Chapter 12 Bankruptcy - Farms

Chapter 12 bankruptcy is a specialized form of bankruptcy designed to assist family farmers and fishermen. Similar to a Chapter 13, a Chapter 12 bankruptcy is a restructuring bankruptcy.  It allows farmers to restructure their debts to retain their farms, machinery, equipment, and vehicles. It allows the individual/business to continue operations and propose a repayment plan over a period of 3-5 years.  A Chapter 12 allows for the restructuring of loan terms covering farmland, machinery, and equipment, allowing for these long-term debts to be paid over an extended period of time exceeding five years under the modified terms.  It even permits debtors to convert certain tax obligations arising from the sale of farm assets into normal unsecured debt, which can be discharged in the bankruptcy.