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Posts Tagged ‘chapter 12 bankruptcy basics’

Chapter 12 is designed for family farmers or family fishermen with regular income. In the event of financial troubles, these families can apply for chapter 12 bankruptcy which will help them pay back the debts they owe to their creditors. A repayment plan will be presented by these families with the goal of paying back debts in three to five years.

Chapter 12 works the same way with other chapters which starts with the filing of bankruptcy petition and provision of schedule of current income and expenditures, assets, financial affairs, executory contracts and unexpired leases. Together with filing of bankruptcy petition, corresponding filing fees are to be paid to the clerk of the court.

Chapter 12 bankruptcy provides protection against any harassment from creditors. Once petition is filed, creditors are prevented from demanding payments from the families or much more file any kind of lawsuits until the stay effect is in action. A bankruptcy administrator will hold a meeting wherein the debtors and creditors must attend to answer all questions required. This is also the time the debtors can propose their repayment action plan before the court. The chapter 12 trustee and creditors will convene a meeting to discuss the debtors’ repayment plan for approval. Once approved, the debtors are required to pay back their creditors by priority. In some cases, the bankruptcy court may award a hardship discharge only under circumstances beyond the control of the debtor. Non dischargeable debts are still not included in this case.