diff --git a/python/src/com/jetbrains/python/testing/universalTests/PyUniversalNoseTest.kt b/python/src/com/jetbrains/python/testing/universalTests/PyUniversalNoseTest.kt
index b64ea37755dc..c635fd23aaee 100644
--- a/python/src/com/jetbrains/python/testing/universalTests/PyUniversalNoseTest.kt
+++ b/python/src/com/jetbrains/python/testing/universalTests/PyUniversalNoseTest.kt
@@ -61,7 +61,7 @@ class PyUniversalNoseTestConfiguration(project: Project, factory: PyUniversalNos
   override fun isFrameworkInstalled() = VFSTestFrameworkListener.getInstance().isNoseTestInstalled(sdk)
 
   //https://github.com/nose-devs/nose/issues/1042
-  override fun treatFoldersAsPackages(anchor: PsiElement) = true
+  override fun packageOnlyIfInitPy(anchor: PsiElement) = true
 }
 
 object PyUniversalNoseTestFactory : PyUniversalTestFactory<PyUniversalNoseTestConfiguration>() {
diff --git a/python/src/com/jetbrains/python/testing/universalTests/PyUniversalTests.kt b/python/src/com/jetbrains/python/testing/universalTests/PyUniversalTests.kt
index 7f5549cc8dfe..76aa3c6cc688 100644
--- a/python/src/com/jetbrains/python/testing/universalTests/PyUniversalTests.kt
+++ b/python/src/com/jetbrains/python/testing/universalTests/PyUniversalTests.kt
@@ -529,7 +529,7 @@ abstract class PyUniversalTestConfiguration(project: Project,
   /**
    * When checking if configuration is ok we need to know if folders could be packages: i.e. if foo.bar requires init.py in foo to work
    */
-  open fun treatFoldersAsPackages(anchor: PsiElement) = (!LanguageLevel.forElement(anchor).isPy3K)
+  open fun packageOnlyIfInitPy(anchor: PsiElement) = (!LanguageLevel.forElement(anchor).isPy3K)
 }
 
 private fun isTestFile(file: PyFile): Boolean {
@@ -595,7 +595,7 @@ object PyUniversalTestsConfigurationProducer : AbstractPythonTestConfigurationPr
   private fun getTargetForConfig(configuration: PyUniversalTestConfiguration,
                                  baseElement: PsiElement, fixConfiguration: Boolean = false): ConfigurationTarget? {
 
-    val setRelative = (fixConfiguration && configuration.treatFoldersAsPackages(baseElement))
+    val setRelative = (fixConfiguration && configuration.packageOnlyIfInitPy(baseElement))
 
     var element = baseElement
     // Go up until we reach top of the file
diff --git a/python/src/com/jetbrains/python/testing/universalTests/PyUniversalUnitTest.kt b/python/src/com/jetbrains/python/testing/universalTests/PyUniversalUnitTest.kt
index 66e7866b0dc6..5b5573ed2282 100644
--- a/python/src/com/jetbrains/python/testing/universalTests/PyUniversalUnitTest.kt
+++ b/python/src/com/jetbrains/python/testing/universalTests/PyUniversalUnitTest.kt
@@ -24,6 +24,7 @@ import com.intellij.execution.runners.ExecutionEnvironment
 import com.intellij.openapi.options.SettingsEditor
 import com.intellij.openapi.project.Project
 import com.intellij.openapi.vfs.LocalFileSystem
+import com.intellij.psi.PsiElement
 import com.jetbrains.python.PythonHelper
 import com.jetbrains.python.testing.PythonTestConfigurationsModel
 
@@ -74,6 +75,9 @@ class PyUniversalUnitTestConfiguration(project: Project, factory: PyUniversalUni
   }
 
   override fun isFrameworkInstalled() = true //Unittest is always available
+
+  // See loader.py:     is_not_importable = not os.path.isfile(os.path.join(start_dir, '__init__.py'))
+  override fun packageOnlyIfInitPy(anchor: PsiElement) = true
 }
 
 object PyUniversalUnitTestFactory : PyUniversalTestFactory<PyUniversalUnitTestConfiguration>() {