Chapter 12 Bankruptcy
Chapter 12 bankruptcy is one of the least-known types of filings supported by the U.S. Bankruptcy Code. However, for farmers in Waco, Killeen, and the surrounding areas, Chapter 12 bankruptcy can be a life-saver. I’ve been a Waco bankruptcy lawyer and a Killeen bankruptcy lawyer for many years, and I’ve seen how this type of legal protection has allowed farmers to continue to run their businesses, pay their creditors, and still make ends meet.
Like Chapter 13, which is designed for individuals, Chapter 12 does not erase debt. Instead, it proposes a plan for farmers and family fishermen to pay their debts over a certain period of time (usually three to five years). A Chapter 12 filing can be a great relief to farmers, who can return to focusing on their farming, rather than having to continually deal with harassing creditors.
A Chapter 12 bankruptcy filing can be a good choice for farmers, because it is significantly less expensive and less complicated than Chapter 11 filings, which are designed for medium to large businesses. It also allows for greater debts than Chapter 13 bankruptcy – a farmer can restructure up to $1.5 million in debt, as long as at least 80% of that debt arises from farming operations.
There are a few requirements you must meet in order to be eligible for Chapter 12 bankruptcy:
- The family operating the farm must own at least 50% stock or equity in the farm
- If the farm is incorporated, at least 90% of the corporation’s value must come from farming operations
- Over half your gross income must have come from farming during the year before your Chapter 12 filing
- Your income must be stable enough to make payments under a Chapter 12 plan
- Stock in the farming operation cannot be publicly traded.
If you are struggling with farming debt, give me a call – I’d be happy to put my years of experience as a Waco bankruptcy lawyer and a Killeen bankruptcy lawyer to work for you!
