When the United States government passed the Bankruptcy Abuse Prevention and Consumer Protection Act in 2005, the result was a significantly more stringent process for debtors wanting to file for Chapter 7 bankruptcy protection and debt discharge. However, the law was written in such a way to provide important exemptions in many of these additions, allowing those not targeted specifically by the law to continue using the benefits of the bankruptcy code.
In particular, the means test, which works to shift bankruptcies from Chapter 7 to Chapter 13, requiring debtors to work through their debts instead of just discharging them, can be avoided through non-consumer debt. This exemption to the means test provides individuals such as small business owners and former military personnel to enter into bankruptcy with a better opportunity to choose the bankruptcy that fits their situation best.
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Non-consumer debt is mostly defined through major debts that are incurred due to business or other expenses that do not pay for consumable goods or services. While this can seem confusing, the general rule of thumb is that non-consumer debt is defined as business debts or debts from personal taxes. Although tax debt may not be a large issue for some, it is a major consideration for others, and may be enough to trigger this particular exemption.
When debts are totaled and classified accordingly, a person may see whether they can go through with a non-consumer means test exemption. If their non-consumer debts equal more than half of their total debt value, that individual may skip the means test altogether. As the government primarily passed BAPCPA as a method to reduce Chapter 7 bankruptcy due to credit card or mortgage debts, this exemption provides relief for individuals who are not suspected of running up unmanageable personal expenses.
For more information regarding bankruptcy exemptions, contact a bankruptcy attorney.
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