Bankruptcy - Are you Exempt from the Chapter 7 Means Test?
The first question to ask before completing the Chapter 7 Means Test is whether the Debtor is exempt from completing the means test for any of the reasons discussed below
The Debtor's debts are not primarily consumer debts1. If the Debtor's debts are more than 50% non-consumer debts, they need only certify as such on the first page of the means test and do not need to complete the remaining sections. A consumer debt is one that is incurred primarily for personal, family or household purpose. Examples of debts which are not consumer debts are debts incurred for business reasons and income taxes. When is the character of the debt determined? This is an unresolved issue. If you ask the United States Trustee this question, they will tell you that the character of the debt is judged at the time the debt was incurred. This is the opinion reached in In re Booth, 858 F.2d 1051, 1054-1055 (5th Cir. 1999).
Disabled VeteranThe Debtor is exempt from the means test if they are a disabled veteran (as defined in 38 U.S.C. ? 3741(1)) whose indebtedness occurred primarily during a period in which the Debtor was on active duty (as defined in 10 U.S.C. ? 101(d)(1)) or while performing a homeland defense activity (as defined in 32 U.S.C. ?901(1)).
Reservists and National Guard Members; active duty or homeland defense activityMembers of a reserve component of the Armed Forces and members of the National Guard who were called to active duty (as defined in 10 U.S.C.? 101(d)(1)) after September 11, 2001, for a period of at least 90 days, or who have performed homeland defense activity (as defined in 32 U.S.C. ? 901(1)) for a period of at least 90 days, are excluded from all forms of means testing during the time of active duty or homeland defense activity and for 540 days thereafter (the "exclusion period").