Bankruptcy by Keyword:
means test exclusion .
non-consumer debt .
Definitions from the USDOJ
- consumer debtor: A debtor whose debts are primarily consumer debts.
- consumer debts: Debts incurred for personal, as opposed to business, needs.
Case Law Topics
Biggest exception to the means test of all is that if debts are primarily non-consumer, 707(b)(2) (the means test) does not apply.
(Note: this exclusion from the Chapter 7 Means Test form 22A does not apply to Chapter 13 version; form 22C).
But what is "consumer debt?" Student loans? Mortgages? Taxes? Personal injury liability? Cases have discussed these issues as have the US Trustee.
The US Trustee's position on these the non-consumer debt exclusion:
* "Primarily" means that no means test requited if less than 50% of total scheduled debt was incurred for personal, household or family purposes.
* Purpose of debt is judged at the time the debt was incurred.
* Home mortgages are typically consumer debt.
* Most tax debts are not typically consumer debt.
Practical issues to consider:
* Sometimes a business lease or other executory contract that's locked in for several years can push a debtor's overall total into a primarily non-consumer debt case.
* Conversely, when a large mortgage debt outweighs a debt owed by a failed business, a bankruptcy that appears non-consumer can to be a business bankruptcy may cross the line to be about "primarily consumer debts."