Non Consumer Bankruptcy

Non-consumer debt is any debt which is not defined by the Bankruptcy Code as debt incurred by an individual for personal, family, or household reasons. General types of consumer debts include credit card charges, living expenses, debts used to purchase a car, and legal fees for a divorce. If half of the debtor's debts are consumer debts they will have to pass the means test to file Chapter 7 bankruptcy. If the consumer has non-consumer debt, which is debt generated with a profit motive, they do not have to pass the means test. Common types of non-consumer debts include payment to maintain or improve investment property, credit card purchases for business purposes, car loans for business vehicles, or personal guarantees for business debts.

Debtors who file a non-consumer Chapter 7 bankruptcy will have their bankruptcy closely monitored by the court and creditors. The debtor will have the burden of proof to prove their debts are non-consumer debts. Good documentation, however, should help a debtor prove their case. Challenges for debt may be done with contested motions or at trial. Bankruptcy lawyers can help you if you are considering a non-consumer bankruptcy.