The means test need not be completed and a debtor will, therefore, qualify for Chapter 7 where the debts are not “primarily consumer debts.” A consumer debt is defined under bankruptcy law as debt incurred by an individual primarily for a personal, family, or household purpose. Debt entered for a business purpose, i.e. not for personal, family, or household purpose, is not primarily consumer debt. The term business debt is not defined by the Bankruptcy Code.
The problem presents itself when a business debtor has both consumer debt and business debt. In order to qualify for the business debt exception, the debts involved cannot be “primarily” consumer debts. In other words, most of the debts (in general 51%) should be debt for the purpose of the business.