When you file Chap 7 the form gives you the choice to file business or consumer debt. I have investment real estate that makes my business debt much greater than my consumer debt. I qualify now under either option, because I also am currently employed at a job that pays only 40% of what I was making a year ago. Are there any advantages to filing under under one of the other?
-
-
If you qualify either way then it really doesn't matter but if more than 50% of you total debt is business related you should mark it as a business filing, especially if you have large credit card debt (which you most likely used to keep the business going as opposed to buying a lot of toys that the Trustee may think you have hidden someplace).
Des. -
Agree, if you qualify either way, it really doesn't matter, but if your debt really is 50%+ business (non-consumer) debt, then that is what you should mark.
Make sure you understand what counts as consumer vs. non-consumer. The mortgage on your primary residence IS consumer debt. Also, there is some debate on how and when to classify a debt as non-consumer. For example, if you took out a mortgage as "owner occupied" but then later turned it into a rental unit, it is an open question whether that debt is non-consumer since the original intent of the loan was consumer.
Other non-consumer debts
Income taxes (correct, personal income taxes are non-consumer)
Student loans (that portion used for tuition and direct education expenses are non-consumer).Comment
-
This was an issue for us as well, SetMeFree. Our investment properties were not purchased as "investments" but as principal residences that we later converted. Since the debt was consumer when we acquired it, it remained so for the purpose of bk.There are two secrets for success in life:
1.) Never tell everything you know.Comment
Comment