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Farmers and family fishermen: Chapter 12 bankruptcy can help

On Behalf of | Oct 8, 2018 | Firm News

If you work in agriculture, you may have a farm and support the community through producing products such as wheat or meats. Perhaps you run a family fisherman business, but it only supports you during a few peak months of the year. Whatever the case is, if you are struggling, bankruptcy can help.

Chapter 12 bankruptcy, a relatively new form, is there for people like you when the debts of farm ownership become overwhelming. Chapter 12 bankruptcy is designed for those who are family farmers or fishermen with regular incomes annually. Through this bankruptcy form, you can work through an arrangement to pay back your debts and to have any additional remaining debts discharged at the end of the bankruptcy period.

Chapter 12 bankruptcy allows for installments to be paid to creditors over three to five years, similar to the way a Chapter 13 bankruptcy works. In most cases, Chapter 12 bankruptcies are set up for three years at a time.

What are the benefits of Chapter 12 bankruptcy?

Chapter 12 bankruptcy is less expensive and complicated than Chapter 11 for businesses, and the process for Chapter 12 bankruptcy is streamlined for efficiency. The goal is to restructure and reorganize the family company, not liquidate the assets the family has.

Keep in mind that this form of bankruptcy is only open to those who have “regular” incomes. That means that the income has to be similar each year and stable in nature. Seasonal incomes are fine, but the payments must be regular year after year. Family fishermen and farmers fall into two categories, corporation/partnership and individual/individual and spouse.

What should you do if you are struggling to make ends meet?

If you are struggling to make payments or keep up with your expenses on the farm or with your family fisherman business, consider Chapter 12 bankruptcy. This form of bankruptcy doesn’t shut down your business. Instead, it aims to help you get back on your feet with a budget and plan in place. It’s a good idea to turn to bankruptcy if you have tried all other options to no avail, such as negotiating with your creditors or setting up separate payment plans.

Don’t think that you have to lose everything you’ve worked for because of falling into debt. Everyone goes through hard times, but with the right help, you can adjust the way you run your business and come out of bankruptcy with a better outlook for the future.