Thompson Law Group, P.C.

Chapter 12 bankruptcy helps fishers and farmers in the U.S.

Chapter 12 bankruptcy is relatively new, so it's not surprising that you may not have heard about it previously. This kind of bankruptcy is only available for family fishermen and family farmers.

It's a similar form of bankruptcy to Chapter 13, but it is more flexible with a periodic payment schedule due to the seasonal nature of the two kinds of work. With a Chapter 12 bankruptcy, farmers or fishermen propose repayment plans lasting between three and five years.

Who can qualify for Chapter 12 bankruptcy?

Individuals or married couples who have a commercial fishing operation or farming operation may file for this kind of bankruptcy. For farmers, at least 50% of their debts must be from the farming operation. For fishermen, 80% of the debts must be from the operations of their work. In both cases, half of all gross income for the couple or individual must come from the fishing or farming operation.

Can you get an automatic stay with a Chapter 12 bankruptcy?

Yes. When you file for Chapter 12 bankruptcy, an automatic stay goes into effect in the same way as with other bankruptcies. The automatic stay stops creditors from taking collection actions of certain kinds while you're in bankruptcy. They do have the option to pursue remedies through court, however, which is something to keep in mind.

Do you have to attend a bankruptcy meeting?

Usually, yes. A Chapter 12 trustee works with you to hold a meeting of creditors. This meeting gives creditors and the trustee time to ask questions about your finances and the petition that you filed.

When does the bankruptcy get discharged?

The bankruptcy is discharged once the payments have all been made. In some cases, the court will dismiss the case under a hardship discharge. For example, if John files for Chapter 12 bankruptcy and can no longer make payments as a result of a terminal illness, the court may choose to discharge the bankruptcy. Usually, the reason has to be no fault of the debtor's own and not in their control.

If you have debt from farming or fishing operations, then Chapter 12 bankruptcy might be a good option for you moving forward. If you think this plan might be good for you, know that you will need to collect many documents supporting your claims and showing your finances (ingoing and outgoing) to the court. Showing as much information as you can may help you successfully negotiate a shorter Chapter 12 plan.

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