One of the lesser-used procedures for filing for bankruptcy is Chapter 12. It was created by Congress to respond to the debt needs of family farmers and is quite similar to filing for Chapter 13 debt reorganization. In fact, one of the similarities is that the debtor can convert their case to a Chapter 7 bankruptcy during the process.
Farmers needed this relief because under the former laws, they usually earned too much to file under Chapter 13 and their relief from filing under Chapter 11 was insufficient to resolve the typical farmer’s debt problems.
Chapter 12 allows farmers to restructure their debts and give them some breathing room to pay them down. During the process, Chapter 12 debtors may not use cash collateral unless the secured creditor grants consent or the bankruptcy court authorizes it. Farmers also can hold pre-confirmation sales of unnecessary assets without interest without obtaining the secured creditor’s permission. However, the court is the final arbiter when it comes to granting permission.
One difference with filing under Chapter 12 is that farmers pay reasonable market rent instead of lost opportunity costs.
Chapter 12 bankruptcies only provide debt relief to family farmers earning regular annual incomes and who have aggregate unliquidated and contingent debts of no more than $1.5 million.
You may be unsure whether you qualify to file for debt relief in a Chapter 12 bankruptcy. That is understandable since the bankruptcy code is complex and evolving. If you are contemplating filing for bankruptcy to get out from under a crushing debt load, a Tampa bankruptcy attorney can provide counsel and guidance to you.