Jump To Navigation


Posted on December 4th, 2014

By Ben Wright of Wright Law Offices.

Arizona residents considering bankruptcy need to be aware that there is a difference between a consumer bankruptcy filing and a business bankruptcy filing.   In other words, there are different rules that need to be followed depending upon where and how your debts are incurred.

Bankruptcy code 11 U.S.C. Section 707(b) essentially states that a bankruptcy case can be dismissed if there is a finding of abuse via the  “means test”.  However, one piece of good news is that the bankruptcy means test only applies to debtors who have primarily consumer debts.

The definition of “primarily consumer debts” needs to be determined in order to make sense of this provision.  The definition of primary is deemed to be anything over 50% of your total debts.  A consumer debt is a debt that is incurred by an individual for a personal, family or household purpose.  All debts outside of this scope will not meet this definition and will not be deemed to be consumer debts.

For example, if an individual incurred $26,000 of credit card debt used to purchase vehicles, food, and clothes but also incurred $30,000 of credit card debt used to start a business that later failed, the bankruptcy means test would not apply to that individual pursuant to 707(b).

In summary, there is a distinct advantage to individuals who have non-consumer debts because they will avoid having to undergo the rigorous means test to determine their qualification for chapter 7 bankruptcy.  Meanwhile, those debtors who need to file a consumer bankruptcy will need to pass the means test in order to qualify for chapter 7.

Rather than attempting to navigate the plethora of different bankruptcy laws, it is usually best to consult a Bankruptcy Attorney in your area.

Contact Us for a Free Consultation
Office Locations

Phoenix Office One
Wright Law Offices
2999 N. 44th St., Ste 600
Phoenix AZ 85018

Telephone: 480-845-0145 / 866-703-3287
Phoenix Law Office

Phoenix Office Two
Wright Law Offices
668 N. 44th St., Ste 320
Phoenix AZ 85008

Telephone: 480-845-0145 / 866-703-3287
Phoenix Law Office

Scottsdale Office
Wright Law Offices
7135 East Camelback Road, Ste 230
Scottsdale AZ 85251

Telephone: 480-845-0145 / 866-703-3287
Scottsdale Law Office

Tempe Office
Wright Law Offices
2238 S. McClintock Dr.
Tempe AZ 85258

Telephone: 480-845-0145 / 866-703-3287
Tempe Law Office

Avondale Office
Wright Law Offices
12725 W Indian School Rd, Suite E-101
Avondale AZ 85392

Telephone: 623-258-4480 / 866-703-3287
Avondale Law Office

Mesa Office
Wright Law Offices

4856 E. Baseline Rd.
Suite #104
Mesa, AZ 85206
Telephone: 480-845-0145 / 866-703-3287
Mesa Law Office

Glendale Office
Wright Law Offices
20325 N. 51st Ave., Suite 134
Glendale, AZ 85308
Telephone: 623-258-4480 / 866-703-3287
Glendale Law OFfice

Facebook IconTwitter IconVisit Us On Google+Visit Us On Google+