Chapter 12 Is a reorganization case, much like chapter 13, except it is available only to farmers. Their special provisions, which are not included in chapter 13, which gives some flexibility to the farmer debtor, and recognize the different ways that farmers relate to their creditors, including especially banks, and the land.
Chapter 12 bankruptcy is relatively new in terms of bankruptcy laws. It allows both family farmers and family fishermen to restructure their finances to avoid foreclosure or liquidation of their businesses. It has many parallels to Chapter 13 bankruptcy, but provides more benefits to family fishermen and farmers. Congress enacted Chapter 12 in 1986 as an emergency measure as the economy tightened agricultural credit, which placed increased pressure on the family farming and fishing industries. These provisions were temporary until they were finally made permanent in 2005. Under Chapter 12 laws, only a family farmer or fisherman with "regular annual income" may be eligible for Chapter 12 protection. Regular income may be seasonal as long as it is stable enough for the debtor to make payments in a repayment plan. Debtors may be individuals, partnerships, or corporations, as long as they are engaged in a farming or fishing operation. Other financial and debt ratio qualifications also apply. To attain Chapter 12, a debtor files a petition while continuing their farming/fishing operations. A trustee is appointed to oversee operations and receive debt payments. The repayment plan period generally runs between three to five years, depending on the debtor's circumstances.Contact Today