chapter13bankruptcyinformation.net

Most people are typically unfamiliar with Chapter 12 bankruptcy. This makes sense since it covers “family farmers” or “family fishermen” with “regular annual income.” This option has similarities to chapter 13 in that it allows monetarily distraught family farmers and fishermen to carry out a repayment plan for all or part of their debts.   

The term of duration for chapter 12 is typically three to five years. Repayments are made during this period of time and normally, the plan must schedule payments for approximately three years unless the court approves a longer period.  In no case, is the duration of the payment plan allowed to extend for longer than five years.  

This model is specifically designed for the unique challenges faced by family farmers and family fisherman and arguably provides a solution to avoid the barriers such debtors would encounter if they sought protection under either chapter 11 or 13 of the Bankruptcy Code.  

This option is purportedly more efficient, less convoluted, and less costly than filing under chapter 11 which covers optimally covers larger businesses and corporations. Chapter 12 also recognizes the simple reality that family farmers or fishermen in debt find chapter 13 less advantageous. This is due to the fact that the debts facing family farmers and fisherman are usually significantly higher because of land and equipment issues. Chapter 12 also makes importance allowances due to the seasonal business aspects of many farmers and fisherman face. 

There are similarities with other bankruptcy models that should be remembered. As in the case of chapter 13, an individual or entity is excluded from this if the part has failed to comply with court orders during the last one hundred and eighty days.  The exclusion also applies to those individuals who have voluntarily removed themselves from the proceedings in the same time period. Credit counseling from approved credit counseling agencies is a requisite.