You may be familiar with Chapter 7 or Chapter 13 bankruptcy as a means of resolving debt, but Chapter 12 offers an additional option for qualifying farmers, fishermen, and other designated entities under the US Bankruptcy Code. The proceedings can be quite complicated, so you should discuss your circumstances with an Iowa Chapter 12 bankruptcy attorney. It may also help to review some basic information on how these cases work.
What Happens in a Chapter 12 Bankruptcy
Through Chapter 12, you can propose and participate in an installment plan to repay some or all of your debts to creditors over 3-5 years. It essentially provides a way for you to restructure your debt in a way that allows you to keep your farm or boat, which is critical to your livelihood. The benefit is that you can still operate your farm or fishing business, because you remain in possession and can earn income through your efforts.
Chapter 12 is strictly voluntary, and the court must approve your repayment plan to make it effective. Creditors will have the opportunity to object to the plan, and certain categories of debt are not dischargeable. Examples include:
- Child support obligations;
- Debt incurred through fraudulent statements;
- Amounts you owe through a personal injury lawsuit in which you hurt someone while drunk driving; and,
- Other specific debts provided by law.
At the completion of the process, you obtain a Chapter 12 discharge eliminating your financial obligations.
Under federal bankruptcy rules, you only qualify for Chapter 12 if you are a family farmer or fisherman with “regular annual income”. Regular annual income may be seasonal as long as it is stable and regular enough to allow you to make payments under a Chapter 12 plan.
In addition to income requirements, keep in mind that you are required to take credit counseling as a prerequisite for filing Chapter 12.
Legal Effect of a Chapter 12 Bankruptcy Discharge
At the completion of the repayment plan, you will obtain a Chapter 12 bankruptcy discharge, which releases you from certain debts. Creditors can no longer attempt to collect on these debts, though there are consequences for your credit score. Your credit report will reflect a Chapter 12 bankruptcy for several years after the order for discharge.
Schedule a Consultation with a Chapter 12 Bankruptcy Lawyer Today
If you have questions about eligibility and implications of Chapter 12 bankruptcy, please contact Telpner Peterson Law Firm, LLP. Our bankruptcy attorneys can tell you more about the process and whether it’s a good fit for your circumstances. You can set up a consultation at our Council Bluffs, IA office by calling 712-309-3738 or checking out our website.