Consumer Debt and Non-Consumer Debt in Arizona Bankruptcy
You’ve taken a closer look at your finances and debt and are now trying to determine if filing for bankruptcy protection is the best option for you.
What you may not have thought of is how the type of debt you incurred can affect any future Arizona bankruptcy proceedings.
Our experienced bankruptcy attorneys are here today to provide useful information about the different roles consumer and non-consumer debt can play when filing for an Arizona bankruptcy.
What Is Consumer Debt?
Consumer debt is individual debt that is primarily incurred for purposes of personal, family, or household use. Common consumer debt examples include the following:
- Home mortgage loan
- Child support and alimony obligations
- Credit cards used for personal or family purposes
- Personal or family car loans
What Is Non-Consumer Debt?
Non-consumer debt is typically incurred through business expenses with a profit motive. However, it also includes other non-business-related expenses. Seven examples of non-consumer debt include:
- Business loans
- Guaranties on commercial obligations
- Tax debt
- Tort claims
- Mortgage for a business property
- Credit cards for business expenses
- Business-related car loans
Side by Side Comparison of Consumer and Non-Consumer Debt Types
Credit card consumer debt: personal daily expenses and household purchases count as consumer debt.
Car loan consumer debt: if you primarily use your vehicle to commute for work, run household errands, and make sales calls it will count as consumer debt.
Tax consumer debt: general tax debts.
Mortgage loan consumer debt: typical mortgage on a home counts as consumer debt.
Legal fee consumer debt: legal fees incurred from a family or household matter (i.e., divorce, child custody disputes, etc.) may qualify as consumer debts.
Credit card non-consumer debt: purchasing equipment or inventory for your business.
Car loan non-consumer debt: if you take out a loan for a vehicle that you use exclusively for business purposes, this will likely count as non-consumer or business debt.
Tax non-consumer debt: debts stemming from income taxes.
Mortgage loan non-consumer debt: mortgages taken on a business or investment property may count as non-consumer debt OR a mortgage, refinancing, or home equity loan on a residence, used in order to fund a business, may well be classified as non-consumer debt.
Legal fee non-consumer debt: Personal injury and tort debts are generally not consumer debts. Legal fees stemming from business disputes are generally considered to be non-consumer debts.
Statutes of Limitations for Arizona Debt
Now that you know a few of the differences between consumer and non-consumer debt, let’s dive a little deeper into how long a creditor has to collect that debt. For that, you’ll need to be aware of Arizona statutes of limitations for bankruptcy law.
A statute of limitations within bankruptcy law is defined as the amount of time that a creditor has to collect a debt. This amount of time is of great interest to both creditors and debtors because once the limit is reached, the debt becomes uncollectible.
It’s important to know these timelines as debt collectors are willing to do what they legally can to ensure they get their money back, such as filing liens, levies, and wage garnishments against debtors.
Here is a list of the most common statutes of limitations that our Arizona bankruptcy lawyers are frequently asked about:
- Three years for credit card debt
- Six years for mortgages and medical debts
- Four years for car loans
- 10 years for unpaid Arizona state taxes
Now that you know the difference between consumer and non-consumer debt, and how long debt collectors have to collect that debt, take the next steps to find out if a chapter 7 or chapter 13 bankruptcy is right for you.
Talk to an Experienced Debt-relief Attorney in Arizona Today
Those facing financial challenges have found that filing for bankruptcy can be an option that helps them take back control of their finances.
An experienced debt-relief attorney at Lerner and Rowe Law Group can help walk you through each step of the bankruptcy process.