Is there a means test for Chapter 11 bankruptcy?

Yes, there is a means test for Chapter 11 bankruptcy in Virginia. The means test was established in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act to ensure that individuals and businesses filing for Chapter 11 bankruptcy are actually insolvent and in need of relief. The means test requires debtors to compare their current monthly income to the median income of people in the same state. If the current monthly income is greater than the median income, then the debtor must complete the remainder of the test. This portion of the test would then determine the debtor’s disposable income to determine if they have the means to repay some of their debts. If the debtor’s disposable income is greater than a certain amount, then the debtor will not be able to file for Chapter 11 bankruptcy. The means test is an important part of Chapter 11 bankruptcy in Virginia, as it ensures that only those debtors who truly need the relief provided by Chapter 11 bankruptcy are able to file. It also generally helps to prevent fraud and abuse of the system.

Related FAQs

Is there a means test for Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts