Chapter 12 Bankruptcy
Bankruptcy is a complex and honestly scary topic when it comes to your home or any type of business or property you own. Chapter 12 bankruptcy is also known as agricultural bankruptcy. It is most commonly declared by farmers who can no longer afford their farm due to outstanding debts owed to various debtors. This includes no longer being able to pay your various bills or struggling to make monthly payments to creditors and vendors.
Chapter 12 bankruptcy filing is a way for some to gain much-needed debt-relief while still retaining ownership of their property. However, it is important to understand the ins and outs of this type of financial decision. That includes understanding the intricacies of North Carolina bankruptcy law including exemptions, debt repayment options, debt restructuring, how to file, and more.
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Is Chapter 12 Bankruptcy The Right Choice For My Farm?
Considering bankruptcy proceedings is never easy and often makes people feel like they have failed. The key thing to remember is that you are taking the right steps to rebuild your finances in order to save your family farm. Chapter 12 bankruptcy was created specifically for struggling family farms and fisheries who need help paying off their debt and gaining protection from debt collectors.
Chapter 12 can ensure that your various farm assets are not at risk for liquidation or seizure by the bank. It also offers a higher debt ceiling and more exemptions than chapter 13 or 14 types of bankruptcy. Our bankruptcy law firm has been helping family farms in North Carolina through this complex process for years.
How Do I Know If My Farm Qualifies For Chapter 12 Bankruptcy?
First, to qualify for Chapter 12 bankruptcy, all of your assets must be related to farm or fishing operations. Second, at least 50% of your debt problems must be related to farming operations or 80% of your debt related to fishing operations. Third, the individual applying must be a family farmer who also earns an annual income. It is key to understand this type of bankruptcy is only available to these types of individuals and their immediate family members. Important to note that to be eligible for Chapter 12, you cannot have a dismissed bankruptcy claim within 180 days of your current filing. Lastly, the individual or family making the claim must meet with a credit counseling agency as well.
What Kind Of Protections Does Chapter 12 Bankruptcy Provide?
The most important thing to know is that declaring Chapter 12 bankruptcy allows you to retain ownership of your land, equipment, and any other assets needed to keep making a living. Second, the terms of any of the loans can be modified so you can make a more affordable monthly payment. You can also alter your repayment plan to align with your busy season when you know you will be generating more income.
Filing Chapter 12 also provides you with much-needed relief from creditor harassment. Once you file, your creditors must cease all actions against you. This includes any type of foreclosure proceedings, attempts to repossess assets or requests for payment. The filing also allows you to take the money you have been paying these creditors and reinvest it into your business to generate income. This is an ideal situation for those who are struggling with debt as a result of stagnant income or high debt repayment plans.
Chapter 12 bankruptcy also allows for key exemptions as well. An exemption is an asset that cannot be seized regardless of your debt or financial situation. A normal business would not be able to claim these types of exemptions but those rules do not apply to farms and fisheries. Important exemptions include homes, cars, vehicles, household items, and retirement accounts.
About Ivey McClellan - Chapter 12 Bankruptcy Attorneys
Ivey McClellan has been helping farmers in the state of North Carolina for decades. Our team of seasoned attorneys has a firm understanding of NC law and have a superior track record representing independent farmers. Declaring Chapter 12 bankruptcy is not something you want to attempt on your own. While the requirements and exemptions related to Chapter 12 may seem straightforward, the intricacies of the process are incredibly challenging. We have tried hundreds of bankruptcy cases and helped countless farmers file for bankruptcy and navigate the complicated bankruptcy process.
As we mentioned above, Chapter 12 will provide comprehensive bankruptcy protection, stop the harassment from debtors and give you the breathing room you need to create a repayment plan that works for you. However, that only works if you are being represented by an attorney who understands the agriculture bankruptcy law and the United States Bankruptcy Code. Together, we will walk you through the entire process and answer any questions you may have. Our bankruptcy lawyers promise to deliver a result that allows you to maintain ownership of your farm, keep working, and become debt-free in the near future.
To book your free consultation and speak with one of our expert bankruptcy attorneys, please contact us today.