The Means Test is used to determine eligibility for Chapter 7 Bankruptcy. However, if your debt is not "primarily consumer debts", then you can bypass the Means Test because you automatically pass the Means Test.
What is considered "Consumer Debt"?
Under the statute, Consumer Debt is defined as debt incurred by an individual "primarily for a personal, family or household purpose." 11 U.S.C. 101(8). The purpose for incurring the debt helps determine if it is a consumer debt. For example, debt incurred for business venture or profit motive is unlikely to be considered a debt incurred primarily for a personal, family or household purposes. In contrast, debt incurred for home improvement is more likely to be considered a consumer debt. Home mortgage is consumer debt. Mortgage on Investment Property is not consumer debt. Tax debt is not consumer debt, just to name a few examples.
What is "Primarily" consumer debts?
A debtor has primarily consumer debts where more than 50% of the total debt owed is consumer debt regardless if the debt is dischargeable.
For more information about Chapter 7 Bankruptcy eligibility, call Muoi Chea Bankruptcy Attorney in Sacramento, Stockton, and Fairfield, California.