Chapter 12

What is Ch12?
Chapter 12 bankruptcy is for “family farmers” or “family fishermen.” This process is much more streamlined that the complex processes of Chapter 11 or Chapter 13.

Who can file Ch12?                                    
There are two categories that identify who is eligible to file for bankruptcy under Chapter 12.

  • Individual or individual and spouse
  • A corporation or partnership

Farmers or fishermen eligible under the first category must meet the following criteria:

  • Individual or spouses must be involved in commercial farming or fishing operations
  • The debt in question should not exceed $3.7 million for farmers or $1.7 million for fishermen
  • At least 50% of the debts for farmers and 80% of the debts of fishermen must be directly related to the commercial farming or fishing operations
  • More than 50% of the income was derived from farming or fishing

Farmers or fishermen eligible under the second category must meet the following criteria:

  • At least 50% of the stock or equity must be owned by one family and its relatives
  • The majority owning family and its relatives must be directly engaged in the commercial farming or fishing operations
  • At least 80% of the value of the stock or equity must be directly related to the commercial operation
  • Stock cannot be traded on the public exchange
  • The debt in question should not exceed $3.7 million for farmers or $1.7 million for fishermen
  • At least 50% of the debts for farmers and 80% of the debts of fishermen must be directly related to the commercial farming or fishing operations

How long does it take?
Disposition in a Chapter 12 proceeding takes anywhere from three to five years from the date of filing.

What are the steps involved in Ch12
In order to file Chapter 12 bankruptcy, you must file a petition and financial documents.

  • File a petition
  • Within 60 days of filing the petition, a meeting of creditors is held
  • If the petition is by spouses, both spouses must both attend the creditors meeting
  • Debtors must propose terms
  • Unsecured creditors can file claims within 90 days
  • Government agencies can file claims within 180 days
  • Usually within 90 days after claims are filed the petition is affirmed or denied

What documents will I need?
In order to file for Chapter 12, you need to file a petition for bankruptcy in the federal bankruptcy court. In addition, you need to file the following documents:

  • Statement of assets and liabilities
  • Source, frequency, and amount of income
  • List of monthly expenses for living, farming, or fishing
  • List of all the property owned or leased

Will I become debt free at the end of Ch12?
Chapter 12 reduces and reorganizes debts and only in a few limited situations discharges debts. All debt that is not discharged must be part of the repayment plan confirmed by the judge.

How will Ch12 filing affect my credit?
Filing for Chapter 12 will affect your credit in the same way as any other bankruptcy. It will stay on your credit report for 10 years and make it difficult or expensive to obtain new credit.

Ch12 FAQs

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Bankruptcy Law Chapter 7 Chapter 11 Chapter 12 Chapter 13

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