Helpful Guidance For Farmers And Fishermen With Chapter 12 Bankruptcy
Immense debt presents particularly unique challenges for farmers and fishermen in Georgia as in most cases, these business owners’ livelihoods are directly tied to the assets they hold. Where other forms of bankruptcy fail to meet their unique financial needs, Chapter 12 bankruptcy can offer a promising alternative.
For more than a decade, the experienced bankruptcy lawyers at Jones & Walden LLC, have been helping family farmers and fishermen in Atlanta and surrounding areas in Georgia choose the best bankruptcy options for their situations. We understand and are capable of addressing the legal needs of our clients due to our unique and diverse legal backgrounds in bankruptcy, business and real estate law. We understand what’s at stake and how to help farmers and fishermen make the right decisions when it comes to debt relief.
Understanding Chapter 12 Bankruptcy
Chapter 12 bankruptcy is available to family farmers and fishermen with regular annual income and allows them to propose a plan to reorganize and repay their debts. It may be utilized by:
- Individual farmers or fishermen
- Business entities in which more than 50 percent of the outstanding ownership interests are held by one family that conducts the farming or fishing operation
Offering Better Debt Relief Options Than Chapter 13 And Chapter 11
Recognizing the unique economic circumstances and hardships faced by farmers and fishermen, Congress created Chapter 12 to eliminate many of the barriers those debtors might encounter attempting to reorganize and repay their debts under Chapter 11 or Chapter 13. For example, Chapter 12 gives a debtor more flexibility in the actual restructuring process than Chapter 13, which is generally limited to a five-year payment term while Chapter 12 plans are not.
Chapter 12 also provides a more streamlined process than Chapter 11 bankruptcy. For example, Chapter 11 requires the debtor to submit its plan for a vote by creditors whereas Chapter 12 does not.
In order to prevent abuse of the Chapter 12 system, Congress enacted strict requirements as to who may qualify as a family farmer or fisherman under the Bankruptcy Code. Individuals hoping to qualify must meet the following criteria* as of the date the bankruptcy petition is filed:
- The individual (or husband and wife) must be engaged in a farming operation or a commercial fishing operation.
- The total debts (secured and unsecured) of the operation must not exceed $4,153,150 (if a farming operation) or $1,924,550 (if a commercial fishing operation).
It’s Important To Point Out. These numbers are up to date as of Jan. 1, 2018, but they are not static. The debt limits change over time. You may contact our law firm to determine the debt limits and how they may affect a Chapter 12 case.
- For a family farmer, at least 50 percent of the debts (exclusive of debt for the person’s home) must be related to the farming operation. For a family fisherman, at least 80 percent of the debts (exclusive of debt for the person’s home) must be related to the commercial fishing operation.
- More than 50 percent of the gross income of the individual (or the husband and wife) for the preceding tax year (or, for family farmers only, for each of the second and third prior tax years) must have come from the farming or commercial fishing operation.
A business entity (corporation, partnership, etc.) must meet the following requirements* as of the date of the filing of the Chapter 12 case:
- More than 50 percent of the ownership interests in the corporation or partnership must be owned by one family or by one family and its relatives.
- The family (or the family and its relatives) must conduct the farming or commercial fishing operation.
- More than 80 percent of the value of the business’s assets must be related to the farming or fishing operation.
- The total indebtedness of the corporation or partnership must not exceed $4,153,150 (if a farming operation) or $1,924,550 (if a commercial fishing operation).
It’s Important To Point Out. As with the criteria above, these numbers are up to date as of Jan. 1, 2018, but also not static and will change over time. You may consult with us if you have any questions.
- A certain portion of the corporation’s or partnership’s debts (exclusive of debt for one home occupied by an owner) must be related to the farming or fishing operation. For a farming operation, at least 50 percent of the debts must be related to the farming operation. For a commercial fishing operation, at least 80 percent of the debts must be related to the fishing operations.
- If the corporation issues stock, the stock cannot be publicly traded.
While very few Chapter 12 cases are filed in northern Georgia on an annual basis, Jones & Walden LLC, has successfully confirmed Chapter 12 cases and is one of the few firms in the metropolitan Atlanta area to do so.
Let Us Protect Your Livelihood And Best Interests
Filing bankruptcy can be an intimidating process, especially if maintaining your livelihood depends heavily on the type of bankruptcy you choose. At Jones & Walden LLC, you will have a team of attorneys, all with diverse legal backgrounds, capable of helping you choose the right debt relief option for your situation.
If you would like to schedule a consultation at our office in Atlanta, contact us today. We serve clients from all over the Atlanta metro and surrounding counties. Call 678-701-9235 or contact us online to get started.
* Criteria and requirements provided by the United States Courts