Oh my Gawd, means test may not have been needed.

[freshstart06]

While I was doing some research on something in regards to BK, I found out that if most of your debt is non-consumer then you do not have to take the means test... is this true???

Most of our debt is IRS Back taxes which is non-consumer debt. it looks like we were able to get rid of back taxes from 2000-2003 but we still have to pay current taxes our taxes is over half of our debt. Is this true, could this be why the our trustee meeting went so smooth???

I am still looking for more info on the internet.

[keepmine]

It's my understanding that that section of the bk code pretains to business related debts. Back taxes would be a consumer debt.

[HHM]

I don't think income tax qualifies as "non-consumer" debt...but I will have to look more closely as the code.

The code defines consumer debt as

"debt incurred by an individual primarily for personal, family, or household purpose"

My thinking is that "income tax" is considered debt for a "personal purpose". Income tax is your "personal" mandatory, liability to the federal govt. But short of searching case law, I am not 100% certain. However, my general understanding is that the only debt that most people may incur that does not fall under "consumer debt" is true "business debt".

[familyof7]

BUT was your taxes owed from a business? Not personal taxes like selfemployment or somthing? Yes you can have taxes 3 yrs or older discharged.

[biotechsolution]

Income taxes are considered non-consumer debt. Page 6-11 of Trustee Handbook.

If the majority of your taxes are income or self-employemnt taxes they are considered non-consumer debt. Now remember
you have to include all your debt, even secured debt that you are not discharging, like autos and mortage.

Neither the means tests or the any for the form 22's apply to you.

Page 6-11 of Chapter 7 Trustee Handbook.

The most common consumer debts are home mortgages, credit card debts, and personal loans. See Wyman, A 707(b) Sampler, Norton Bankruptcy Law Adviser, Issue No. 5, page 2 (May 1994). Debt incurred for a business venture or with a
profit motive is not a consumer debt. Cypher Chiropractic Center v. Runski (In re Runski), 102 F.3d 744, 747 (4th Cir. 1996).

Debt that is owed for income taxes is not consumer debt. In re Westberry, 215 F.3d 589, 591-94 (6th Cir. 2000).

And this is not busiess income tax, it's personal income and self-employment taxes.

I am still amazed how many attorneys still do not know this.


And it scares me to think how many people are forced into 13 because of an incompetent attorney.

[HHM]

Thank you for clarifying the issue.

My only concern is that all those decisions are pre-2005 new law, but as far as I know, the new law did not make any meaningful changes as it relates to what is or is not considered consumer debt.

However, you make a could point, the percentage is based on ALL your debt, secured, unsecured, taxes, etc. So, even if most of the debt you are attempting to discharge is back-taxes, if you have a mortgage, you likely do not have the majority of your debt as non-consumer. '

In any event, thank you for looking that up.

[familyof7]

Freshstart06 has no mortgage or anything like that so she may be on to something here

[freshstart06]

No mortgage, no real cc debt only about maybe $1500 at the most and that is a big maybe, Most of our debt is income tax over 50%. I truly think this is why our meeting went smooth. from what I read even if 50% is non-consumer we are safe. We also had a pending lawsuit that was based on "option money" on a purchase we did not purchase this is also consider non-consumber. We took that means test for nothing but if there are problems we can use the point that our debts are non consumer and this will help our case.

[biotechsolution]

You only use Schedules I and J for determining disposable income.

FreshStart06:

You only use Schedules I and J for determining your disposable income.

You will have much more wiggle room when determining expenses.

There is also some caselaw out there in which even if you have some disposable income you cannot be forced into a 13 because your debts are considered non-consumer.

You are considered a 'Tax-Debtor' in which you are treated the same has a business debtor by the tax court.

Find a good business bankruptcy attorney and you'll breeze through a chapter 7.

[freshstart06]

the only problem is we already filed and had our meeting but it was so smooth just basic questions. Should I write the trustee and make him aware that most of our debt is tax debt, I am sure he knows by now. I mean he did not ask any questions just yes and no.

At least I have a cushion if I have to fight my case if he claims abuse (I can't see how)

[freshstart06]

Oh, we went pro se too, but at least this will be easier now

[biotechsolution]

You can file an amended 22A.

You

[danaf]

I wouldn't write the trustee a ltr at this point. Just sit tight and see what happens. You are in the 60 day club and worrying too much! Do you have the means to check pacer? Do you intend to? If so, wait 10 days or so and check it out. But until then, don't worry yourself so much! :-)

[freshstart06]

Oh, I don't know what to do.. what is the worse that can happen if I email the trustee and make him aware of all of the tax debt. It is broken down on one of those schedules, I am going to look it up now.

[biotechsolution]

You can file an amended 22A.

--------------------------------------------------------------------------------

You can amend you form 22A. They have a form 22A with nothing more than a statement on it that states my debts are non-consumer in nature and therefore not subject to the means test.

If I were you. I'd send an email to the trustee letting him know that the majority of your debts are tax, therefore non-consumer. Give him the page number of the trustee manual. Then ask him if he'd like you to file an ammended 22A.

What this will do is feel the trustee out. If he's going to let you breeze through he won't want you to file an amended 22A. And if he's going to object to your bankruptcy he has to file something within 10 days of your 341 then you can always amend your 22A and throw out the means test.

Email me the form if you need it. I'd tried putting the pdf here but it didn't workl.