Holly H. Hines is a bankruptcy attorney in Worcester County, Massachusetts. She received her undergraduate education from Anna Maria College, and earned a J.D. from Massachusetts School of Law. In this piece, she explains the basic elements of a Chapter 12 bankruptcy case.
A Chapter 12 bankruptcy probably isn’t a typical filing for many practitioners because the Chapter 12 filing is a type of bankruptcy protection reserved for family farmers and fisherman. So obviously this is not something that is going to come up nearly as often as a Chapter 7 or a Chapter 13 filing.
To file for a Chapter 12 bankruptcy, you need to be dealing with someone who owns a farm or a fishery, and someone who needs to preserve that business and not lose it to his creditors.
The reason that the government created a differed type of filing for these business owners, as opposed to bankruptcy filings for large businesses or individuals, was simply as a way to give farmers and fishermen their own types of protection unique to their situation. The people who run farms and fisheries needed a way to protect their businesses from collapsing when they ran into financial trouble, and the government wanted to make sure that there was a way that they could structure a different type of bankruptcy to protect these businesses. Rather than letting small farms go out of business, a Chapter 12 can help farmers and fishermen actually restructure their companies so that they can reorganize and pull out of the debt.
Chapter 12 bankruptcies are actually similar to Chapter 13 filings in many regards when you look at the way that repayments are structured and set up. To get a farm or fishery out of bankruptcy, an attorney needs to help work out a payment plan arrangement with the client’s creditors, similar to a Chapter 13 plan, which would allow the farmer or fisherman to make payments over a 36- or 60-month period to pay back the debt through that plan.
Here in my office in Massachusetts, we do not come across many Chapter 12 bankruptcy cases frequently, mainly because it is a lot more common for me to handle Chapter 7 filings and a lot of Chapter 13 filings. But it is nice to know that the option exists for farmers or fishermen who run into financial trouble.
This article is for informational purposes only. You should not rely on this article as a legal opinion on any specific facts or circumstances, and you should not act upon this information without seeking professional counsel. Publication of this article and your receipt of this article does not create an attorney-client relationship.
