Consumer debt?

[Newposter]

I have been pouring through the forms and the information available here and on the official .gov websites.

The debts that are to be listed are "consumer debt".

Ok...I have no mortgage, no car payments, no credit card debt.
Every debt I have is the result of racing horses. Vet bills, horse transport, trainers, and a truck I co-signed for to haul horses. That is it.

I was not incorporated....no LLC, no DBA, nothing of that sort. Did not race in a "stable name". Just me.

Is it consumer debt?

[justbroke]

I would say that is non-consumer debt. Anything that is for investment or business purposes, or not related directly to the health, welfare, and lodging of your family or yourself, is non-consumer debt. For example, an investment home that you use as a rental, would be non-consumer. Credit cards that you took out for business purposes ("business" credit cards), would be non-consumer. Taxes are often considered non-consumer debt.

Of course, I would not just trust my word and I would seek advice from an attorney who can conclusively tell you that this debt is non-consumer debt. To me it reads as though you wre operating a business. It does not matter if it was not an LLC or Corp or DBA... it's a business.

[Newposter]

Does that change whether or not I can file chapter 7 as an individual? Other than the means test..is there any other impact for me?

[justbroke]

You would still file as an individual with "non-consumer" debts. The only time an individual would file a bankruptcy as a "non-individual" would be if they were filing for a corporation or other separate legal entity. Your horse racing business is not a separate legal entity. If the debt that you incurred was in your name personally, then you incurred it as an individual and not as a "corporation" (or other legal entity). (Even if you did business as a DBA, then that too is still you personally, just using a different name to conduct business.)

[bcohen]

From the OP's previous thread, I am not sure that her horse-racing activity was a business. I did not see that she raced horses for the purpose of making money. Assuming that her involvement in horse-racing was really just a hobby, wouldn't the debts be considered "consumer"? In any case, the only effect of having debts be considered as "non-consumer" versus "consumer" is getting to avoid the means test.

[justbroke]

I didn't see the other item and assumed it was a business. I'm not a tax attorney and take this with a grain of salt, but I agree wit you bcohen. If it was just a hobby and not operated as a business, the costs and expenses may not be "non-consumer" in nature. This is why Newposter should see a qualified attorney to review just what you have, especially whether you treated this activity as a business.

[despritfreya]

Business or no business, I think Newposter's income will be below the CMI threshold for a single person. Newposter, does your income from all sources except SS average more or less than $3,704.91 per month for the past 6 months? Income includes wages, self employment type draws, regular contributions from others including family members, gambling winnings, etc but does not including SS.

Des.

[Newposter]

My income has fallen to nearly $0 since I left the race track (last November).

I made money each and every year I raced. Since 2011 it was my sole income. I declared it as a business on taxes... Etc. I guess that makes it a business. It worked for me because I was both the barn manager and my own groom (usually costing approx $600 per week if I had to hire).

I am not concerned about the means test at all. Was Just trying to figure out if there was any other reason "consumer" vs "non-consumer" debt made any difference when I file.

[despritfreya]

I am not concerned about the means test at all. Was Just trying to figure out if there was any other reason "consumer" vs "non-consumer" debt made any difference when I file.

IMO other than having to "qualify" based upon your income, it only matters as it relates to the Trustee's ability to recover a preferential payment. In consumer cases the threshold within that 90 day window is $600 to one particular creditor. In a non-consumer case it is over $6,000.

Des.