Chapter 12 Bankruptcy Rules

Chapter 12 Bankruptcy Rules """A bankruptcy option under the Bankruptcy Code Chapter 12 for families who work as farmers or fishermen, similar to Chapter 13, assumes that the borrowers have a normal income sufficient to create repayment installments to eliminate or reduce debts in accordance with a court-approved repayment method. Additionally, the code recognizes that the debtor may have periodic revenues and earnings. Similar to chapter 13, the range of time for repayment installments is three to five years based on the court's evaluation of the borrower's income, but unless it meets unusual conditions, such as secured debt, it is typically three years. The Chapter 12 bankruptcy reorganization strategy aims to assist family farmers and fisheries in dealing with loan companies and continuing to operate their businesses. Designed for family producers and fishermen. Chapter 12 is significantly less expensive and less complicated than Chapter 11 and is designed to deal with the large debts frequently incurred by these individuals or families in a more expedient manner than Chapter 7. Any married couple, individual, corporation, or partnership can readily petition for Chapter 12, despite the code's use of the phrase ""family farmer or fisherman."" As long as the income and principal amount of the debt are organization-related, the operational assets comprise at least 80 percent of the total business assets, and the family operates the business, they are permitted to choose this option. If the business operates as a corporation, it cannot be publicly traded.

If a partner is involved, all information regarding available cash flow and financial obligations must be disclosed. Any consumer who intends to file a Chapter 12 petition will be required to attend mandatory credit counseling. They will then be required to disclose a complete list of all of their creditors, along with all debt-related documentation and monthly expenses. A stay will be issued, alleviating the debtor of all actions or harassment by creditors.

Typically, a payment plan is developed during financial debt counseling and must be submitted within ninety days or with the petition. The court-appointed trustee will then convene a meeting with the debtor and all loan servicers. The consumers will then answer all questions posed by the trustee and loan companies under oath. The outcome of the meeting will determine how the consumer can most effectively pay off or reduce his or her poor debts using the designed repayment strategy. According to the outcome of the meeting, the lenders or the trustee could contest or modify the schedule. A payment term could be established for any secured claim that is longer than five years.

When creditors file objections to the repayment plan, they are typically associated with a desire for liquidation or a concern that not all disposable cash flow has been allocated to debt repayment. The bankruptcy court will confirm the repayment plan, and then fixed payments will be paid to the trustee for distribution to creditors using an ordinary method covering loan company status priority, secured then unsecured.

When all debt is discharged, creditors included in the plan have no further claims against the debtor.""

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