The bankruptcy code contains many different chapters, or types of bankruptcy, for which a person or corporation may file. Chapter 12 bankruptcy is not as well-known as other types. This is because it was designed to specifically meet the needs of family farmers and fisherman.
A family farmer eligible for chapter 12 bankruptcy is defined by a set of factors:
- The farmer must have less than $1.5 million in debt.
- At least 80% of this debt must be farm-related.
- Half of the farmer’s gross income should come from farming from the preceding year.
- The farmer must have sufficient income in order to make payments under a chapter 12 bankruptcy plan.
Chapter 12 bankruptcy was created to help family farmers or family fishermen who are in financial distress pay all or part of their debts with additional benefits not available to others who file for bankruptcy under chapter 11 or 13. Benefits include higher debt ceiling amounts and better exemptions and provisions. Debtors under chapter 12 make installment payments to creditors over three to five years, but not exceeding five years.
Chapter 12 was added to the bankruptcy code in 1986 as an emergency response to agriculture credit issues and bank failures in the 1980s. The Act was originally intended to expire in 1993, but was extended many times until it was made permanent in 2005.
If you are having serious issues with your finances and credit, bankruptcy might be the best option for you. At the DeLadurantey Law Office, LLC, our qualified Milwaukee bankruptcy lawyers can speak with you about your situation and help you determine the best course of action to take. Contact our offices today at 414-377-0518.