In re Millard, 585 B.R. 182

Millard, a plaintiffs' attorney, worked for Wrona (2009–2015) under a fee-splitting/draw arrangement: $10,000 monthly draws against a capital account, repaid from future contingency-fee collections.
The arrangement contemplated mutual profit: Wrona financed cases and expected a return; Millard would develop the practice and share fees 50/50 after costs.
Millard stopped receiving draws in October 2015, resigned November 30, 2015, and left a negative capital-account balance of roughly $260,000; Wrona obtained a ~$300,000 state-court judgment.
Millard filed Chapter 7 on January 3, 2017 and listed the Wrona obligation as business debt. The U.S. Trustee moved to dismiss under 11 U.S.C. § 707(b)(1), arguing the Wrona debt was consumer (personal) debt.
Key factual dispute: although Millard primarily used draws for household expenses, the parties contend the loans were incurred as part of a business/start-up financing arrangement with a profit motive.

Issue	Plaintiff's Argument (U.S. Trustee)	Defendant's Argument (Millard / Wrona)	Held
Whether the Wrona debt is a "consumer debt" under 11 U.S.C. § 101(8)	Characterize debt by how proceeds were spent: draws paid household expenses → consumer debt	Debt was incurred as part of a profit-seeking business arrangement (start-up capital for contingency practice) → non-consumer debt	The debt is non-consumer: U.S. Trustee failed to prove primary personal purpose
Whether courts should determine purpose solely by how loan proceeds were used	Use of proceeds controls the inquiry	Purpose when incurred and parties’ intent control; use is one factor only	Court rejects use-only test; focus on intent at incurrence under totality of circumstances
Whether mixed motives convert the debt into consumer debt	Spending on living expenses proves primary personal purpose	Mixed motives exist but primary purpose was business/investment to increase earnings	Primary purpose found to be business/investment despite household use
Whether employment-related loans are presumptively business or consumer debt	Lender identity irrelevant; use determines characterization	Loans to finance a lawyer’s role in a practice can be non-consumer if incurred as business investment	Court holds identity and deal structure matter; loans here were business-oriented

In re Stewart, 175 F.3d 796 (10th Cir. 1999) (courts should examine purpose for which debt was incurred; factual record can justify reliance on how proceeds were used)
In re Burns, 894 F.2d 361 (10th Cir. 1990) (non-consumer debt includes obligations incurred with an eye toward profit)
In re Cherrett, 873 F.3d 1060 (9th Cir. 2017) (appropriate to consider all circumstances indicative of debtor’s primary purpose)