If I work for an S-corp and am a signer on the company checking account, what happens if I file for personal Chapter 7 bankruptcy?
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If I work for an S-corp and am a signer on the company checking account, what happens if I file for personal Chapter 7 bankruptcy?
Am I putting this account at risk by filing?
Asked on October 23, 2011 under Bankruptcy Law, Massachusetts
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 12 years ago | Contributor
No, just as bankrupcy of the S-corp does not affect your personal accounts or assets, your personal bankruptcy would not affect the bank accounts or assets or a corporation--either S-corp or C-corp; or, for that matter, a limited liability company or LLC--which you work for.
If you are an owner of the S-corp, then your shares of the S-corp are an asset which would be taken into account in determining your total assets for Ch. 7 purposes--however, that will still not directly affect any accounts you are a signatory on, and if it's an illiquid investment (i.e. a small or closely held company, where it'd be almost impossible to sell your shares), then the effective value of those shares may be minimal or nil. But if you're not also an owner as well as an employee, you would not even need to mention or account for the S-corp at all in the bankruptcy, other than detailing your compensation.
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