CONSUMER DEBT

consumer debt

Debts incurred by an individual for primarily personal, family or household purposes. Taxes are not consumer debts; neither are business loans. The means test only applies to those with consumer debt. (Bankruptcy in Brief)

Used to describe debts that are not fixed in right at the time, but are dependent on some other event happening to fix the liability. (Bankruptcy in Brief)

Under Title 11 U.S.C. Section 101:

(8) The term "consumer debt" means debt incurred by an individual primarily for a personal, family, or household purpose.

United Glossary of Bankruptcy Terms2012.

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Debts that are owed as a result of purchasing goods that are consumable and/or do not appreciate. Possessing high levels of consumer debt is not typically beneficial for the average individual because it increases the strain on one's sources of income to maintain regular payments. If not managed well, consumer debt can lead to bankruptcy.

Possessing some consumer debt can be beneficial under certain circumstances, such as debt accrued to buy something that will boost an individual's earning power. For example, financing a car might be a wise idea if the owner needs it to travel to work at a higher-paying job.