Chapter 12 Bankruptcy provides debt reorganization for individuals or partnerships classified as “family farmers” or “family fishermen”. Chapter 12 is nearly identical to Chapter 13, in that it involves establishing a plan to repay debts over the course of a three to five year period. However, Chapter 12 includes several provisional differences that specifically address needs unique to owners in the farm and fishing industries.
The key advantage of Chapter 12 Bankruptcy for farmers and fishermen is the allowance of a higher debt ceiling than is provided by Chapter 13. This higher ceiling is required due to the fact that owners of farm or fishing businesses will typically incur much higher debts than the average wage-earner. While the corporate-oriented Chapter 11 option also has higher limits, it is far more complex and expensive to file than Chapter 12 Bankruptcy.
To file for Chapter 12 Bankruptcy relief, an individual classified as a family farmer or fisherman must meet criteria including the following key points:
Yes, a husband and wife for instance, may file a single joint petition. A partnership may file corporately, but will be subject to additional qualifications, which include:
In terms of farm operations, yes. While chapter 12 mandates the assignment of a court-appointed Trustee, control of day-to-day operations remains in the hands of the debtor. In Chapter 12 cases, the Trustee’s function is limited to financial oversight. The Trustee is responsible for making recommendations regarding Chapter 12 dischargeability, exchanging information with interested parties, verifying that the debtor will be able to make payments on time, etc.
Farm bankruptcy can be complex. Contact us today to help you navigate the huge number of potential pitfalls of this type of bankruptcy. 801-221-9911