Family Farmers’ and Family Fishermen’s Legal Solution to Debt Crisis

If you are thinking about filing for bankruptcy, you must first learn everything you need to know regarding bankruptcy, its different chapters and these chapters’ specific advantages and disadvantages. Afterwards, you can proceed to evaluating your actual financial situation to see if you really need to file a bankruptcy case and, if yes, which specific chapter will help you best.

Bankruptcy is a legal proceeding where debtors (individuals, families or business firms) declare their inability to further pay their overwhelming debts. There are different chapters in the U.S. Bankruptcy Code, each designed to address an individual’s , a family’s or a firm’s financial situation. One of these is Chapter 12 bankruptcy, which is specifically designed for family farmers or family fishermen, to enable them to recover from unmanageable debts.

Family farmers or family fishermen may refer to an individual, an individual and his/her spouse, a partnership or a corporation. To be eligible, however, the debtor should, first and foremost, have a regular annual income (though the law makes an allowance for those with seasonal income). This is just to make sure that the debtor will have enough, regular earnings to pay the debt.

Other conditions required by Chapter 12, include:

  • at least 50% of the farm or fishery is owned by the debtor:
  • with regard to the amount of death, 50% should be due to farming (for family farmers) and 80% should be due to the commercial fishing business (for family fishermen);
  • gross income that came from farming or fishing operation (for the previous tax year) must have been more than 50%; and,
  • the total debt owed does not exceed $4,031,575 for farmers and $1,868,200 for fishermen

According to the Bradford Law Offices, PLLC, Chapter 12 bankruptcy is very similar to Chapter 13 in how it is structured. However, it provides additional benefits not available to those pursuing Chapter 13 bankruptcy, including higher debt ceilings than those under Chapter 13 bankruptcy and increased exemptions from financial obligations.

It is explained by the United States Courts that this Bankruptcy Code provides that only a family farmer or family fisherman with “regular annual income” may file a petition for relief under chapter 12. The purpose of this requirement is to ensure that the debtor’s annual income is sufficiently stable and regular to permit the debtor to make payments under a chapter 12 plan. But chapter 12 makes allowance for situations in which family farmers or fishermen have income that is seasonal in nature. Relief under chapter 12 is voluntary, and only the debtor may file a petition under the chapter.

 

 

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