Sonoma County debtors with substantial income may be able to skip the means test if more than half their debit is "business debt."
The bankruptcy means test - created in 2005 - is meant to identify debtors who have enough nonexempt assets to pay their creditors. If you fail the means test, you may be forced into Chapter 13 or even blocked entirely from bankruptcy protection.
But do you even have to take the means test?
I recently handled a Chapter 7 bankruptcy for a Sonoma County couple who owned half a dozen homes, mostly in the South, in addition to their primary residence. While they may have been able to pass the means test in any case - since their income had plummeted - we didn't have to worry about it.
Since they were operating the homes as rental properties, all of the mortgages were considered business debt. If more than 51 percent of debt is business debt, as opposed to consumer debt, you don't have to take the means test!
If you're considering Chapter 7 bankruptcy, call me for a free consultation at 707-544-5354.
