Chapter 7 bankruptcy petitioners are required to pass a means test showing they don't have enough money to cover their bills. However, if you have certain debts in sufficient amounts, you may be exempt from having to take this test. Here are two debts that may let you bypass the chapter 7 means test.

Tax Debt

To understand how tax debt can provide an exemption to the means test, it's important to learn the difference between consumer and non-consumer debt. Consumer debt is the bills you incur for yourself, your family, or your household. Utility bills, mortgages, and auto loans are examples of consumer debt.

Non-consumer debt, on the other hand, is everything else that doesn't fit in the consumer debt category. This includes things like business debt and involuntary financial obligations (e.g. taxes).

The reason this distinction is important is because bankruptcy court will let petitioners bypass the means test if their non-consumer debt exceeds half the total amount of debt they owe. So, if your debts total $50,000 but $35,000 of that amount are past-due taxes, you would be exempt from having to take the means test.

Student Loans

The way the bankruptcy court handles student loans isn't great. Unfortunately, you cannot discharge student loan debt through chapter 7, which means you'll still have to pay back that money when your case concludes. However, your student loans may benefit you in a different way in this situation.

As mentioned previously, the court will exempt you from the means test if your non-consumer debt exceeds 50 percent of your total debt. Depending on what state you live in, student loans may be considered non-consumer debt. Thus, if the loans make up the majority of your debt, you'll automatically be eligible to file chapter 7 bankruptcy.

However, even if you live in a state where student loans are considered consumer debt, it may be possible to have yours reclassified as a non-consumer bill. If you used the money to pay for the education required for your job or to start a business, the loans could be considered business debt, and you could use that reasoning to avoid the means test.

Be aware, though, you'll likely need to produce proof backing up your assertion, such as receipts for the books and tuition you paid for. It's essential you work with a bankruptcy attorney who can guide you through the process with minimum legal trouble.

For help with your bankruptcy petition and bankruptcy law, contact a local bankruptcy attorney.