Chapter 20. A Trip through Chapter 12 Bankruptcy

You can make a small fortune in farming—provided you start with a large one.


To meet the economic realities and problems unique to family farming and fishing, Chapter 12 of the Bankruptcy Code provides special treatment for the debts of family farmers and fishermen. More streamlined, less complicated, and usually less expensive than Chapter 11 bankruptcy cases, Chapter 12 eliminates many of the barriers that family farmers and fishermen had faced when seeking to reorganize successfully under either Chapter 11 or 13 of the Bankruptcy Code.

Chapter 12 Basics

First enacted in 1986 to redress the plight of the agricultural industry and to protect farmers, Chapter 12 bankruptcy cases originally were made available to only family farmers with regular annual income. In 2005, Congress made family fishermen also eligible for Chapter 12.

Reorganizations under Chapter 12 resemble reorganizations under both Chapter 11 and Chapter 13.

Chapter 12 has eligibility requirements. In order to qualify as a family farmer or fisherman, one must have regular annual income and have debts that do not exceed the debt limitations presently capped at $3,792,650 in the case of farmers and $1,757,475 in the case of fishermen. Like all bankruptcy chapters, the debtor files the bankruptcy petition and schedules of assets, liabilities, income, and expenses. Involuntary petitions by creditors to put a person or entity into a Chapter 12 bankruptcy case are not ...

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