Is there a means test for Chapter 11 bankruptcy?
Yes, there is a means test for Chapter 11 bankruptcy in California. The purpose of the means test is to determine whether the individual filing for Chapter 11 bankruptcy qualifies to file under Chapter 11 or must file under Chapter 13 bankruptcy. In order to be eligible for Chapter 11 bankruptcy, the debtor must pass one of two tests. The first test is the median income test which compares the debtor’s household income to the median income of California households. If their income is below the median, they qualify for Chapter 11 bankruptcy. If their income is above the median, they must pass the second test, the disposable income test. This test looks at whether the debtor has any disposable income left after paying their reasonable monthly expenses. If there is no disposable income, the debtor qualifies for Chapter 11 bankruptcy. However, if there is disposable income, the debtor may be ineligible for Chapter 11 and must file under Chapter 13.
Related FAQs
What is a “plan of reorganization” in a Chapter 11 bankruptcy?What is a “liquidating plan” in a Chapter 11 bankruptcy?
What assets can I protect in a Chapter 11 bankruptcy?
Is there a means test for Chapter 11 bankruptcy?
What is “adequate protection” in a Chapter 11 bankruptcy?
What is a “cash collateral motion” in a Chapter 11 bankruptcy?
What is “cramdown” in a Chapter 11 bankruptcy?
How does the court decide which debts to discharge in a Chapter 11 bankruptcy?
How can I get the most out of my Chapter 11 bankruptcy?
What is a “debtor’s exam” in a Chapter 11 bankruptcy?
Related Blog Posts
What is Chapter 11 Bankruptcy Law? - July 31, 2023What Can You Expect from Filing for Chapter 11 Bankruptcy? - August 7, 2023
Understanding the Steps Involved in Chapter 11 Bankruptcy - August 14, 2023
What are the Benefits of Chapter 11 Bankruptcy? - August 21, 2023
What Are the Risks of Chapter 11 Bankruptcy? - August 28, 2023