Questions & Answers


What is the means test?

Answer


The means test is a formula applied to determine whether a liquidation pursuant to a Chapter 7 bankruptcy is appropriate, or if the debtor’s debts should be subject to a repayment plan pursuant to Chapter 13 of the Bankruptcy Code. Specifically, in the event that the debtor’s current monthly income exceeds the relevant state’s median income a means test is applied under the Bankruptcy Code to determine whether a Chapter 7 filing is presumptively abusive. If the filing is determined to be presumptively abusive, and such finding is not rebutted, the bankruptcy case will be converted to a Chapter 13 bankruptcy or it will be dismissed.

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