In an unsecured loan what criteria is used to claim it as a business loan as opposed to a consumer loan

Asked about 4 years ago - Dothan, AL

a loan was discharged in a chapter 7 bankruptcy case as a consumer loan in the filing. the loan was an unsecured business loan. what evidence is required for the court to rule it as a business loan.

Additional information

i did not receive any notice of a discharge. i just recently was made aware of the discharge,which was not listed in the filing and was a business loan to the debtor filing the bankruptcy.

Attorney answers (3)

  1. Mark Markus

    Contributor Level 16

    1

    Lawyer agrees

    Answered . Well, the only reason this would make a difference is if you didn't pass the means test and needed to have more than 50% of your TOTAL debt be non-consumer. Since your facts state that you received a discharge, it is a moot point.

    However, to answer your question, a loan is non-consumer if it is made and used for a non-consumer purpose (anything other than personal goods or services, essentially).

  2. Ellen Lorraine Patton

    Contributor Level 10

    1

    Lawyer agrees

    Answered . Are you the creditor or the debtor in this question? The way I read it, you are the creditor. Regardless, the classification of the debt in the petition is not dealbreaker one way or the other. It is still discharged if it is listed in the petition. If you are a creditor, you should find an attorney specializing in creditors' rights and have them review everything to see if there is any way to preserve your claim.

  3. William Richard Abelmann

    Contributor Level 5

    1

    Lawyer agrees

    Answered . It appears that you may be a creditor in this case. Generally, classification of debts as consumer or non-consumer will not have a significant impact on the dischargeability of debts in a chapter 7 proceeding. As the debtor prepares the petition, they will have the opportunity to describe each debt. This description may include words such as "business loan". In any event, the only explicit description of debts as consumer/non-consumer is in the initial pages of the voluntary petition where the debtor elects whether debts are primarily consumer or non-consumer.

    Note that if the debt was inadvertently not listed, the discharge may still extend to your debt. You should contact an attorney if you want to seek to preserve your rights to dispute dischargeability.

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