Can you be sued for an overdue balance by a business credit card issuer? The short
answer is yes. At least, your business can be sued. If you have a Corporation or
LLC and have kept your business finances properly separated from your personal
finances, you should have a certain amount of protection from lawsuits. The
creditor can sue your business, but not you personally.
If you have a sole proprietorship or partnership, you will have more personal
liability for the debts of the business, and your personal financial well being
could be put at risk in the event of a lawsuit by a creditor.
Other things that could put your personal finances at risk are if you sign a personal
guarantee to obtain a business credit card, or if the creditor inserts special
language in the terms stating that the person who uses the card has some level
of responsibility. Also, if the creditor can prove that there was fraud
committed in the credit application process, then they could probably sue the
owner or owners instead of the business.
The best course of action, of course, is to avoid this scenario altogether.
Obviously that isn't always possible.
This s precisely why it's wise to build business credit and have a solid separation
between your business and personal finances: doing so will protect you to the
maximum extent possible in the event that, at some point in the future, your
business is unable to pay its debts.
Trevana Properties is a placement company working with a variety of hedge funds, REIT's, commercial banks, specialty boutique lenders, private investors and other funding sources not widely known to the general public.