“means test” limitation for individual consumer debtors

In addition to the eligibility requirements, individual debtors with primarily consumer debts (debts incurred by an individual primarily for a personal, family or household purpose) must disclose financial information using a “means test” that evaluates their potential ability to pay creditors a certain minimum amount over a five-year period. If the result of the means test demonstrates the debtor has the potential ability to pay that minimum amount, a presumption arises that the debtor’s bankruptcy filing is an “abuse” of Chapter 7, and the case is subject to dismissal or conversion to Chapter 11 or 13. (No presumption arises where the means test calculation shows the debtor is unable to pay the minimum amount.)

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