For most households, filing for bankruptcy without liquidating assets involves Chapter 13 bankruptcy, a process that effectively reorganizes debts and alters amounts to be repaid along with the overall repayment period. While most consumer households and individuals should opt for Chapter 13 if their goal is to retain much of their property through bankruptcy, there’s a better option for family farmers and fishermen filing for bankruptcy in Redwood Falls, MN. If you’re a farmer or fisherman struggling financially, filing for Chapter 12 reorganization bankruptcy is most likely the right choice for you. Behm Law Group, Ltd. can give you the help you need throughout your petition.
Because Chapter 12 was specifically designed to address the debts of family farmers and fishermen, it’s reasonable that it’s more beneficial to filers of that status to choose Chapter 12 over Chapter 13. The details of those benefits include the following:
- You can have more debt than a Chapter 13 filer. In Chapter 13, filers aren’t eligible if their secured debts are greater than $1,184,200 or if their unsecured debts exceed $394,725. However, for farmers and fishermen with the much greater debts that often come with owning and operating a farm or fishing venture, the debt ceiling for Chapter 12 peaks at $4,153,150.
- You have more wiggle room with repaying secured debts. If your secured debts are so high that repaying them will take longer than your repayment plan period, it’s possible that you will not have to repay those debts in full during the plan period. You’ll still have to repay those debts completely, but you may adjust your plan so that you make reasonable payments throughout the plan period and continue to pay those installments after the plan is completed until your debts are repaid in full. This gives you more room to breathe within your repayment plan.
- You have more wiggle room with repayment installments. In a Chapter 12 plan farmers and fishermen are allowed to base the frequency of their payment installments around the production cycle of their crop or catch migration and population. In Chapter 13, on the other hand, the filer must make monthly payments regardless of income patterns.
- You have more cramdown options. In Chapter 13 and Chapter 12, you have some options to “cramdown” your debts, meaning you can reduce a debt to the present value. For example, if your car was worth $5,000 at the time of the filing of your bankruptcy petition, but your debt on the car was $8,000 at that time, you can cram the debt you owe down to the $5,000. In Chapter 13, you can only use cramdowns on certain debts, but Chapter 12 allows more extensive uses of cramdowns, including home mortgages and motor vehicle loans.
Overall, Chapter 12 offers a lot more to family farmers and fishermen than Chapter 13. If you think you’re eligible to file for Chapter 12 bankruptcy in Redwood Falls, MN, contact Behm Law Group, Ltd. at (507) 387-7200 today.