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Chapter 12 Bankruptcy

Debt Relief for Family Farmers

Chapter 12 bankruptcy is a reorganization proceeding limited to farmers. If a person or entity doesn’t meet the definition of “family farmer” or “family fisherman,” Chapter 12 is not available. There are also debt limits in Chapter 12. The amounts are adjusted periodically, but as of August 2016, the limit is $4,031,575.00.

A Hybrid Bankruptcy Solution to Help Food Producers

If available, Chapter 12 can be a strong tool to use to reorganize or liquidate in a controlled manner a farming operation. The relief is essentially a hybrid of the relief under Chapters 11 and 13. It offers unique tax provisions which, if available, permit farmers to avoid substantial capital gains.

How Are Chapter 12 Plans Administered?

Chapter 12 plans are, like in Chapter 13, administered by a Chapter 12 trustee and the plan payments are disbursed by the Chapter 12 trustee.