Irvine, California Chapter 12 Bankruptcy Attorneys
Serving Agricultural and Seasonal Businesses across Orange County
Chapter 12 is a reorganization for family farmers and fisherman that is modeled after Chapter 13, where the debtor retains his or her property and pays creditors from future income. This chapter applies to single or married individuals, partnerships, and corporations who earn a “regular annual income,” or an income that is stable enough to make payments based on their future earnings.
Learn more when you call the Financial Relief Law Center, APC at (949) 570-5466. We offer free consultations to discuss your situation.
“I ran into a financial issue from my past and was in need of legal direction to take so I could handle a bank account that was levied. I called at 4:30 on a Friday after Christmas and Victor promptly called me back within minutes.”Patrick E.
How Are Family Farmers & Fishermen Defined?
As defined in the Bankruptcy Code [11 U.S.C. § 101(21)], a farming operation includes:
- Tillage of soil
- Dairy farming
- Producing and raising crops, poultry, or livestock
- Producing poultry and livestock products in an unmanufactured state
Individuals are considered “family farmers” under 11 USC §104(b) if they are engaged in “farming operations;” their debts do not exceed $3,544,525; at least 50% of the noncontingent, liquidated debts (excluding any debt for their principal residence) arose out of their farming operations; and they receive at least 50% of their gross income from farming in the preceding tax year or in each of the second and third tax years proceeding filing [11 U.S.C. § 101(18)(A)].
For fishermen, total debt cannot exceed $1,924,550 and 80% of the total debts arose from commercial fishing operations.
Nuances of Chapter 12 Under the U.S. Bankruptcy Code
- Helping family farmers continue farming serves as the primary purpose behind Congress’ adoption of Chapter 12. In re Indreland, 77 B.R. 268, 270 (Bankr. D. Mont. 1987) (quoting with approval In re Tart, 73 B.R. 78, 81 (Bankr. E.D.N.C. 1987).
- Under Chapter 12, family partnerships and corporations that satisfy the eligibility criteria, as well as individuals, may be debtors. [See 11 USC Sections 101(18)(B), 101(19A)(B).
- A Chapter 12 debtor need only have sufficient "regular annual income"- thus including irregular or seasonal income. [11 USC Sections 101(19), 101(19B)]
- Only a “family farmer” or “family fisherman” with “regular annual income” is eligible to be a debtor under Chapter 12. March, Ahart & Tchaikovsky, CAL. PRAC. GUIDE: BANKRUPTCY (The Rutter Group 2007) 5:495.
If eligible as a Chapter 12 debtor and you are delinquent on promissory note payments, filing under this chapter may allow you to file a motion to value your real property with the goal of re-amortizing the loan based on the value of the real property rather than the amount owed and making payments at a reasonable rate of interest over a reasonable amount of time (e.g., 30 years at 5%, although every case is different). The terms of a Chapter 12 plan is typically 36 months.
Contact Financial Relief Law Center, APC Today
Chapter 12 filings can be complex for a number of reasons. For example, The Office of the United States Trustee imposes requirements upon Chapter 12 debtors, including filing monthly operating reports during the case. Furthermore, any professional compensated in the case must be approved and employed by court order. These complications require the assistance of a knowledgeable bankruptcy lawyer, like those found at Financial Relief Law Center, APC.
Call (949) 570-5466 or contact our firm online to schedule your complimentary case consultation. se habla español.
What Sets Us Apart?
As attorneys who routinely support consumers in potentially dire financial straits, we are empathetic and compassionate about what these problems mean to our clients. More importantly, we’ve grown to understand how important it is that we only deliver our best possible work so our clients’ chances of getting the best possible outcome are secured.
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