Chapter 12 bankruptcy covers anglers and farmers. If your income comes from family fishing or farming and you have a steady flow of income in prior years you can qualify for chapter 12 bankruptcy. The chapter 12 covers family businesses in these areas of business. The debt ratio of anglers and farmer is usually too high for chapter 11 and 13, which corporations usually use when filing bankruptcy.
More than fifty percent of your income has to come from the business in order to file under chapter 12 bankruptcies. You must have had this income for more than three years. The loss or debt must not exceed a certain amount if you are a farmer and another amount for an angler. The percentage of the debt must come from the operations of the business as well. Both businesses have different amounts for total debt.
If a corporation or a partnership needs to file a chapter 12 bankruptcy, they need to meet certain guidelines before they can use this bankruptcy law. The guidelines are:
• One family must own over half of the stock in the company. No public trading of stocks can have taken place.
• The family needs to have control over the operations of the business.
• The value of the business that needs a relationship to farming or fishing is eighty percent.
• The total debt for a corporation or partnership for filing bankruptcy is the same amount for the individual farmer or angler.
When filing the needed information for a chapter 12 bankruptcy you need to complete the following:
• Names of creditors and what you owe and the type of claim they hold on your business.
• The amount of income and the source of income for the debtor.
• All the personal and business property you currently own.
• A complete list of your expenses relating to the fishing or farming business.
Keep in mind that married parties need to include their spouse’s information whether they participate in the family business or not.
After the meeting with the creditors and the debtor, a repayment plan will be decided. You have up to ninety days to file the repayment documents that include secured creditors and taxes, which are claims of priority. You must offer something equal to or greater than what you owe for the document to be approved by the courts.
When you file for a chapter 12 bankruptcies, you need to remember that this does not take away any liability from you; you have to repay the money in some way. The laws have changed to protect the creditors who in the past have taken huge losses because of bankruptcies.
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