Bankruptcy by Keyword:
"Best Interest Of Creditors Test"
Related Keywords: Chapter 13 plan .
Chapter 13 Plan Modification .
Liquidation Test .
Case Law Topics
The "best interest of creditors test" of § 1325(a)(4) -- also informally known as "the liquidation test" -- requires that unsecured creditors in a Chapter 13 case be paid at least as much through confirmation of a proposed Chapter 13 plan as they would receive if the debtor's case were liquidated under Chapter 7 of the Bankruptcy Code.
It is important to remember that number is not arrived at simply by adding up the value of the property; you are also allowed to reduce that amount by the administrative costs of selling the item, etc. to arrive at the true amount that unsecured creditors would get in a Chapter 7 case.