Means Test and Mainly Business Debt: Anyone out there have same situation?

[trecker]

Has anyone had mainly business related debt and if so, what are the rules for passing the means test, and does it still apply if you have 90% business debt? I have been getting differing answers from several attorneys and literature. Some say you still have to pass the means test, and others say, "It is my understanding that if the debt is over 50-60% business related debt, the means test does not apply" Confusing? Yes! Can someone give their experience on this? Thank you!

[Dollar Bill]

Hello. I have almost 1 million in biz debt and will file c7 at the end of this month.

Yes, primarily biz debt c7's will check the box on the means test that says primarily biz or so. If you have 51% of the as biz debt your good to go. Just make sure your primary residence won't take you over the biz debt amount etc etc.

[CindyLou]

find an attorney that is familiar with chap7 with primarily business debt....if they tell you you can't do it then find another.

[PoorGrammyinBK7]

My understanding, after speaking with an atty, is that if over 50% of your TOTAL DEBT, including house, car, etc - is business debt, then you can file C7 regardless of the means test.

[PoorGrammyinBK7]

but there are other factors and differences which could mean a 13 is still best for you - depends on many things....

[trecker]

re: Means Test and Mainly Business Debt: Anyone out there have the same situation?

Thank you for the tips. To those who have been advised that if you have over 51% business debt, do you happen to know where in the Bankruptcy law code it could be found?

[HHM]

Keep in mind, passing the means test (or side-stepping it on the biz debt exemption) is only the first part. If you still show disposable income on Schedules I and J (income and expense), you will still be put into a chapter 13.

As for the code section for the "biz debt" exception.
Section 707(b)(1)

[Needing Help]

HMM - is that the case as well if your income is BELOW the median? Can you still be forced nto a chapter 13? Do the trustees base "expenses" on a certain threshold... in other words, are you allowed certain costs? Gasoline, food, etc?

[HHM]

HMM - is that the case as well if your income is BELOW the median? Can you still be forced nto a chapter 13? Do the trustees base "expenses" on a certain threshold... in other words, are you allowed certain costs? Gasoline, food, etc?

I don't quite understand your question, if you are below the median, then you are below the allowed expenses; thus, there is no presumption of abuse.

[Needing Help]

Thanks for the quick reply. Are you saying that if the past 6 months of income is LESS than the median for your state, you can cleanly file a chapter 7? For example... let's say I make $50,000 in a family of 3. Median is $60,000. We are WELL below. However... what if our rent is only $300 per month, no car payments, little expenses, etc. Can we still be forced into a 13?

[biotechsolution]

needing help. read the bk code carefully. the only way you can be pushed in a 13 with disposable income is under 707(b). Which only applies in consumer debt cases. The UST could possibly object to your discharge but it would l have to fall under another statute...707(a), which is normally objections for either procedural or fraud agruments. When you fill out your schedules I and J. Just make sure you end up with 0 on your bottom line. If you are a business debtor your chances of the panel or UST trustee objecting are slim to none. I had a $18,000/yr school expense for my 8 year old and never heard a peep. Remember the only section that pushes people into a chapter 13 is 707(b).

[HHM]

Thanks for the quick reply. Are you saying that if the past 6 months of income is LESS than the median for your state, you can cleanly file a chapter 7? For example... let's say I make $50,000 in a family of 3. Median is $60,000. We are WELL below. However... what if our rent is only $300 per month, no car payments, little expenses, etc. Can we still be forced into a 13?

You still need to show no disposible income on schedules I and J.

[PoorGrammyinBK7]

If you are primarily business debt, (we are) do you still have to fill out the means test sheet - showing the last 6 months of income?

And how do you do the current income and expenses? Do you fill out that? And do use use actual current income - or again - do you have to use the figures from the "means test" that we supposedly are exempt from??? Very confused...

Our last 6 months was nearly double what it is now, and that is money that will NOT be repeated - one time payments on a note.

If we use our CURRENT monthly income on I and J we are about a (negative) $800 in disposable income

[stressin]

You still need to show no disposible income on schedules I and J.

How does this work if you are filing primarily for business and are closing the business or have closed the business prior to filing?
It's possible that after completing the schedules, WE (spouse and myself) will have some disposable income, but I am filing seperately and won't have any income--because the business will be closed.

I have been confused about this. My lawyer doesn't seem to think that my filing a Chapter 7 for primarily business debt is going to be a problem, and I will have closed the business prior to filing (I am liquidating now). But as a married couple, we will probably have some disposable income.

It can't be that cut and dry because I don't see how I could be pushed into a Chapter 13 if I am filing seperately and our schedules (which are for household income) show any disposable income. I won't actually have ANY income, so a 13 wouldn't make sense in my case.