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Chapter 12 Bankruptcy

Chapter 12 Bankruptcy is a form of bankruptcy set aside for family farmers or fishermen. Distressed farmers and fishermen are able to receive financial relief under Chapter 12 reorganization and thus restructure their debts in order to keep their family business going. For family farmers or family fishermen who operate a business and receive a regular annual income, but are experiencing financial difficulty, Chapter 12 bankruptcy relief is available. In 1986, Chapter 12 was amended into the federal bankruptcy code. Unlike a Chapter 7 bankruptcy in which a debtor could be discharged of debts through liquidation, a Chapter 12 petition allows the debtor to repay their debts by entering into a repayment plan which will be filed in the court. Because this is a very specialized area of debt relief, it is important that a debtor seeking relief under this provision to hire an experienced Chapter 12 attorney.

How to Hire a Chapter 12 Bankruptcy Attorney

A bankruptcy attorney who represents debtors facing a financial difficulty often specializes in the preparation of Chapter 12s. Often these attorneys will offer an initial free consultation to discuss your circumstances and can advise you whether or not Chapter 12 is the appropriate relief to resolve your financial crisis. Further, since a Chapter 12 operates similar to a Chapter 13, he or she is usually has the knowledge required to structure your repayment plan which will need to be filed with the court. Identical to the Chapter 13 repayment plan, the repayment plan filed under Chapter 12 permits family farm debtors to repay their creditors over a period of three years. However, if it becomes apparent that the debts cannot be paid within this time period, the plan may be extended up to five years upon the court’s approval.

Generally, family farmers or fishermen who seek relief under the Chapter 12 code will have property and assets that they wish to retain. However, due to increasing interest rates it has become difficult to pay the mortgage on the property. When choosing to hire a bankruptcy attorney to file a Chapter 12 petition, it is also important to learn the type of experience they have had in filing Chapter 12s.  An attorney who has helped debtors under a Chapter 12 will know how to devise a repayment plan so that the mortgage is crammed down to permit the debtor  to pay the current market rate on the property.

A Lead Counsel bankruptcy attorney will also possess the most current Chapter 12 bankruptcy laws and rules. Despite the amendments which were added to the Bankruptcy Code in 1986 to include Chapter 12, Congress can modify the regulations. More so, although the Bankruptcy Code is federal law there are usually different procedures which must be followed in each local jurisdiction. However, an attorney who is licensed to practice in a specific jurisdiction will have the knowledge of the local court rules. If you are a family farmer or fishermen and believe that this is the kind of financial relief which may be in your best interest, contact a bankruptcy attorney in your area to discuss your case.

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