If you own or operate a family farm, and you are struggling to make ends meet, you may have considered bankruptcy as a means of getting a fresh financial start. Though you could seek protection under Chapter 7 (liquidation) or Chapter 13 (reorganization), the federal bankruptcy laws have a specific provision, Chapter 12, to provide relief for family farmers. Chapter 12 was added to the bankruptcy laws in 1986, providing relief similar to Chapter 13 with some additional benefits. This blog post provides an overview of the benefits of Chapter 12.

At the office of bankruptcy attorney Carrie Weir, in Rockwall, Texas, I provide a free initial consultation to anyone considering filing for bankruptcy. For a private meeting, contact my office online or call me at 972-772-3083 to set up an appointment.

An Overview of the Protections Under Chapter 12

Under the federal bankruptcy laws, relief under Chapter 12 is available only to individuals or entities that meet the statutory definition of “family farmer.” This can be an individual, a partnership or a corporation.

There are specific tests that are applied to make this determination, including:
• Amount of debt
• Percentage of debt arising from a farming operation
• Whether or not the applicant has “regular annual income.”

If the entity seeking protection is a partnership or corporation, at least 50% of the ownership of the farming operation must be held by one family, and more than 80% of the value of the partnership or corporation must be related to the farming operation.

A Chapter 12 bankruptcy petition is closely modeled on a Chapter 13 filing. When you seek protection, a trustee is appointed and you work with creditors to negotiate new payment arrangements. The plan can include modification of the terms of secured or unsecured debts. The petitioner has a couple options, though, with respect to repayment. You can either agree to repay all unsecured debts, or to dedicate all disposable income to the repayment of unsecured debts. In many instances, a Chapter 12 petition gives you a longer period of time in which to repay your creditors.

As with a Chapter 13 petition, you must prepare a reorganization plan, submit it to your creditors, and have it approved. Your lawyer will help you prepare this plan and will review any proposed restructuring agreements from your creditors, to ensure they are within your means.

Contact the Office of Texas Bankruptcy Attorney Carrie Weir

I offer a free initial consultation to all potential bankruptcy clients. Contact my office by e-mail or call me at 972-772-3083 for a private meeting. With offices in Rockwall, Texas, I represent clients in Heath, Greenville, Lavon, Wylie, Mesquite and Rowlett.

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