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Are my debts “predominantly business debts” so I don’t need to pass the Means Test?

Posted on Sep 17, 2009 in Bankruptcy, Chapter 13, Chapter 7

Have you lost a lot of money in your business or investments?  Have you run up a lot of debts on your credit cards trying to keep your business afloat?  Then your debts might be “business debt” and not “consumer debt”.  If your debt is not “predominantly consumer debt”, then the means test doesn’t apply to you. This means that you might be making more than the median family income and still not be presumed to be abusing the bankruptcy system by filing a chapter 7 case.  That might be good news for you.  You might be able to avoid being an indentured servant for 5 years in chapter 13.

How do you know whether or not your debt is “predominantly consumer debt”?  The term “predominantly” is not defined.  The Supreme Court says to read the Code in accordance with plain language.  I take this to mean use words the way people use them in ordinary language.  Predominant to me means more than anything else.  Not necessarily a lot more but certainly more.  Look it up in the dictionary.  So if the majority of your debt is not consumer debt, the means test probably will not apply to you.  I’d see if you pass the means test anyway.  Often you will.  And if there are two ways to get to “GO”, then I would certainly suggest that you take both of them.


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