Chapter 12 of the Bankruptcy Code was enacted in 1986 following a period of economic hardship for farmers. Chapter 12 shares many similarities with Chapter 13 but also includes elements of Chapter 11 and some special provisions specifically to account for smaller, family-owned farmers and operations. The term "family farmer" is defined under Section 101(18) and describes a farming operating conducted by a family, either in their capacity as a natural person or a family-held corporation. Although a Chapter 12 debtor may also file for Chapter 13, it is not the same that a Chapter 13 debtor always qualifies for Chapter 12. The perks afforded to a Chapter 12 Debtor will often outweigh those of a Chapter 13 Debtor and the filing of a case may be more beneficial if you qualify as a family farmer under Chapter 12. Chapter 12 has benefits including the ability to value a primary residence and re-amortize the loan based upon the value of the residence which is like getting a loan modification for an under-water property at a reasonable rate of interest at the current value of the home.
