Investor's wiki

Chapter 12

Chapter 12

What is Chapter 12?

Chapter 12 is a special type of bankruptcy expected explicitly for somebody meeting the definition of "family rancher" or "family angler." The person likewise must have what's called "standard annual income."

More profound definition

Chapter 12 bankruptcy doesn't naturally clear out your debts in general. All things being equal, you must file a repayment plan, like Chapter 13 bankruptcy. Both an individual and an individual and spouse can apply for bankruptcy protection under Chapter 12, yet the bulk of their debts must be connected with their cultivating or fishing business.
This incorporates debts that have a fixed amount yet bars the filer's home. For a family rancher, no less than 50 percent of the debts must be connected with the business, and for an angler, no less than 80 percent must be.
Additionally, no less than 50 percent of their income must have come from the business for the previous tax year. For family farmers this incorporates the three previous tax years. They must have standard annual income with the goal that they have the financial resources to make a long-term plan to repay their creditors north of 3 to 5 years.
Similarly as with different types of bankruptcy, anybody filing Chapter 12 must initially file a petition with the court that serves their area, along with the required documentation and desk work.
This incorporates uncovering their assets and their liabilities, their income and expenses, and a statement of their financial affairs. They must give point by point arrangements of all income as well as all business and everyday costs, and a definite rundown of all property as well as a rundown of each and every creditor and the amounts owed.
Find out more: What is bankruptcy?

Chapter 12 model

You run a family cultivating business and have needed to supplant several bits of costly equipment over the past two or three years. There likewise has been a dry spell that hurt your harvests so you created less product to sell.
You're earning less money as well as spending more due to business-related expenses. In the event that no less than 50 percent of your debt is connected with running your business, you can apply for Chapter 12 bankruptcy and make a 3-to 5-year plan to assist you with paying your creditors while likewise permitting your financial situation to recuperate.


  • Chapter 12 was presented in bankruptcy law as a transitory measure in 1986 and became permanent in 2005.
  • Farmers and fisheries must meet several requirements to be eligible for filing, remembering limits for debt and qualifying percentages of income and debt.
  • Individually owned and corporate-owned ranches and fisheries can file for chapter 12 bankruptcy, permitting them to revamp their debt and finances in discussion with creditors.