Chapter 12 Bankruptcy
While there are a number of paths to take to file bankruptcy, often one needs to choose the right Chapter to file under. Each Chapter works a bit differently. Chapter 12 is for family farmers and fishermen, and includes individuals or individual couples/married couples, whose business is running an independently owned farm/business/corporation.
When filing Chapter 12, it is necessary for the business to be family run, and important to consider the size of the debt. Earnings must be about 80 percent and be solely from farming or fishing. This particular Chapter is usually easier for those filing a bankruptcy petition, but it is also easier to understand and more streamlined than other Chapters.
Those who file Chapter 12 must offer a payment plan that makes installment payments to creditors. In most cases, the payment plan is three to five years in length, but may be extended by the courts if necessary. Generally speaking, a payment plan under Chapter 12 cannot be extended beyond five years.
When the payment plan has successfully paid the debt(s) owing, the debtor gets a discharge and is released from debt. There are some debts that are not covered under Chapter 12, and those may include, child support, alimony, and debts from fraud.