Chapter 12 Bankruptcy

See also: Chapter 12 Section of our Washington State Bankruptcy FAQ

Debt Relief for Family Farmers and Fishermen

Chapter 12 bankruptcy is specifically tailored to suit the needs of both family farmers and fisherman, eliminating many of the barriers that farmers and fishermen face under Chapter 11 and Chapter 13 bankruptcy code. Chapter 12 is far less expensive and complex than an alternative Chapter 11 corporate filing. Chapter 12 is fundamentally similar to Chapter 13, but provides a key advantage - a higher debt limit ceiling. This is due to the fact that Chapter 13 was designed for typical wage earners, who are expected to face smaller debts than owners in the farm and fishing industries.

Famers and Fishermen can file as an individual, individual with spouse, or corporation/partnership.

Benefits of Chapter 12

Can protect your home, property, and farming/fishing equipment

Higher debt limit ceiling

Lower filing cost (compared to Chapter 11)

Proceedings are less complex than Chapter 11

Drawbacks of Chapter 12

You must still pay back some or all of your debt, over time

Requirements to Qualify for Chapter 12 Relief

To file as an individual or individual with spouse, you must meet all of the four following criteria at the time of filing:

You must be currently engaged in a farming or fishing operation

Total debts (secured and unsecured) for the operation must not exceed $3,237,000

At least 80% of your fixed-amount debts must be related the farming/fishing operation

Over 50% of your gross income as an individual (or individual and spouse) for the preceding tax year must have been generated by the farming/fishing operation