Are you a struggling family farmer or fisherman? Chapter 12 is a special kind of bankruptcy designed just for you. This bankruptcy category helps family farmers and family fisherman who have regular and steady incomes reorganize their debts so they can pay them off — or pay at least part of them off.
Via the Chapter 12 process, you’ll work with your attorneys and the bankruptcy court to develop a payoff plan that you can reasonably afford, and that will last three to five years. It’s important to note that if your plan doesn’t pay off all of your debts, it will last for a maximum of five years. Once the payoff plan period is over, and you’ve made all your payments successfully, any remaining debt obligations covered by the bankruptcy will be satisfied.
Which family farmers and fishermen are eligible for Chapter 12?
Family farmers and family fisherman who qualify for Chapter 12 will be filing taxes as (1) an individual or spouse, or (2) a partnership or corporation. Let’s take a look at what you’ll need to satisfy if you want to qualify for Chapter 12 bankruptcy proceedings as an individual or spouses:
- As an individual or a husband-wife duo, you need to have a farming or fishing operation.
- The total amount of your debts — whether secured or unsecured — can’t be more than $3,237,000 for farmers or $1,500,000 for fishermen.
- For family farmers, a minimum of 50 percent of your total debts need to be related to commercial fishing or farming. For fishermen, it needs to be 80 percent.
- For family farmers and fishermen, at least 50 percent of the gross income of the individuals and/or spouses needs to generate from the fishing or farming business. Other conditions and exceptions may apply to this stipulation in some circumstances.
Do you think you could benefit from Chapter 12 bankruptcy?
A couple or individual struggling to make financial ends meet in a fishing or farming operation may be able to get his or her finances back in order via Chapter 12 proceedings. As such, if you’re in a financially difficult situation, you might want to investigate Chapter 12 bankruptcy as a viable solution to your financial woes.