Most 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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