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Bankruptcy is a useful financial tool that helps individuals get back on their feet financially when they are saddled with debt they can’t pay. Family farmers and fisherman are eligible for a special type of filing—Chapter 12—allowing them to restructure their finances to avoid foreclosure or liquidation. Here’s how it works and how to find out if you’re eligible.

How Does Chapter 12 Bankruptcy Work?

The first step of Chapter 12 bankruptcy is to file a voluntary petition for relief. Within 90 days of this, you must propose a plan outlining how and to what extent you will repay your creditors. A trustee is appointed to review these documents and advise the courts on whether they should approve your petition or not.

Chapter 12 repayment plans are structured over three to five years. In this time, the aim is to make regular payments to creditors, so they get at least some of what they are due. After the payment plan is completed, remaining debts are discharged and do not have to be paid.

Are You Eligible for Chapter 12 Bankruptcy?

bankruptcyOnly individuals who earn at least 50% of their gross annual income from farming or commercial fishing are eligible for Chapter 12 bankruptcy. At least half of their total debts must be related to these operations. Also, their debts may not exceed a set limit—$4,153,150 for farmers or $1,924,550 for fisherman.

Partnerships or corporations may not file for Chapter 12. There are exceptions, however, if a single family owns more than 50% of the equity interests or stock. The best way to determine whether you are a candidate is to consult an attorney.

 

Zellar & Zellar, Attorneys at Law, in Columbus, OH, has more than 50 years of experience handling a diversity of bankruptcy matters, including Chapters 7, 12, and 13. Their lawyers will confidently advise you on which type of filing best suits your needs and subsequently guide you through the complicated process of paperwork and court proceedings. While they deal with the legal issues, you can focus on getting your financial affairs back on track. Find out more about their work in the Chapter 12 field online, or call (614) 257-1643 to schedule a consultation.

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