You incur consumer debt when you use credit to purchase things that you and your family need for everyday living. If you owe money for goods and services in one of the following categories, you likely have consumer debt:
By contrast, an individual debtor (the person filing for bankruptcy) with primarily business debts will not have to meet income requirements or complete the means test to receive a Chapter 7 discharge. You incur business debt when engaging in a profit-motivated endeavor, such as opening a restaurant or starting a party-based cosmetic company.
The following are examples of common types of business debt:
Be aware that only a sole proprietor is eligible for a Chapter 7 bankruptcy discharge. Chapter 7 bankruptcy will not wipe out the debt of a partnership, limited liability company, or corporation.
(For additional details, read Bankruptcy for Small Business: An Overview.)