Chapter 12 bankruptcy is a specific type of bankruptcy that is especially created for family business owners who work as farmers or fishermen. Therefore, the specifics of the bankruptcy filing are tailored to benefit farmers and fishermen who are struggling financially with their business.
Chapter 12 is different because it is a less expensive process than Chapter 11, and it's simpler, too. It is comparable to Chapter 13 bankruptcy, but it is more flexible and it is designed with seasonal workers in mind. It recognizes that farmers and fishermen do not necessarily have the same income each month of the year.
How do I know if I can qualify for Chapter 12 bankruptcy?
If you have a commercial operation in either farming or fishing, and you are either an individual or a married couple, you can file for Chapter 12 bankruptcy. You must also have debt no more than $4,031,575 in 2018 as a farmer, and debt no more than $1,868,200 in 2018 as a fisherman.
What is an automatic stay?
As soon as you have filed for a Chapter 12 bankruptcy, an automatic stay goes into effect. This means that creditors must stop trying to gain back what you owe, unless they have received permission from the bankruptcy court. This is also true for anyone who is jointly liable for debts, for example a joint owner of your credit card.
If you are struggling financially as a farmer and you would like to gain a fresh start by reorganizing your business, Chapter 12 could be for you. Make sure to conduct thorough research before taking action.
Source: The Balance, "What is Chapter 12 Bankruptcy?," accessed March 09, 2018