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Our bankruptcy law firm serves clients in numerous different communities in Washington and Oregon. There are many small commercial fishing enterprises in these two states, and farming is a widespread occupation as well. Chapter 12 is a relatively new form of bankruptcy that can be useful for family farmers and family fishing businesses that are experiencing financial difficulties. This is a highly specialized financial tool, and it is rarely used when you look at the big picture, but it can be the ideal solution when certain circumstances exist.

To be eligible to file for a Chapter 12 bankruptcy, your level of debt must fall under certain limits. These figures are going to be adjusted slightly year-by-year to account for inflation, but the limit is around $4 million for farmers, and $2 million for fishermen. For farmers, at least half of their debt must be due to the farming operation, and the figure is 80 percent for fishing businesses, but home mortgages are not included. Finally, more than half of the gross income that is reported by the debtor must come from the fishing or farming enterprise.

When you file for Chapter 12, you immediately receive an automatic stay, so your creditors are held at bay temporarily while you create a three to five-year debt repayment plan that you will present to the court. The rules stipulate that all your disposable income must go toward the repayment of the debt. In this context, “disposable income” is whatever you have left after you pay business expenses and basic living expenses. If the plan is confirmed by the court, you abide by the terms, and the court will discharge the debt once the terms have been met and the case is closed.

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We Are Here to Help!

If you feel as though a Chapter 12 bankruptcy may be able to provide you with a path toward financial stability, we can answer your questions and help you take the next step if you decide to move forward. To schedule a free consultation, call OlsenDaines bankruptcy attorneys toll-free at 1-800-682-9568.