The Farmer Bankruptcy – Bankruptcy’s Best Kept Secret: Chapter 12

One of the least known attributes of bankruptcy is the benefits it can afford to one who makes their living from a farm or a fishing operation. There is a form of bankruptcy – Chapter 12 – that is designed exclusively for those of you in those fields. It happens to be one of the most flexible and adaptable, yet rarely used, forms of bankruptcy. Unlike its more complicated sibling…Chapter 11… the farmer/fisherman can use Chapter 12 to reduce and restructure loans on land, equipment, boats, and vehicles, eliminate or substantially reduce debt to suppliers, and forestall payments so that you can pay your creditor can when your season arrives.

Are you eligible for Chapter 12? If you can answer “yes” to the following questions, it may provide the solution you are looking for:

  • Are you or your business primarily engaged in a farming or fishing operation?
  • Is your total debt less than 3,800,000?
  • Is the debt at least 50% related to your farming or fishing operation?

Unlike more complicated reorganizing bankruptcies, in Chapter 12, you do not need the consent of your creditors to restructure your debts. And there are very few limits on the amounts, the manner, or the time frame under which you can repay your creditors.

Keep in mind that Chapter 12 bankruptcies are very rare and involve specialized experience in the intricacies of this area. It is important to select a firm whose lawyers understand the particular sensitivities of the farm and fishing industry, and who have had experience working with bankruptcy trustees who have participated in such cases. Ask your prospective counsel how many Chapter 12 cases they have handled, their success rate, and whether they will share the perspective of other Chapter 12 clients.