August 27, 2022

Benefits of Chapter 12 Bankruptcy

During times of economic hardship, businesses of all sizes may consider bankruptcy. Typically, most businesses will seek financial relief through a Chapter 7 or Chapter 11 bankruptcy filing. These two aspects of the United States Bankruptcy Code are designed to ensure that individuals who own businesses are not left destitute when their businesses are unable to make a profit.

However, there is another type of bankruptcy filing that only applies to a very specific area of the business world—family farmers and fishermen. If you are a family farmer or own a fishing operation, and you are struggling to make ends meet and have no disposable income, you may be eligible to file for Chapter 12 bankruptcy.

At Siddons Law, we understand the stress and anxiety that come with owning a business and having to deal with the inability to pay for your usual business expenses. Our bankruptcy law expert is here to help those family farmers and fishermen, figure out their financial affairs and determine if Chapter 12 bankruptcy may be an option for their secured debt.

What Is Chapter 12 Bankruptcy?

Created in 1986 by the United States Congress, Chapter 12 bankruptcy was specifically designed and tailored to the needs of family farmers and those who own commercial fishing operations. The bankruptcy laws provide a way for a family farmer or owner of a fishing operation to find relief from their secured debt without having to shut down or liquidate their operations.

Much like Chapter 13 bankruptcy, Chapter 12 bankruptcy is a type of reorganization bankruptcy. The primary differences, though, are that Chapter 12 bankruptcy only applies to family farmers and fishing operations, and it is much simpler to handle.

When Can Family Farmers and Fishermen Go to Chapter 12 Bankruptcy Court?

Before you can actually file for Chapter 12 bankruptcy, you must first establish that you meet the requirements under bankruptcy law. You must meet certain criteria in order to file this type of bankruptcy and work to set up plan payments or get a hardship discharge for secured claims.

This criterion includes:

  • Being an individual, married couple, partnership, or corporation
  • Owning farming or fishing operations
  • Fishing or farming accounts for more than 50% of your gross income
  • Having debts which are made up of 80% of the fishing operation or 50% of the farming operation (except for mortgage payments)
    • Debt cannot exceed $1.8 million for fishermen or $4 million for farmers
  • Having more than 50% of business interests owned by a single family, if you are a corporation or partnership

If you meet these criteria, contact a Chapter 12 legal expert, such as ours at the law offices of Michael Siddons in Media, PA, to find out if you can take your case to the bankruptcy court.

Benefits of Chapter 12 Bankruptcy in Media, PA

When it comes to Chapter 12, there are a wide variety of benefits that your commercial fishing operation or farming operation can enjoy. These advantages include:

  • Automatic stay to ensure that your business can remain open throughout the course of the Chapter 12 filing
  • Secured creditors cannot collect, foreclose, or repossess while you are working through the financial situation
  • Co-signers are also protected from secured claims and unsecured creditors
  • Cramming down to reduce the secured debt can be done through the bankruptcy court
  • Credit counseling and means tests are not required
  • No liquidation of assets
  • Seasonal trends are taken into consideration for monthly payments
  • Home mortgages will have no anti-modification provision
  • Debt amount limitations are not as rigid as with other bankruptcy types
  • Filing a plan must be done within 90 days
  • Fewer Trustees’ oversight
  • The payment plan must be confirmed before the filer needs to start making plan payments
  • Expensive properties can have extended payments beyond the bankruptcy period
  • Existence of more exemptions for Chapter 12 than other types of bankruptcy
  • The bankruptcy court authorizes Chapter 12 payments to the creditors when you make payments to the court

If you are in need of financial relief through Chapter 12 bankruptcy and would benefit from a repayment plan to deal with your business expenses and debts, contact the law offices of Michael Siddons in Media, PA, to learn more about filing for Chapter 12 and to see if you qualify.

Stop Getting Harassed by Secured Creditors and Unsecured Creditors by Filing a Chapter 12 Bankruptcy

At Siddons Law, our team is here to help farmers and fishermen overcome the many challenges of owning and operating these types of businesses. There are many reasons why you may be facing financial hardships related to your farming or fishing operation, and our legal team is available to assist you in navigating through these tough times.

From fluctuating land values to a decline in profits, government cutbacks, and more, farming or commercial fishing operations may find themselves dealing with secured or unsecured debts that they simply cannot repay. When your regular annual income is not sufficient enough to cover all of the mounting debts associated with your agricultural business, it is time to consider your bankruptcy options.

When you hire our experienced Media, PA, bankruptcy lawyer, Michael Alan Siddons, you can rest assured that you are getting the best possible legal representation to help you through this difficult time. From the initial evaluation of your financial situation to the confirmation hearing and everything in between, Michael Siddons will provide guidance and legal advice to ensure you get the best possible outcome.

To learn more about filing for Chapter 12 bankruptcy in Media, PA, or to find out if you qualify, contact our legal expert at the law offices of Michael Siddons. Our initial consultations are always free, and our legal fees are reasonable. We do not want to add to your financial hardship, and we know how vital this type of bankruptcy can be for the continuation of your business.

Contact us today at 610-255-7500 for a free consultation.