In bankruptcy situations, determining the type of a debt can be a source of contention. The following definitions apply in general:
- Anything that isn’t considered consumer debt is classified as business debt. Non-consumer debt is a term used to describe this type of debt.
- A consumer debt is a loan taken out by a person for personal, family, or domestic purposes. Everything else is referred to as non-consumer debt.
A solid rule of thumb is to focus on what you did with the money rather than where it came from or the transaction type designation. Consider the following example:
- It’s most likely a consumer debt if you utilized the money to pay for personal, family, or household expenses or to buy personal, family, or domestic things.
- If you utilized it to pay for something else, it’s most likely a company debt rather than a consumer debt.
The date the debt was incurred will be used to determine its status. The debt will be a consumer debt if you incurred it for a consumer purchase (such as a home computer) and then used the property in your business.
Types of Consumer Debt and Non-Consumer Debt in Ohio
Consumer debt is defined as “debt incurred by an individual principally for a personal, family, or home purpose” under Title 11 U.S. C. 101. Non-consumer debt is any debt that is not specified by the Bankruptcy Code as debt incurred by an individual for personal, family, or household purposes.
Consumer debt is defined as debt that was used to fund a debtor’s consumption, whereas non-consumer debt may have been used for profit. The following are some of the most typical types of consumer debt in bankruptcy cases:
Non-consumer debts frequently involve purchases made for the aim of investment. They’re sometimes referred to as “commercial debts,” and they can include, but aren’t limited to:
Depending on the court, the fundamental intention of most purchases frequently affects their classification. Student loans, for example, are a type of debt that can be classified as either consumer or non-consumer debt, albeit they are rarely dismissed in bankruptcy proceedings.
What is non-consumer loan?
Consumer debt, as defined by the bankruptcy legislation, is debt incurred by an individual largely for personal, family, or home purposes. A home mortgage loan, medical expenditures, and domestic duties are all instances of consumer debt. Business loans, guaranties on commercial obligations, tax debt, and tort claims are all instances of non-consumer debts. When it comes to credit cards, vehicle loans, and school loans, the debtor’s motivation at the time the debt was committed will determine the outcome.
A chapter 7 debtor’s case cannot be dismissed for abuse based on 707(b) of the bankruptcy code if his debt is predominantly non-consumer debt. However, under 707(a) of the statute, a chapter 7 debtor with largely non-consumer debt can still have his case dismissed “for cause.” If a debt is consumer in nature and is cosigned in a chapter 13 case, the co-debtor benefits from a hold on collection actions, and the plan can provide for preferential treatment of that claim. However, chapter 13 does not offer any protection to the co-credit debtor’s report.
How is consumer debt defined?
Consumer debt refers to personal indebtedness incurred as a result of the purchase of items for personal or household consumption. Consumer debt includes credit card debt, school loans, auto loans, mortgages, and payday loans. These are in contrast to other debts such as those utilized for corporate investments or debt incurred as a result of government operations.
What are the types of debt?
Debts come in a variety of shapes and sizes. Debt is divided into four types. Secured debt, unsecured debt, revolving debt, and mortgages are the four types of debt.
What is non-consumer customer?
Non-Consumer Users: Individuals who have access to system components but are not cardholders, such as staff, administrators, and third parties.
Who is not consumer with example?
1-2-1c ANYONE BUYING ITEMS FOR ‘RESALE’ OR COMMERCIAL PURPOSES’ IS NOT A CONSUMER – The statement ‘for commercial purpose’ is intended to cover circumstances other than those of resale of products, while the term ‘for resale’ suggests that the goods are brought for the purpose of selling them.
What is the difference between consumer and non-consumer?
Consumer debts, in general, are debts that are incurred largely for personal, family, or domestic purposes. The remainder is made up of non-consumer debts. Business debt, which is non-consumer debt incurred with a profit motive, is a significant component of non-consumer debt.
Is Rent a consumer debt?
Eviction Protections in California During the Covid-19 Pandemic Rent owed between March 2020 and September 30, 2020 is converted to consumer debt and cannot be used to justify eviction (if the tenant follows all requirements). The remaining 75% of rent will be used to finance consumer debt.
What is the most common type of debt?
Mortgages are the most prevalent and largest type of debt that many people have. Mortgages are loans used to buy homes, with the collateral being the underlying property. Mortgages have the lowest interest rates of any consumer loan, and the interest is frequently tax deductible for those who itemize their taxes. To keep monthly payments affordable for homeowners, mortgage loans are typically granted for 15 or 30 years.
