Exemption from Means Test

[casablanca]

I received the BK paperwork from our attorney last week, and since I have a large IRS debt that will be dischargeable, he checked the box that says most of my debt is non-consumer debt, which means (I think, anyway) I am exempt from the means test. I'm wondering what this means in the grand scheme of things - is it good? bad? indifferent? I have a lot of confidence in our attorney as I really looked hard for someone who was highly regarded and recommended, plus has been doing this for some time, so I'm not really worried, just curious.

Thanks for your input!

[skweakalee]

In most jurisdictions if greater than 50% of total debt is business debt, you don't have to go through the means test. Some jurisdictions look at the number of creditors.

This is a good thing, but...

A case can still be dismissed for "cause" under 707a. Some jurisdictions define cause as good faith. The good faith factors usually include things like: can the debtor repay his debt, has the debtor made significant lifestyle changes, is the debtor declaring bankruptcy to avoid a single large debt, has the debtor performed "procedural gymnastics," etc.

In other jurisdictions there is no good faith test, so you'd get to declare Ch7 with an above median income without fear of dismissal under 707.

[casablanca]

Thank you for the reply, that's good to know. Fortunately I'm sure we would pass a good faith test, since we also have a large amount of other consumer type debts and tried for quite some time to work this whole situation out with both the IRS and our other creditors. We are under the median income for a Chapter 7, and our budget ends up slightly underwater each month, which will be corrected with some adjustments in spending.