Today, the food industry is largely industrialized across the country, but there are some farming and fishing families still thriving today. However, because farming and fishing are some of the most difficult trades with which to support a household and maintain a healthy business, there are also a large number of financially struggling family farmers and family fishermen. For these family businesses, bankruptcy might be the best path to take. While our attorneys often handle cases for individuals working through Chapter 7 or Chapter 13 bankruptcy, Behm Law Group, Ltd. also offers legal advice and assistance to family farmers and family fishermen filing for Chapter 12 bankruptcy in Mankato, MN.
Chapter 12 works in many similar ways to Chapter 13, but is specifically designed to serve family farmers and family fishermen rather than a household or individual. Chapter 12 filers will work with their bankruptcy trustee to establish a 3 to 5-year repayment plan for their debts, where they must pay back 100% of their priority debts and to be determined portion of their other debts. The amount a family farmer or family fisherman must repay of non-priority debts is determined by their average income received within the 6 months prior to filing for bankruptcy.
There are ways, however, to reduce the amount of your secured debts as a family farmer or family fisherman filing for Chapter 12 bankruptcy. By effectively “cramming down” secured debts, you can lower your owed debt and pay less in the long run.
Cram Down: The cram down method is a way of bringing your debts back in time. This means you can reduce certain debts (for example boat loans, business mortgages, and farm equipment debts) to the present market value of the property. This method is effective on “upside down” loans where you owe more debt than the base value of the property. If you owe $4,000 on a loan after the accumulation of missed payments and interest and the collateral for the loan is worth $2,000.00, you can reduce that debt down to the base value, and you would not have to pay more than $2,000. In Chapter 13, cram downs are limited in many ways, but in a Chapter 12 case, the court can authorize the cram reduction of almost all secured debts, including your home mortgage and car loans.
Cramming down secured debts can often give a family farmer or family fisherman the ability to meet Chapter 12repayment plan requirements. For more information about cram downs and the process of filing for Chapter 12 bankruptcy in Mankato, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.