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Is a lawsuit judgment a consumer or non-consumer debt? Considering filing chapter 7 to discharge judgement debt (attny fees).

Miami, FL |

I lost a lawsuit and have to pay the opposing party's attorney fees. I am thinking about filing chapter 7 bankruptcy. Is the judgement (attorney fees) considered as consumer or non-consumer debt? If non-consumer debt I am exempt from the means test and therefore would qualify for chapter 7 rather than chapter 13.

Attorney Answers 4

  1. Probably non consumer, because it sounds like you took the loss as part of some business dispute.

  2. There is insufficient information to respond. It is based upon the type of issue that was litigated. Some matters that your would think are consumer debts may be defined as business debt, and others the opposite. It is usually an easy answer for a seasoned bankruptcy attorney.

    However, do not think that passing the Means Test is a guarranty of being able to file Chapter 7. In many jurisdictions the US Trustee's Office and the Courts will also look at your actual income less expenditures to see whether you are filing a Chapter 7 in good faith. It is not all black and white. Again, seek the advice of a good bankruptcy attorney.

    The response given is general in nature and based upon limited information. It does not and cannot replace that of a proper consultation with a qualified attorney. You should not act upon this Information alone, but should seek legal counsel prior to taking any action.

  3. Retain an experienced bankruptcy attorney who can help you determine the best type of case for you to file. These are not always straight-forward or simple questions to answer.

  4. You will want to meet with an attorney because there many many factors in choosing to file a 7 vs 13. The type of debt and means test are just one issue. Your assets and other schedules will come in to play as well.