What is chapter 12 Bankruptcy?
Chapter 12 bankruptcy is a form of bankruptcy that is available exclusively to family farmers and fishermen. Chapter 12 is closely modeled after Chapter 13. However, Chapter 12 has a higher debt ceiling and allows payments to be made over more than five years. Corporations, LLCs or partnerships that meet the definition of family farmer or fisherman may file Chapter 12.
Advantages of Chapter 12 Bankruptcy
Chapter 12 has advantages over Chapter 13 in that it allows payments over longer than the three to five years allowed in Chapter 13, thus allowing many farmers to restructure or cram down farm debt that is attached to their houses or equipment.
Who Qualifies to file for Chapter 12 Bankruptcy?
Chapter 12 can be filed both by farmers who want to continue farming or farmers who want to get out of farming but who need a way to restructure their debts.