It may be that if you are filing for a Chapter 7 bankruptcy for your business that the majority of the debts are business debts and you won’t have to go through the means test in order to qualify. There are several different steps that may need to be taken to see which form of chapter of bankruptcy is best suited for your needs. In order to determine this you should rely on a Houston bankruptcy attorney to assist you before you even start your filing to ensure that you have chosen the right Chapter.
For those that are filing for a Chapter 7 bankruptcy which is a personal bankruptcy they have to go through what is called a means test. What this does is determines if you have enough disposable income to be able to pay back some of your debts or all of it. However, if your debts are mostly for your business usually over 50% then you will not have to go through this test. It is an important that your debt be classified as business debt in order for you to be eligible for the business debt exemption.
The debt is usually considered a business debt if it was created in the hopes of making a profit from your business. Generally if it turns out that you are able to use your business debt exemption then you will qualify for the Chapter 7 bankruptcy. It may even be at that your mortgage will be considered as a business debt. If you purchased the property for your business specifically or as an investment for your business then the mortgage may be classified as a business debt.
Business Debt Exemption