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Financial difficulties can be overwhelming and sometimes, filing for bankruptcy is the only way to help get you back on your feet. One option when considering bankruptcy is Chapter 12 bankruptcy, which was designed to help family farmers and fishermen with their debt. Below, we'll dive into the details of Chapter 12 bankruptcy and how it might benefit you.   


Chapter 12 of the Bankruptcy Code (also known as “Family Farmer Bankruptcy”) is designed specifically for family farmers and fishermen. It allows them to create a repayment plan that restructures their debt, making it easier to repay creditors over a period of time while still being able to keep their assets. The goal is that, through this repayment plan, the filer will be able to pay off their debts without having to liquidate any of their assets or property in order to do so.  


In order to qualify for Chapter 12 bankruptcy, you must have regular income from farming or fishing activities that exceed your expenses over the last three years. This income must also come from one or more of the following sources: operating a farming business (including crops and livestock), leasing farmland or other agricultural property, owning an interest in a fishing vessel (including crew members), or providing services related to farming or fishing. Additionally, at least 50 percent of your total debts must come from farming operations; if not you may qualify for another type of bankruptcy instead.


Once you've determined whether or not you qualify for Chapter 12 bankruptcy protection, you'll need to file a petition with the court outlining your assets and liabilities as well as any secured debts such as mortgages and car loans. From there, you will then propose a repayment plan based on your current income and expenses. This repayment plan will be reviewed by both creditors and the court before it's approved; once approved it will become legally binding on all parties involved including yourself and your creditors. During this time any legal actions against you such as foreclosure proceedings must stop so that you have time to repay your debts without interruption.  


Bankruptcy sometimes is necessary in order to get back on track financially. If you are a farmer or fisherman who has experienced financial difficulty due to circumstances beyond your control like low crop yields or fluctuating fish prices, then Chapter 12 may be an option that can help get you out of debt without having to sacrifice any assets in the process. Talk with a one of Almeida & Davila’s bankruptcy attorneys today about whether filing for Chapter 12 bankruptcy might be right for you! 

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