Filing for Protection under Chapter 12 of the Bankruptcy Laws The Special Provisions for Family Farmers

Filing for Protection under Chapter 12 of the Bankruptcy Laws The Special Provisions for Family FarmersMost individuals who seek bankruptcy protection must file under Chapter 7 or Chapter 13. Chapter 7 allows you to permanently discharge debts in exchange for the sale of certain property. With a Chapter 13 filing, you can set up new payment arrangements with your creditors, satisfying your debts over a three-to-five year period. However, if you’re a family farmer, as defined by the law, there’s another option open to you—a Chapter 12 petition.

Qualifying as a “Family Farmer”

Under the bankruptcy law, to be able to file for protection under Chapter 12, you must be engaged in a farming operation with debts that do not exceed $3,792,650. Chapter 12 is available to individuals or married couples who operate a farm, even if incorporated, as long as the farm is controlled by a single family. Chapter 12 is similar to Chapter 13, allowing you to restructure your debt. As a result, you must have regular income in addition to your farm income to qualify. Furthermore, at least half of your debt must be farm debt.

A Chapter 12 family farmer petition carries a much higher debt ceiling than other reorganizations. For example, Chapter 13 debts are capped at $1.5 million and family fisherman petitions, also under Chapter 12, only allow you to reorganize a little over $1.75 million. In addition, unlike a Chapter 13 filing, you can extend repayment on secured debt in a family farmer petition beyond five years.

As with other forms of bankruptcy, the Chapter 12 includes the automatic stay, which goes into effect immediately and prevents a creditor from calling, writing or taking legal action to collect the debt.

Contact Heath, TX Bankruptcy Attorney Carrie Weir

I provide a free initial consultation to anyone with questions or concerns regarding a bankruptcy filing. 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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