Issue link: https://mbozikis.ufcontent.com/i/1422521
42 $419,275 or less and (ii) noncontingent, liquidated, secured debts in the amount of $1,257,850 or less. 11 U.S.C. ยง 109(e). 2. Means Testing Although individuals are, as a general matter, eligible to file for bankruptcy under various Chapters of the Bankruptcy Code, whether an individual debtor will be eligible for Chapter 7 or instead will be required to proceed under Chapter 13 (and, if so, the terms of its Chapter 13 proceeding) is determined by reference to such individual's financial situation or "means." These so- called "means tests" were included as part of the 2005 Amendments and are intended to prevent individuals above certain income levels from using bankruptcy to disadvantage their creditors. a. Chapter 7 Means Test The Chapter 7 means test is a threshold inquiry that determines whether an individual debtor with primarily consumer debts is eligible to file for bankruptcy under Chapter 7, which, generally speaking, benefits the debtor by allowing him or her a full discharge of his or her unsecured debts (with certain exceptions). 14 If a debtor fails this means test (i.e., he or she is found to have sufficient financial means to pay at least a portion of his or her debts), then he or she will be deemed ineligible for Chapter 7, forcing the debtor into Chapter 13. Section 707(b) of the Bankruptcy Code provides that the court, on its motion or on a motion by the U.S. Trustee, private trustee or any party in interest, may dismiss a case filed by an individual debtor whose debts are primarily consumer debts or, with the debtor's consent, convert such a case to Chapter 11 or 13, if the court finds that granting such debtor relief under Chapter 7 would constitute an abuse of the provisions of Chapter 7. 11 U.S.C. 14 Generally speaking, a Chapter 13 debtor enjoys an absolute right to convert to Chapter 7. If, however, he or she fails the Chapter 7 means test, he or she will not be permitted to convert his or her case to Chapter 7.