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Chapter 7 Means Test

Toccoa, GA |

I own a small business(motel). It's a non performing loan. Bank has sold the note to a private investor at a deep discount. The note holder is harassing me with the threat to garnish my paycheck after seeking a judgment for the deficiency.

I make six figure salary, so I wonder if I am allowed to bypass the means test due to the fact that all of my debt is business related(All non-consumer).

If so, can the creditor still try to stop chapter 7 filing?

Please advise.

Attorney Answers 4


  1. Your salary is not relevant to the means test if the non-consumer debt exception applies.


  2. The means test does not apply if the majority of your debt (50% plus $1) is business debt.

    The six figure salary may present (depending on your expenses and other debt) a possible good faith issue, but your attorney can assess that.

    If you find this answer helpful, please mark it here on AVVO as helpful. In answering you, I am attempting to communicate general legal information and am not representing you (and am not your lawyer). Do feel free to call me at 404-768-3509 if you wish to discuss actual representation (the phone call also does not retain counsel; that requires an office visit and appropriate paperwork). In that a forum such as this provides me with limited details and doesn't allow me to review details and documents, it is possible that answers here, while meant to be helpful, may in some cases not be complete or accurate, and I highly recommend that you retain legal counsel rather than rely on the answers here. (You can also email my office at geaatl@msn.com . An email also does not retain my office, but can help you get an appointment set if you prefer not to call). I am happy to discuss possible representation with you. Any information in this communication is for discussion purposes only, and is not offered as legal advice. There is no right to rely on the information contained in this communication and no attorney-client relationship is formed. Nothing in my answer should be considered as tax-advice. To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. Note that I am only licensed in Georgia and thus cannot practice in other states. I am also required to advise you, if your question concerns bankruptcy, that the U.S. Congress has designated Ashman Law Office as a debt relief agency that can help people file bankruptcy.


  3. As stated, the means test does not apply if most of your debt is business debt (that includes your house, cars, etc, as personal debt), but creditors and the US Trustee do have the ability to contest a Ch. 7 discharge if someone has significant income. It is not used much, but it can happen. See a lawyer - it might be a case in which the worst thing that can happen is a dismissal.


  4. When congress passed BAPCPA, they installed the means test as a threshold factor in determining eligibility for chapter 7. However, they did not get rid of the old "good faith" test. Although the means test will not be required in your case, the good faith will be based on your income and actual expenses. Basically, if you have money left over after your living expenses, business expenses, and payments on debts related to property you want to keep, you might have an issue with chapter 7. However, if the budget shows money left over each month, you could file a chapter 13 and pay that amount over 5 years to unsecured creditors. At the end of that time period, any unpaid, non-dischargeable debt would be discharged. This usually ends up a better deal than a garnishment. I recommend calling a bankruptcy attorney on this site and setting a time to come in and go over all of the facts and figures to find out for sure what you can and can't do.

    The above information is general in nature. In order to obtain more specific and legal advice upon which to base your important decisions, please contact our office directly for a free phone or in person consultation. Robert M. Gardner, Jr. Hicks, Massey & Gardner, LLP hmgrmg@yahoo.com 53 W. Candler St. Or 718 Oak St. Winder, Ga. 30680 Gainesville, Georgia (770) 307-4899 (770) 538-0555 gadebtlaw.com hicksmasseyandgardner.com serving metro Atlanta and all of Northeast Georgia Bankruptcy, Divorce, Personal Injury, Worker’s Compensation, Medical Malpractice, Adoption, Civil and Criminal Litigation