The BAPCPA amendments to Section 707(b) are substantial. Section 707(b) still applies however only to individuals whose debts are “primarily consumer debts.” Consumer debt is defined in Section 101(8) as “debt incurred by an individual primarily for a personal, family, or household purpose.” Case law has made it clear that a consumer debt is any debt not incurred with a profit motive. Specifically, a home mortgage is normally a consumer debt unless the loan proceeds were used in a business. Income taxes however are not consumer debts.
Substantial Abuse is Changed to Mere “Abuse”
A chapter 7 case of an individual whose debts are primarily consumer debts may be dismissed by the court if allowing the case to proceed would be an “abuse of the provisions of this chapter.” The pre-BAPCPA language of “substantial” abuse, giving the presumption to the debtor has been deleted.