Chapter 12 bankruptcy is a type of bankruptcy specifically designed for family farmers and fishermen. It allows these individuals to reorganize their finances and pay off their debts over a period of three to five years and to most importantly to keep their family business.
The process of filing for Chapter 12 bankruptcy begins with the individual filing a petition with the bankruptcy court. This petition includes information such as the individual's income, expenses, assets, and liabilities. Once the petition is filed, an automatic stay goes into effect, which prohibits creditors from taking any further collection actions against the individual.
After the petition is filed, the court will appoint a trustee who is responsible for managing the individual's assets during the bankruptcy process. The trustee will work with the individual to develop a repayment plan that outlines how the individual will repay their debts over the three to five-year period. This plan must be approved by the court, and it typically includes a payment schedule and a list of the individual's creditors.
Once the plan is approved, the individual must make regular payments to the trustee, who will then distribute the funds to the creditors according to the priority set out in the bankruptcy code. The goal of the plan is to help the individual repay their debts in a manageable way, while still allowing them to continue operating their farming or fishing business.
It's important to note that in order to qualify for Chapter 12 bankruptcy, the individual must have regular income from a farming or fishing operation and their debts must fall within certain limits set by the bankruptcy code.
The entire process typically takes around three to five years from the date of filing the petition to the date of discharge.
Chapter 12 bankruptcy can be a useful option for family farmers and fishermen who are struggling with overwhelming debt and need a way to reorganize their finances and continue operating their businesses. If you think Chapter 12 bankruptcy may be right for you, give me a call and I’ll be happy to speak with you about it. There is no fee for the initial consultation.
