subject: What Is A Chapter 12 Bankruptcy? [print this page] Most people don't realize that the federal bankruptcy code was made in a large part to protect individuals and help them get out of debt. Thats why there are so many different "Chapters" of bankruptcy. Each one of these chapters is meant for people or corporations (even municipalities) in different financial situations.
People whose livelihoods depend on their family farm are able to file a Chapter 12 bankruptcy. A Chapter 12 bankruptcy is intended for family farmers and fisherman facing rough times. A Chapter 12 bankruptcy is more similar to a Chapter 13 bankruptcy for individuals than a Chapter 11 corporate bankruptcy, but is designed for family farmers who own their own businesses and therefore have larger amounts of debt.
So, how does a Chapter 12 work? It allows the farmer to reorganize their debts into a payment plan made over a 3 to 5 year period, in order to get their farm back on its feet. Moreover, the payment schedule is tailored to the farmer's way of life and is dependent on the seasons just like a farmer's income is. Like a Chapter 13 bankruptcy, you are able to keep your property, your farm, and creditors are no longer allowed to call. Best for family farmers is that the limit for the total amount of debt you are allowed to have in order to qualify is way higher than a Chapter 13 bankruptcy.
How do you know if you qualify? First of all, to be eligible for a Chapter 12 bankruptcy, your farm must be a family type operation. This type of bankruptcy isnt intended to protect big agri-businessit is for family farmers working land they own. Second, farmers must owe no more than about 3.7 million dollars in both secured and unsecured debt. That is almost three times more than the debt limits for a Chapter 13 bankruptcy, which is why a Chapter 12 is so appealing to family farmers. Like I said, the law was written with farmers in mind: the bankruptcy court understands the different challenges that farmers face, and the necessity of taking on a lot more debt to just do normal business.
A Chapter 12 is an incredible thing for farmers who have had a rough few seasons. It stops creditor calls, can help you get in control of your debt, and best of allit means that you can keep your farm. A Chapter 12 bankruptcy will help you preserve the farm that you have spent your life working hard for and will in turn preserve your family's source of income.
