Bankruptcy Bliss

Chapter 12 Bankruptcy is reserved for a special nitch of people. Chapter 12 was designed to help the family farmers and fisherman. Now what does that mean? A fisherman or a farmer that is following in their ancestors footsteps in those fields that have insurmountable debts as a result of the much needed industry they followed their family into, can file for protection from Chapter 12. A minimum of 50% of your income must have come from either fishing or farming. Your total debts can not surpass 3,237,000 if your a farmer and 1,500,000 if a fisherman.

Chappter 12 Bankruptcy

If you are a farmer or a fisherman and have major financial problems, you might be eligible to file bankruptcy under Chapter 12.To be considered a Family Farmer or Family Fisherman you must have a steady income stream from one of those industries. Chapter 12 Bankruptcy is designed to protect those with a family history in the farming or fishing business. Their debt is usually too high to qualify under Chapter 13.and Chapter 11 is more suited for large corporations.

To qualify under Chapter 12 you must be an individual engaged in either a farming or fishing operation with more than 50% of the gross income for the last three years resulting from the farming or fishing operation. Maximum total debt cannot exceed $3,237,000 (farming) or $1,500,000 ((fishing). Also the percentage of total debt related to the business operation must be at least 50% for farming or 80% if in the fishing business.

Partnerships or corporation can file under Chapter 12 if they meet the following criteria:

o More than half the stock must be owned by one family (including relatives). The stock cannot be publicly traded.
o The family must be personally managing the operation.
o At least 80% of the value of the corporation must be related to farming or fishing.
o Total debt and its relationship to total debt are the same as for an individual – farming $3,237,000 and 50%; fishing – or $1,500,000 and 80%.

To complete the form, you will need the following information

o List of creditors, amounts owed and nature of their claims
o Debtors source and amount of income.
o List of all property owned
o Detailed list of farming/fishing expenses

If you are married, you must include this information for your spouse even if the spouse is not included in this petition.

The trustee will hold meetings of your creditors after you file your petition. The debtor is placed under oath and is questioned by both the trustee and creditors concerning his debt and repayment plan.

The official repayment plan must be filed within 90 days after filing the petition. The plan must include full payment for priority claims (i.e.: taxes) and secured creditors must be guaranteed value at least equal to the value of the collateral that was pledged. The unsecured creditor must receive at least as much cash as they would have received if the debtor’s nonexempt assets were sold under either a Chapter 7 or Chapter 11 filing.

Unsecured creditors must file a claim with the court within 90 days after the meeting of the creditors in order to collect from the distribution. The court charges a filing fee as of October 2005 of $239.

If you can be classified legally as a Family Farmer or Family Fisherman, Chapter 12 Bankruptcy can hold significant advantages over Chapter 7 or Chapter 12 Bankruptcy. The choice is yours.