What to do if I’m beingsued personally for a credit card debt incurred through my S-corp?

On Monday I go to arbitration for a $20,000 debt incurred from about 2-3 years ago. The credit card was taken out in the business’ name and does not show on my personaI credit report. The business has not operated in 2 years. I haven’t filed bankruptcy yet because I can’t afford it right now. My name is on the credit card as president of the corporation. Also, there were several charges from them for years of a credit protection service that I never agreed to and tried unsuccessfully to have removed. They never removed them.

Asked on October 21, 2011 under Bankruptcy Law, Pennsylvania


SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 9 years ago | Contributor

Two different issues are presented here:

1) Can you be sued personally on a "business" card? Very likely yes. If either the card was taken out by you, notwithstanding that it may either have your business name on it or have had payment made by your business, or if the credit card agreement for a card taken out by the business says that the person in whose name it is may be liable for the debt, then you could be sued personally. Review the account documents: in whose name is the account? how did you sign for the card? What do the agreement(s) say about personal liability? Etc. It is common for an employee to be liable on a "business" card.

2) Can they add charges to your card that you did not agree to? Legally no, though a factual matter may be whether you did somehow implicitly agree or authorize the credit protection service.

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