In our ongoing effort here at Talk Local to educate our readers about the various kinds of bankruptcy and exactly what they mean, today we’re going to cover the Chapter 12 bankruptcy definition. Maybe you’re here wondering if you can file for Chapter 12, or perhaps you’re just examining all your options before you make any kind of decision. Whatever the reason, we’re here to help.
Bankruptcy for Family Farms
Chapter 12 bankruptcy isn’t one of the more common chapters, and that’s for a reason – because it’s designed for a specific need. Chapter 12 is bankruptcy for the reorganization of family farms. It’s closely modeled after Chapter 13, which is bankruptcy for wage earning individuals, but it has a higher debt ceiling than Chapter 13, so it will apply to many larger farm operations.
Who Can File?
Well, ostensibly, Chapter 12 bankruptcy is only available to people who are family farmers, according to the definition in the statute, but who exactly can file? A family farmer can be an individual, partnership, or corporation, all with different rules and requirements. As an individual, the family farm debts cannot exceed $3,544, 525, and 50% of that debt must be solely tied to the farming operation. Partnerships and corporations have the same debt ceiling qualifications, with the additional conditions that 80% of corporate assets must belong to the farm, and the farm must be at least 50% owned by members of a single family.
Filing Chapter 12
In order to file for Chapter 12 bankruptcy, the farm debtor needs to file a petition with the court, along with a complete documentation of assets and financial affairs.
Do you need to speak with an attorney about filing Chapter 12 bankruptcy? If so, TalkLocal can help you find an attorney in your local area who will be happy to help you get started.
