Chapter 12 Bankruptcy – For Family Farmers and Family Fishermen
Chapter 12 is designed for family farmers or family fishermen with regular annual income. It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years.
Chapter 12 has been described as a Chapter 13 for farmers and fishermen.
Under the Bankruptcy Code, "family farmers" and "family fishermen" fall into two categories: (1) an individual or individual and spouse and (2) a corporation or partnership.
Farmers or fishermen falling into the first category must meet each of the following four criteria as of the date the petition is filed in order to qualify for relief under chapter 12:
1. The individual or husband and wife must be engaged in a farming operation or a commercial fishing operation.
In order for a corporation or partnership to fall within the second category of debtors eligible to file as family farmers or family fishermen, the corporation or partnership must meet each of the following criteria as of the date of the filing of the petition:
1. More than one-half the outstanding stock or equity in the corporation or partnership must be owned by one family or by one family and its relatives.
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