Primary producers such as family farmers and family fishermen that are financially stressed are able to apply for bankruptcy under a special provision known as a Chapter 12 bankruptcy application. The Chapter 12 bankruptcy application is treated in a similar way to a Chapter 13 in that the debtor can suggest an scheme of payments to satisfy the debt.

Chapter 12 can generally only be used by family run concerns (there are exceptions – seek legal advice if you need clarification in your situation). Larger corporate entities, although engaged in primary industries, must use the Chapter 11 process to seek relief from creditors. The Chapter 12 process has been designed to be streamlined and less complicated so as to reduce any further stresses on families.

Like the Chapter 13 application, a trustee is appointed to manage the debts and repayments are made through the trustee to creditors. A Chapter 12 applicant is able to continue trading as a farmer or fisherman and will not be discharged from bankruptcy until the agreed period has expired and the debtor has bet all agreed payments.

In order to complete a Chapter 12 petition for bankruptcy, you will need to assemble the following information and documents:

  • A list of all creditors and the amounts and nature of their claims;
  • The source, amount, and frequency of the debtor’s income;
  • A list of all of the debtor’s property; and
  • A detailed list of the debtor’s monthly farming and living expenses, i.e., food, shelter, utilities, taxes, transportation, medicine, feed, fertilizer, etc.

When submitting an application, you will need to pay both a case filing and administration fee – currently $200 and $39. These can be paid in four installments with the last installment paid no later than 120 days after lodging the application.

If you are in financial stress and feel you meet the criteria for a Chapter 12 petition for bankruptcy, contact a specialist bankruptcy lawyer for more information or advice.