Chapter 12 Bankruptcy
What does Chapter 12 Bankruptcy mean?
Chapter 12 Bankruptcy allows for the reorganization of debts of a "family farmer," or a "family fisherman." Chapter 12 Bankruptcy requires a debtor have an established income from the business, and the debtor must make a 3 or 5 year reorganization plan to repay their debts. No Chapter 12 plan may extend longer than five years.
To qualify for Chapter 12 Bankruptcy, an individual and their spouse, a corporation, or a partnership must be actively engaged in commercial fishing or farming, not have unsecured debts exceed $3,792,650 if they are farmers or $1,757,475 if they are fishermen, have 50% of their debts of a fixed amount related to farming operations, or 80% of their debts of a fixed amount related to fishing operations, and have 50% of the gross income for the debtor or debtors come directly from the farming or fishing operations.