Chapter 12 Bankruptcy: Helping Family Farmers and Fisherman Tackle Debt

Running a farm or fishery requires an investment of time and money that sometimes requires running up debt. If you’re too far stretched and struggling to pay the bills, Chapter 12 bankruptcy creates a plan for repaying all or some of your debts. It’s designed to help family farmers and fishermen avoid having assets taken away through liquidation or foreclosure. 

Filing for Chapter 12 can even help keep your business while navigating the courts. 

The catch? Not everyone qualifies – and it helps to have a good lawyer. Our qualified bankruptcy attorneys at the Rollins Law Firm can help you through this complicated process. Schedule a case evaluation today!

 

What is Chapter 12 Bankruptcy?

Family farmers and fishers use Chapter 12 bankruptcy because it offers lower court costs and a more streamlined process than other types of bankruptcies. 

Filing for Chapter 12 allows you to propose a reasonable repayment plan to settle your debts over 3-5 years. You can continue operating your business and even keep your assets during this time. After 3-5 years, the court may forgive the rest of your debts (with a few exceptions.) 

 

Who Qualifies for a Chapter 12 Bankruptcy?

To file for Chapter 12, you must be a “family farmer” or “family fisherman” business with a “regular annual income.” (Note that Chapter 12 does accept qualifying seasonal producers who only earn seasonal income.) 

Generally, eligible filers fall into two categories:

• Individuals or married spouses who run a family operation
• Family-owned corporations and partnerships 

Filers also have to meet specific criteria based on their business structure. For example, individuals and couples must:

• Earn at least 50% of their gross income from agricultural activities
• Owe at least 50% of their debts (80% for fishers) for business purposes
• Have less than $10 million in combined debts 

How Does Chapter 12 Bankruptcy Work?

You initiate a Chapter 12 bankruptcy by voluntarily filing a petition with the bankruptcy court. The court then appoints a bankruptcy trustee to examine your case and handle debt payments. You may also receive an automatic stay that stops debt collection activities like phone calls and wage garnishments.

After filing, you have 90 days to propose a repayment plan to cover your debts. Typically, plans span 3-5 years, though some individual debts (like for equipment purchases) may have longer terms. 

You can usually continue business operations and keep your assets during the repayment period. If you stay on top of your payments, the courts may discharge and forgive most debts – except child support and alimony – after 3-5 years. In some instances, the court might even issue a “hardship discharge” even if you missed payments. 

Why Hire a Lawyer for Your Chapter 12 Bankruptcy? 

Hiring a lawyer supports you through bankruptcy proceedings to craft a healthy plan. Chapter 12 filers around Greenwood, MS, and surrounding communities have benefited from working with us to achieve the following:

Reduce – or Eliminate – Bankruptcy-Related Tax Bills

Our legal team can potentially eliminate any taxes that result from asset sales during Chapter 12 bankruptcy. When it comes to more important items like farm equipment or real estate, that can amount to hundreds of thousands of dollars in savings! 

Get Back to Business with New Financing 

Bankruptcy hurts your credit score and makes obtaining new financing difficult. We help Chapter 12 candidates stay eligible for funding to keep on truckin’. 

How’s this possible? After filing, we can issue new lenders a super-priority lien to jump ahead of lenders you already owe. New lenders prefer this because they get priority during repayment. 

Minimize Your Risk of Involuntary Liquidation

Our firm can help ensure your creditors don’t force a sale of your assets. Keeping more assets isn’t just good for business – it can help you recover from your bankruptcy filing faster.   

Free Up More Cash for Your Business

Lastly, we can free up cash collateral that you might have otherwise used to repay debt so that you can use it as working capital. The more cash you have on hand during bankruptcy, the better the chances you can continue operations and get back to business as usual.  

Contact Our Chapter 12 Bankruptcy Attorney! 

With an experienced legal team, filing for a Chapter 12 bankruptcy doesn’t have to be complicated. Unfortunately, not many lawyers have done Chapter 12 bankruptcies. 

As one of the few firms in the state that handles Chapter 12 cases, we’re here to help family farmers and fisheries in Greenwood, MS, and the surrounding communities keep doing what they love.