Get Your Client Out Of The Means Test Jail

Get bankruptcy debtors out of means test jail


As much as the means test is a pain in the neck, why don’t more bankruptcy attorneys skip it?

Finding that your client’s debts are not “primarily consumer” is an instant, get-out-of-jail-free card.

If you can check the B-22A box that the debts are not primarily consumer debts, you get to skip the rest of the miserable form.

Let’s revisit the statute:  §707(b)(1) starts out providing that the court may dismiss a case “filed by an individual debtor…whose debts are primarily consumer debts…”  That’s the foundation for the means test and B-22.

If the debts are not “primarily consumer” debts, then your client’s case can’t be dismissed under this section.  Pretty strong hand, right?

The Code  defines consumer debt as “debt incurred by an individual primarily for personal, family, or household purposes”.  Section 101(8).

For me, it’s easiest to list the things that aren’t consumer debts

  • Taxes
  • Business debts
  • Debts in general incurred with a profit motive
  • Tort debts

There are two theories operating here as to why a debt isn’t a consumer debt.  One is found in the tax debt cases, holding that one doesn’t decide to incur a tax, it’s imposed upon you.  Therefore, it isn’t a choice.

[Remember that the means test is a penalty to be inflicted only on the consumer who makes bad choices or suffers bad results.  Somehow, those who fail in business or choose not to pay taxes aren’t subject to the means test indignity.  But there, there, my ire is showing.]

The second discriminator is the presence of a profit motive:  investment property, trade debt, stock margin debt.

The character of the debt is determined when that debt is incurred, says the majority position on the issue.

So, the former family home, now a rental, is encumbered with consumer debt, since it was incurred, in the first place, for household purposes.  Consider, if you’re feeling argumentative, whether that character changes if the house has been refinanced after it became a rental.  I haven’t seen cases, but I haven’t yet looked.

In the case of the small business owner, this may require that you sort credit cards into those used for business and the personal cards.  If the client is undisciplined in the division, you may have to analyze the usage of each card, if finding more business debt is critical to your escape from means test jail.

Happy sorting.

Image courtesy of Mark Strozier.



  1. Hi Cathy,

    I’ve had a great deal of success using this tactic. I’ve also used rental homes (even ones converted from primary residences) as a basis for “checking the B22A box and have been successful so far. Great Tip.

    •   So many investment homes/condos are /were purchased where the deed and
      loan say you will occupy it as a residence for at least six months but
      no one checks, no one cares.  I can imagine that coming up with a
      persistent US Trustee.

  2. I feel that the Mean Test is just “unfair.”  It is based upon what IRS deems a family should be spending a month, not realizing that it is impossible to rent an apartment for three people for $800 a month!  Not in Miami, that is.  Also, you do not spend $400 a month for food for 3 people… where do they shop?  I can understand where they are coming from, but please… Individuals who are not in business should not be penalized these days for not having money –o.k.kk.o.k hold on Myriam….

    Thank you for all your  reports and information, I am grateful.


  3. I think my revulsion at the means test was the spur to try to master the d*** thing and keep it from thwarting my clients.  (There was also my partner who decreed that I’d be the firm expert on the means test)

    Stay mad and do good work for your clients.

  4. It’s unfortunate that for all the extra work that may have to go into working toward differentiating these debts, we cannot charge the client more.  Make them do the leg work and take some responsibility and maybe they will think twice before deciding to re-file a few years down the road.

  5. John B Dougherty says


    Please help – 341 meeting in two days!

    I am trying to keep my client in a Chapter 7- I have filed the petition
    accordingly. I am trying to end run the “Means test” by stating most of my
    clients debts are business debts.

    DR has approximately$200K in debts, with roughly$140K clearly
    business debts.So far so good, right?

    My concern is that my client has a pretty good income –
    $5200 per month net take-home pay after legitimate deductions for medical
    insurance etc. his monthly expenses are
    only approximately $3000 – leaving approximately $2200 per month. He claims he
    takes $1000 and gives it to his elderly mother(yes I think he can actually
    really prove this!) But that still leaves him around $1200 per month. He takes
    a lot of cash out of his checking account. He claims he has to pay a lot of his
    bills in cash.

    He has almost no assets – no real estate, no investment
    accounts, and almost $0 in cash.

    Question: What should I be concerned about at the341?

    Can the Trustee say my guy has too much money at the end of
    the month to be a Chapter 7 candidate? If so, should I dismiss his case before
    the 341? Any other suggestions?

    • If his debts are not “primarily consumer” the means test deductions don’t control anything.

      In my view, I and J are projected, real, and flexible.

      For a non consumer debtor, the only challenge to the case is 707(a) “cause”. I don’t see it on your facts.