Related Keywords: non-consumer debt . Nondischargeble . support of family members .
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."
Because student loan debt is nondischargeable, debtors tend to want to give it more attention than other unsecured debts when it comes to their Chapter 13 plan. These cases explore various attempts to do that inside of "outside" the plan.
There is no mention of student loan debts in 11 U.S.C. §507(a) and therefore, there is no statutory basis for treating such debts as priority debts under the Bankruptcy Code. As a result, a monthly student loan payment is not an expense that may be deducted from income on the means test form 22A.
The key issue in these cases is whether the obligation to repay a nondischargeable student loan constitutes "special circumstances" under §707(b)(2)(B).
Cases tend to be fact based, and lead to different results, and also apply different standards in arriving at those results.
Various cases of hardship claimed and analyzed by courts. Case by case determination.
Section 523(a)(8) governs discharges of student loans. A student loan "undue hardship" discharge is available in either a Chapter 7 or Chapter 13 bankruptcy, under 523(a)(8).
While student loans are nondischargeable, and can only be discharged with a showing of undue hardship, occasionally a Chapter 13 plan will be approved that discharges a student loan, and if there is no objection, what happens when then plan is completed?
While student loans are nondischargeable, they generally can't be given preferential treatment under the plan, compared to other unsecured creditors. However, there are legal ways to maximize payments on nondischargeable student loans. In court districts that hold that Form 22C determines PDI, any excess "actual" income is considered "discretionary" and can be used any way the debtor wishes.