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While few Connecticut residents file for Chapter 12 bankruptcy, this is an option.  However, you must meet specific requirements in order to qualify for Chapter 12 bankruptcy.  If you are eligible for Chapter 12 bankruptcy, you might want to consider applying for it.

Chapter 12 bankruptcy is designed for family fishermen or family farmers with a regular income.  If you are a family fisherman or farmer and you have fallen on hard times, you might be able to apply for Chapter 12 bankruptcy.  Under Chapter 12 bankruptcy, you can come up with a plan to repay your debt.  This repayment plan will allow you to make installments in order to pay back all or part of your debt to creditors.  Much like in a Chapter 13 bankruptcy, this repayment plan will last for about three to five years.  In most cases, a repayment plan will last for three years.  The repayment plan is not to exceed five years.  Chapter 12 bankruptcy is a good option because it is less complicated and less expensive than Chapter 11 bankruptcy, while accomplishing similar goals.  In addition, Chapter 12 bankruptcy can be applied to larger corporations. 

To be eligible for Chapter 12 bankruptcy, you must fulfill certain requirements.  For starters, you must be a family farmer or fisherman that has a regular income.  This ensures that the debtor has a steady income and will be able to make the payments outlined in the repayment plan.  In addition, you must be either an individual farmer or fisherman or a corporation or partnership.  If you are an individual or if you are married and you want to file for Chapter 12 bankruptcy, you must meet the following criteria:

  • Your total debt must be less than $3,237,000 if you are a farmer or $1,500,000 if you are a fisherman
  • 50% or more of your gross income from the previous tax year must come from the fishing or farming operation
  • 50% or more of a farmer’s debt must be related to the farming operation or 80% or more of a fisherman’s debt must be related to the fishing operation
  • You must engage in the fishing or farming operation

If you are a part of a partnership or a corporation, you must fulfill the following requirements in order to be eligible for Chapter 12 bankruptcy:

  • Your total debt must be less than $3,237,000 if you are a farmer or $1,500,000 if you are a fisherman
  • 80% or more of the corporation/partnership’s assets have to be related to the fishing or farming operation
  • 50% or more of a farmer’s debt must be related to the farming operation or 80% or more of the fisherman’s debt must be related to the fishing operation
  • At least half of the company’s equity or stock has to be owned by one family
  • Stock issued by the corporation can’t be publicly traded

If you meet the above requirements, you will be eligible for Chapter 12 bankruptcy.  To discuss your options or how to apply, you can contact a Connecticut bankruptcy lawyer, like me.