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Filing for Chapter 12 Bankruptcy in Chino, CA

Get the help of a Chino bankruptcy lawyer today!

Chino, located in the San Bernardino County, is a center for agriculture with a long history of farming. As such, it is home to countless family-owned farms, many of which have roots tracing back to the original Spanish land grants. If you are a family farmer or fisherman who is struggling with debt, you may be able to achieve debt relief by filing for Chapter 12 bankruptcy. Under this chapter, family farmers and fishermen can rearrange their debts and get their lives back together—very similar to the repayment plants proposed under Chapter 13. There are, however, distinct differences that we will clarify later. Below, we explain what this chapter entails; after reading, we encourage you to reach out and contact our Chino, CA firm to learn more.

Should I file for Chapter 12 bankruptcy?

Specifically tailored for family farmers and fishermen, Chapter 12 helps to streamline the process and eliminate unnecessary barriers that would otherwise bar these individuals and families from achieving debt relief. While Chapter 11 and 13 are both available options for those struggling with debt, neither one is precisely suited for farmers and fishermen. Chapter 11 can be complicated, costly and better suited for large corporations, while Chapter 13 is designed to help regular wage earners with smaller amounts of debt. This is where the simpler, less expensive Chapter 12 can be perfect for those in the agricultural industry.

There are two categories of those eligible to file for Chapter 12:

Individual or Individual & Spouse:

  • Must be an individual or spouses running a farming or commercial fishing operation
  • Total debts must not exceed $3,792,650 for farming or $1,757,475 for commercial fishing
  • For family farmers, 50% of total debts must be related to the farming operation
  • For family fisherman, at least 80% of the debts must be related
  • More than 50% of last tax year's gross income must come from farming or fishing

Corporation or Partnership

  • More than 50% of stock or equity owned by one family or one family and relatives
  • The one family or one family and relatives must run the farming or fishing operation
  • More than 80% of the corporation or partnership's value must relate to farming or fishing
  • Total debts must not exceed $3,792,650 for farming or $1,757,475 for commercial fishing
  • For farming operations, 50% of total debts must be related to the farming operation
  • For commercial fishing operations, at least 80% of the debts must be related
  • The corporation stocks are not allowed to be publicly traded

No one is permitted to file for Chapter 12 bankruptcy if they have had a bankruptcy petition dismissed within the previous 180 days due to willful failure to appear before the court or comply with court orders. They also may not file under Chapter 12 if they voluntarily dismissed a bankruptcy petition within the preceding 180 days because creditors sought relief to recover property. Those who are interested in filing under Chapter 12 are also required to participate in approve credit counseling within the 180 days preceding filing.

How does Chapter 12 bankruptcy work?

If you are eligible to file under Chapter 12, the case would start by filing a petition with the local bankruptcy court—unless ordered otherwise, you would also include a schedule of assets and liabilities, schedule of current income and expenditures, schedule of executor contracts and unexpired leases, and a statement of financial affairs. The petition will also need to outline things such as: all creditors, including the amount and nature of their claim; details regarding your income, such as source and amount; all of your property; and all of your monthly expenses related to farming and fishing, such as food, shelter, feed, and more.

In most cases, you will need to pay $246 in filing fees and miscellaneous administrative fees. While petitioners usually pay these fees up front, installments may be used in some circumstances to make it easier on the debtor. After the petition has officially been filed, a trustee will be appointed to administer your case. In most cases, a district has one trustee who is responsible for overseeing all of the Chapter 12 bankruptcies in the area. It is the responsibility of this trustee to oversee the bankruptcy case, to gather your payments, and to distribute them to all of the different creditors that you will be paying off under Chapter 12.

Within 21 to 35 days, the trustee will schedule and arrange a "meeting of creditors." During this meeting, both the trustee and creditors are permitted to ask you questions regarding your debt while you are placed under oath. You will also need to answer payments about the proposed repayment plan. Any problems with the plan are typically shortly resolved, and can be avoided altogether by meeting with the trustee prior to the meeting ever taking place. As in all bankruptcy filings, as soon as you file, you will experience the automatic stay, which is a court injunction that puts a stop to all collection attempts. Under Chapter 12, co-debtors are also protected under the automatic stay—this means that unless the court otherwise explicitly states, collectors and creditors are not permitted to collect on those who are also liable for your debts.

Understanding the Repayment Plan

Chapter 12 is very similar to Chapter 13 in that the debtor must submit a repayment plan to the court either with the petition or within 90 days of filing. The plan usually lasts between three to five years and outlines how all priority claims will be paid off in full—these include those that are granted special status, such as debts related to taxes. The plan must also outline how secured creditors will receive payment that at least covers the collateral of the debt. In some cases, this may extend past the initial three to five years if the original plan was to pay off the loan for longer than that, e.g., in the case of a long-term mortgage. If all of the debtor's disposable income is used within the plan to pay off priority claims and the amount necessary for secured claims, they may not be liable to pay off unsecured claims. It is only required that unsecured creditors receive as much as they would under a Chapter 7 liquidation.

Within 45 days of the repayment plan being filed, the bankruptcy judge must review and determine whether or not it meets the standards set under the U.S. Bankruptcy Code. If it does, the judge can determine if it is feasible at a confirmation hearing, which may be attended by creditors. It is typical for creditors to argue at this type of meeting that they would receive more payment under Chapter 7, or that not all of the disposable income is committed to paying off the debts in the three- to five-year repayment plan. These objections can both be heard and argued at the confirmation hearing. If the court ends up approving of the plan, the debtor can move forward in the repayment plan, sending funds regularly to the trustee to distribute. If the plan is denied, a modified plan can be submitted or the case can be converted to a Chapter 7.

Why You Should Hire a Chino Bankruptcy Attorney

If you are a family farmer or fisherman who has fallen on hard times, it can be difficult to see the light at the end of the tunnel. At the Law Offices of David R. Gunnin, we have more than three decades of helping people just like you achieve financial security. We know how difficult it can be to deal with debt, which is why we are committed to ensuring that you don't go through these difficult times alone. If you would like to learn more about how a bankruptcy lawyer in Chino can help you explore your options, do not hesitate to contact us today. We can schedule your free initial consultation, and go above and beyond to help you out. Call today.

Law Offices of David R. Gunnin - Chino Bankruptcy Attorney
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Phone: (909) 590-4648
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