name alone, it may be consumer debt instead, with different rules and options.

If an issuer has sued you or the business, talk to an attorney before you negotiate, and do not miss the deadline to respond. A court judgment gives the issuer stronger ways to collect, so the response deadline on the papers comes first.