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Could you benefit from a Chapter 12 bankruptcy?

If you are at the end of your financial rope and struggling to find a way out of debt, it's likely that you have already looked into filing for bankruptcy under either Chapter 7 or Chapter 13. However, if you are the owner of a Florida citrus farm, you may not realize that you have another option -- Chapter 12.

Most debtors will not be eligible to file for bankruptcy under Chapter 12. That's because this subset of Chapter 13 bankruptcy is available only to those who own family farms and a very few others. It was developed back in the 1980s when family farmers started to struggle to maintain ownership of the farmlands that had, in many cases, been in their families for generations.

A major difference between filing under Chapter 12 rather than Chapter 13 is that Chapter 12 allows for the seasonal and cyclical nature of farming when determining your debt repayment schedule. It remains the same as Chapter 13 in that debtors choose three- or five-year repayment plans to follow.

Can I qualify to file under Chapter 12?

Both married couples and single individuals who own farms may qualify. However, due to the nature of farm ownership, the debt limits are higher for Chapter 12 than they are for Chapter 13.

The total debt limits in 2018 could not be in excess of $4,153,150 for a farmer. Family farmers must also have no less than half their debts be generated from their farming operation. For married couples and single filers, over half of their annual gross income must be derived from their farming efforts for the previous tax year.

What if I've incorporated my farm?

Under certain circumstances, both partnerships and corporations might still qualify to file Chapter 12 bankruptcy.

It's okay to be confused.

You're a farmer. You know about planting and harvesting schedules and the best way to harvest your crop each season. You're not supposed to navigate the complex world of bankruptcy on your own. A Tampa bankruptcy law attorney is a good ally to have when it's time to take action toward a fiscally solid future.

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