Bankruptcy – Chapter 12

Chapter 12 is designed for family farmers, family fishermen. Family farmers may also include individuals who, in their ordinary course of business, cut timber. Moreover, family farms or fishing operations also include those that are incorporated or those who are in partnerships. However, under any of these farming or fishing businesses, the farmer or fisherman must have regular annual income. This may be established through income realized during or after the harvest season when the farmer or fisherman earns his or her money and not necessarily throughout the year. The reason for this is to make sure that that family farmer or fisherman is financially stable enough to make payments under any proposed plan while having enough left over for the day to day expenses of providing for a family. The Chapter 12 plan’s purpose is to restructure the way debts are paid so that most, if not all, of the debts can be repaid over the required period of the plan. Under chapter 12, debtors propose a repayment plan, much like in a Chapter 13, to make installments to creditors over three to five years. Generally, the plan must provide for payments over three years unless the court approves a longer period of time. Chapter 12 is much more streamlined, much less complicated, and considerably less expensive than Chapter 11 – making it much more financially feasible and manageable than a Chapter 11. In addition, few family farmers or fishermen find chapter 13 to be of any advantage because it is designed for wage earners who have smaller debts than farmers and fishermen. One of the greatest benefits of a Chapter 12 filing is to allow the family farmer or fisherman to propose a reorganization plan that will allow payments to be made seasonally. In other words, payments can be made while the farmer or fisherman is earning his money.

Contact HLO for a free consultation to see if you qualify for a Chapter 12 repayment plan so that we can help you organize your payment arrangements into a feasible repayment plan and work with you through your financial hardships to retain your property and to keep farming or fishing.