Is there a means test for Chapter 11 bankruptcy?

Yes, there is a means test for Chapter 11 bankruptcy in Washington. To determine eligibility for Chapter 11 bankruptcy, individuals and businesses must go through a means test to calculate their average monthly income over the past six months. The means test is used to identify individuals and businesses who may have excessive income to be able to fund a repayment plan and may give the court the power to order an individual or business to convert their filing from Chapter 11 to Chapter 7. To pass the means test, the debtor’s average monthly income must be below the median income of the state of Washington. If the debtor’s income is above the median, they may still be eligible for Chapter 11 if they can show that their disposable income is not sufficient to fund a repayment plan. The debtor must also show that the repayment plan they propose is feasible and that the proposed plan is in the best interests of the creditors. In addition to the means test, those filing for Chapter 11 must also submit documents that provide a list of their creditors, the estimated value of their property and any debts secured by property. Debtor’s must also provide a detailed description of their financial affairs, a list of all their assets and liabilities, and their tax returns for the past two years. Once the means test is completed and the other documents are filed, the court will decide whether the debtor is eligible for Chapter 11 and what type of repayment plan should be established.

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