In order to qualify to file Chapter 12 Bankruptcy, the Debtor must be a Family Farmer or Fisherman. This means the Debtor must be engaged in a farming or commercial fishing enterprise. Furthermore, the Chapter 12 Bankruptcy Debtor must derive more than 50% of his or her gross income from Farming or Fishing efforts.
More than 50% of the Debts incurred by the Debtor in Chapter 12 Bankruptcy must be incurred by the Farmer must be related or derived from his Farming Operations. For a Fisherman, 80% of the Debts must be on account of his Fishing Operations.
As opposed to a Chapter 13 Bankruptcy, The Debtor in a Chapter 12 Bankruptcy may be not only an Individual, but a Corporation or a Partnership. However, Partnerships or Corporations are not eligible to file Chapter 12 Bankruptcy unless at least 50% of the Stock or Equity Interests are owned by a single family. The concept was to assist the Family Farmer, as the Law states.
Chapter 12 Bankruptcy is fashioned specifically for Family Farmers and Fishermen. Although Chapter 12 Bankruptcy is mostly similar to Chapter 13 Bankruptcy, there are some differences, primarily in the Debt limits the Debtor may have and qualify to file a Chapter 12 and Exemptions that may benefit the Chapter 12 Debtor more thanfarmers_and_fishermen1 the Chapter 13 Debtor.
Chapter 12 Bankruptcy is so named because it refers to Chapter 12 of the 11th Title of the United States Code. Chapter 12 Bankruptcy is a Chapter of the Bankruptcy Code, such as Chapter 11 Bankruptcy, Chapter 7 Bankruptcy and Chapter 13 Bankruptcy are Chapters of the Bankruptcy Code. There is even a Chapter of the Bankruptcy Code for Municipalities.
Chapter 12 Bankruptcy is one of the more rare Bankruptcies that are filed. Only 637 Chapter 12 Bankruptcies were filed in 2011, a year in which over 1.4 million Bankruptcies were filed.
A Debtor in Chapter 12 Bankruptcy may have total Debts of $4,031,575 for Family Farmers and $1,868,200 for Fishermen. These Debt Limits are the limits as of 2014 and may be subject to change. These Debt Limits are also greatly more than the limits usually available in Chapter 13 Bankruptcy.
If the Family Farmer of Fisherman exceeds the above Debt Limits, then he must either file a Chapter 11 Bankruptcy or Reorganization, or a Chapter 7 Bankruptcy or Liquidation. If one files a Chapter 12 Bankruptcy or Chapter 11 Bankruptcy, he is seeking to reorganize his Debt under his existing Enterprise or Corporation. If the Debtor files a Chapter 7 Bankruptcy that means that usually he is seeking to liquidate the existing Corporation or Enterprise and possibly also Liquidate some of his Assets. This does not necessarily mean that the Debtor cannot continue in his chosen efforts, as a Fisherman or Farmer.
Similar to a Chapter 13 Bankruptcy, in a Chapter 13 Bankruptcy the Debtor will continue his operations in Farming or Fishing without interference from the Trustee. The Trustee duties are essentially limited to the review of documents, collecting and distributing monies, and ensuring that the Assets of the Estate are protected. As in a Chapter 13 Bankruptcy, the Chapter 12 Bankruptcy has plan payments that extend from three to five years.
In a Chapter 13 Bankruptcy the Debtor can Cramdown or Pay on the Secured Value of Secured Debts such as Loans on their Farm or Boat. The difference, which is the Unsecured portion of the Loan, is treated as any Unsecured Creditor, meaning it is usually eliminated completely as a Debt to be paid through the Chapter 12 Bankruptcy Plan.
A Chapter 12 Bankruptcy is similar to a Chapter 13 Bankruptcy or a Chapter 11 Bankruptcy, but is specifically available to a fisherman or a family farmer.