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Chapter 12 Attorney in Portland, Oregon

Understanding Chapter 12 Bankruptcy

Chapter 12 bankruptcy operates similarly to a Chapter 11 or Chapter 13 case. While all three types of bankruptcy organize a repayment plan so that the debtor can retain assets and continue to conduct business, Chapter 12 is specifically designed for family farmers and family fishermen. These business models produce too little income for individuals to qualify for Chapter 11 bankruptcy, and too much debt to qualify for Chapter 13. Chapter 12 bankruptcy offers a compromise between the two that better accommodates the needs of a family-based farm or fishing business.

At Troutman Law Firm, P.C. in Portland, OR, Attorney Ted Troutman helps our clients file for Chapter 12 bankruptcy so they can alleviate financial pressures and enjoy life again.

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Who is Eligible for Filing Chapter 12 Bankruptcy?

Under the law, a debtor filing for Chapter 12 bankruptcy must be a family farmer or fisherman with regular annual income. Your income may be seasonal, as long as you bring in enough money to make payments under a bankruptcy plan. Those applying for this type of bankruptcy may be individuals, partnerships, or corporations.

Additionally, a debtor must:

  • Be a farmer with total debts not exceeding $4,153,150

  • Be a fisherman with total debts not exceeding $1,924,550

  • Obtain more than half of their gross income from farming or fishing operations

  • Owe 50 percent of their total debts due to farming or 80 percent of their total debts due to fishing (excluding mortgages)

Our team can help determine if you meet the necessary requirements to file for this type of bankruptcy. If you do not, we can also find a more appropriate solution.

Chapter 12 bankruptcy offers a compromise between the two that better accommodates the needs of a family-based farm or fishing business.

What to Expect after Filing Chapter 12 Bankruptcy

Once you have completed all necessary paperwork and valued all your assets, you can file your documents with the bankruptcy court. The remainder of the process is typically broken down into four steps:

  • Automatic stay: As with most types of bankruptcy, a Chapter 12 case will trigger an automatic stay. This prevents creditors from pursuing collections without the explicit permission of the court. This not only protects the debtor, but also any individual or co-debtor who is also liable.

  • Meeting of creditors: Once your case is filed, the trustee for your case will hold a meeting with the creditors, in which you will present a repayment plan developed between you and your attorney. During this meeting, the creditors may also ask you questions about your financial situation.

  • Repayment plan: This plan typically breaks down repayment of debt over a period of three to five years. Once a judge approves your plan, you can begin making payments to the trustee, who will in turn make payments to the creditors.

  • Discharge: Once the creditors have received all payments, your case is discharged and your bankruptcy complete.

While a discharge is not usually permitted until all payments are made, the court may make exceptions in certain cases. If the debtor can prove that unavoidable circumstances, such as a serious illness, prevented them from making payments, they may receive a hardship discharge.

Find the Solution that Works for Your Business

If you are a family farmer or family fisherman experiencing extreme debt and financial hardships, Chapter 12 bankruptcy could be a solution for you. To explore your options, contact Troutman Law Firm today. You can call or contact us online anytime.

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