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Non-consumer debt is a term that’s synonymous with business debt. It’s any kind of debt that isn’t for personal or family finances.

There are a lot of different debt terms that people need to know. Buzzwords like “good debt” and “bad debt” are constantly used by personal finance influencers.

We’ll set the record straight on what some of these terms mean and how you can use them to offset expenses.

What Exactly Does “Consumer Debt” Mean?

Consumer debt is any kind of debt for personal or family use. This includes credit cards, student loans, car payments, mortgages, and other forms of borrowing from lenders.

Generally speaking, consumer debt can fit into two categories: secured debt and unsecured debt. 

Secured debts are those that have collateral behind them, such as a house or car. On the other hand, unsecured debts don’t have any collateral backing them and are usually a higher risk for lenders.

Is Primarily Consumer Debt the Same Thing?

The term “primarily consumer debt” describes a loan package that primarily consists of consumer debt. The majority of the loan is from consumer spending, such as credit cards and other unsecured debts.

In most cases, when lenders look at a borrower’s ability to repay, they will look at their ability to pay off all of the consumer debt they have before considering a loan. It helps lenders determine how responsible the borrower is and whether or not they are likely to be able to meet their obligations.

Non-Consumer Debt

Non-consumer debt is, as the name implies, any type of debt that isn’t for personal or family finances. These types of debts are typically taken out by businesses and other organizations to help finance operations.

The most common types of non-consumer debt include commercial loans, business lines of credit, and corporate bonds.

Non-consumer debt is often seen as a more reliable type of loan because it’s borrowed by businesses with the financial resources to repay their loans on time. These factors make non-consumer debt less risky than consumer debt and can be an attractive option for lenders.

Which One Is Right for Your Situation?

It’s essential to understand the differences between consumer debt and non-consumer debt.

Whether you need consumer debt or non-consumer debt, you should know your options and make sure you’re making sound financial decisions. 

Know your budget and be mindful of how much debt you take on and what type of loan works best for you.  Having this kind of knowledge will help ensure you can pay off your debt responsibly and on time.

How Do These Debts Affect Chapter 13 Bankruptcy?

When it comes to filing for bankruptcy, there are a few distinctions between consumer and non-consumer debt.

Under Chapter 13 of the Bankruptcy Code, consumer debts are grouped together as “general unsecured debts,” while non-consumer debts may be treated differently. 

Generally speaking, non-consumer debts such as business credit cards or loans are classified as “priority debts” and must be paid in full.

Borrowers need to understand the differences between consumer and non-consumer debt if they’re considering filing for bankruptcy. Make sure to consult with a qualified bankruptcy attorney so that you can make an informed decision about your finances.

How Debt Is Handled with Bankruptcy

When considering filing for bankruptcy, the type of debt is a key issue to consider before making any decisions. 

Secured loans carry more weight in a bankruptcy case than unsecured loans because if the debtor fails to make payments, the lender can use assets owned by the borrower as collateral to recover the money owed.

Some secured debts may be exempt from discharge due to their priority status. Unsecured loans do not have property attached as collateral. They are also considered uncollectible if there is no way for the creditor to garnish wages or take back the property they were given as payment.

However, some types of debt, such as child support and alimony, will never be discharged in a bankruptcy case, regardless of what kind of debt it is classified under. 

Before beginning any legal proceedings, it is important to understand which types of debts will require repayment and which can potentially be discharged.

Why Does the Type of Debt Matter?

You need to know the nuances between consumer debt and non-consumer debt before you can make any decisions about your financial future. 

Filing for bankruptcy is a big deal. You shouldn’t take it lightly, so educate yourself on the difference between these two types of debt to know what you can and cannot do. It will also allow you to make the most informed decision possible about how to handle your debts.

Borrowers need to understand the differences between consumer and business debt if they also plan on applying for a loan.

Lenders may have different requirements depending on whether or not the debt is classified as consumer or non-consumer. Knowing this information can help you make the right decision about borrowing money.

Is Chapter 7 Different?

Consumer debt is treated differently in a Chapter 7 bankruptcy case. Most of the time, consumer debts are classified as “general unsecured debts” and can be discharged. 

However, it’s important to note that some types of consumer debt (e.g., student loan debt) cannot be discharged due to their priority status. You’re probably going to be stuck with them for life.

It’s also important to understand that some creditors may still be able to pursue legal action against the debtor even after a bankruptcy discharge. 

For example, credit card companies can attempt to collect on unpaid debts through civil lawsuits or wage garnishment despite being discharged in a Chapter 7 case.


Business debt includes loans to start or expand a business, commercial mortgages, and equipment leases. Consumer debt includes credit card debt, personal loans, medical bills, and student loan debt.

Understanding the differences between consumer and non-consumer debt allows you to make an informed decision about handling your financial obligations responsibly. With the proper legal guidance, it is possible to manage your debts and get a fresh start successfully.  The right information, planning, and resources can help you avoid the burden of unmanageable debt.

Debts Not Covered by Bankruptcy

While consumer debt is typically dischargeable in a bankruptcy case, certain types of debt cannot be discharged. 

These include tax obligations, alimony and child support payments, court-ordered fines or restitution orders, student loan debt (in most cases), and debts incurred through fraud.

Only debts listed in the bankruptcy petition will be discharged, so it is essential to list all of your debts when filing for bankruptcy.  Some states may have additional restrictions on which debts can be included in a bankruptcy case.

The Means Test?

The means test is a form of financial analysis used by the courts to determine whether or not someone qualifies for Chapter 7 bankruptcy. It takes into account your income, expenses, and debts and compares them against your state’s median income. 

If it’s determined that you have enough disposable income to pay off at least some of your debt, you may be required to file for Chapter 13 bankruptcy.

For business debt, the means test is crucial because it determines whether or not you will be able to discharge all of your business debts in a Chapter 7 case. 

If the means test shows that you have enough disposable income to pay back some of your business debts, then you may be required to file for Chapter 13 and create a payment plan to repay them over time.

It’s important to note that if you do not qualify for Chapter 7 due to the means test, it does not necessarily mean that you cannot discharge your business debts. Depending on your individual circumstances, an experienced bankruptcy attorney can help you explore other options for managing your situation.


Are Student Loans Consumer or Non-Consumer Debts?

Student loans are generally considered consumer debts, as they are not incurred to start or build a company. 

In most cases, student loan debt is not dischargeable in a bankruptcy case and must be paid back over time. Depending on your particular circumstances, you may qualify for specific programs, such as an income-based repayment plan that can help make your student loan payments more manageable.

What is not considered a consumer loan?

Non-consumer loans are loans taken out by startups and business owners, mainly as capital for building a company. Some business owners will take out loans against one business to fund another project. This practice is also widespread in real estate and is known as the BRRR strategy.  

Is Consumer Credit a debt?

Consumer credit is a type of debt that is incurred when an individual borrows money to purchase goods or services. It includes credit card debt, auto loans, personal loans, and home equity loans, among other types of consumer loan debts. 

What is the highest consumer debt category?

The highest consumer debt category is credit card debt, typically the most expensive type of debt. 

Credit card interest rates are often higher than other consumer loans, making it difficult to pay off quickly and easily. If you have credit card debt that you are unable to manage, start by coming up with a plan. You can use the debt snowball method, which involves paying off the smallest debt first and then the second smallest, etc.

There is also the debt avalanche method, where your priority goes to whichever debt has the highest interest rate. If both of these fail, one last strategy before filing for bankruptcy is to use a consolidation firm to help get everything down to one payment with a lower interest rate.

Consumer vs. non-consumer insurance

Consumer insurance is a type of policy that provides coverage for purchasing goods or services. It includes auto, home, health, and life insurance, among other policies. 

Non-consumer insurance typically refers to liability policies such as errors and omissions (E&O) and directors and officers (D&O) insurance, which provide financial protection for a business in the event of a lawsuit or other legal action. 

When it comes to managing debt, consumer insurance is generally not considered when determining eligibility for bankruptcy. However, speaking with an experienced attorney about your situation is a wise strategy and should be done before making any decisions.

Why is consumer debt important?

Consumer debt is a part of managing your finances. It can provide you with the resources to purchase goods or services that may be necessary for everyday life or that could help improve your quality of living. 

At the same time, taking on consumer debt responsibly matters most, as too much can lead to serious financial problems. 

Non-consumer debt collection

Even if you file for bankruptcy, these types of debt must still be paid back over time. 

Collecting non-consumer debt is generally handled by collection agencies or the creditors themselves. Your business attorney and accountant should be notified before taking action, as they can help you understand your rights and responsibilities in these cases. 

Sometimes, collection efforts may be stopped or paused during bankruptcy proceedings.

Is a mortgage considered consumer debt?

A mortgage is a loan used to purchase real estate and is usually secured by the property itself. In most cases, mortgages are considered consumer debt since they are not used for business purposes, though in the case of investment properties and properties owned by a business, things can change.

Consumer debt examples

Consumer debt is any type of loan that is used to purchase goods or services. Some common examples of consumer debts include auto loans, credit cards, student loans, and personal loans. 

These types of debt are typically unsecured, meaning they don’t have collateral backing them up. In some cases, these types of debts can be discharged in a bankruptcy case, although it depends on the kind of debt and your particular financial situation.

Are student loans consumer debt?

Student loans are a type of debt used to finance higher education. These loans are considered consumer debt since they are for personal reasons. 

Because these loans are often through the government, failure to pay can result in paycheck garnishment and other collection practices.