What is Chapter 12 Bankruptcy?

Modeled after Chapter 13 bankruptcy, Chapter 12 is a relatively new addition to bankruptcy laws. It provides reorganizational advantages and financial relief specifically for family farmers and fisherman in debt. Today, our Tampa, FL based bankruptcy attorneys shed light on this bankruptcy option for seasonal businesses.  


About Chapter 12 Bankruptcy 


When most business owners think of bankruptcy lawthey tend to think of Chapter 11, 13, or 7. In addition to these three types of bankruptcythere is also what’s referred to as Chapter 12. This form of bankruptcy law allows “family farmers” and “family fisherman” to avoid foreclosure or liquidation by restructuring their finances. Essentially, Chapter 12 bankruptcy provides a way for family farmers or family fishermen under financial distress to pay back their debts. 


Structurally in many ways, it’s similar to Chapter 13 bankruptcy, but Chapter 12 provides additional benefits to debtors in certain circumstances, beyond the options available to ordinary wage earners. This type of bankruptcy is termed as the family farmer or family fisherman which includes seasonal operations.   


The “Family Farmer” 


The Bankruptcy Code defines family farmer”¹ as an individual or individual and spouse engaged in a farming operation whose total debts does not exceed $10 million and not less than 50% of debt is derived from the farming operation and more than 50% of income is derived from the farming operations.   


The “Family Fisherman” 


Family fisherman with regular annual income”1 is defined as a family fisherman whose annual income is sufficiently stable and regular that allows the family fisherman to make plan payments.   



How Chapter 12 Bankruptcy Cases Work 


Chapter 12 bankruptcy cases are similar to Chapter 13 cases with more freedom in structuring the repayment plan around the seasonal nature of the business.  


After filing a voluntary petition for relief, the debtor’s Chapter 12 case begins. Under Chapter 12, debtors propose an installment-based repayment plan to pay creditors over three to five yearsDuring this time most Chapter 12 debtors continue farming or fishing 


Our Tampa, FL bankruptcy lawyers can help you understand the specifics of Chapter 12 and help you at every step. David Jennis and the attorneys at Jennis Morse Etlinger are known for their experience and integrity. If you need legal help with commercial bankruptcy, corporate restructuring, or other business litigation, contact our law firm. 


Other Types Of Business Bankruptcy 


Many business owners may not qualify for Chapter 12 bankruptcy, and there are other financial options you can take based on your unique circumstances. To enable your company to become more financially stableyou may also want to speak with a bankruptcy lawyer about chapter 7, 11, and 13 options.  


Chapter 7 Bankruptcy 


This applies to a straight liquidation for businesses that will no longer be operatingChapter 7 may be filed by business individuals whose business debts make up more than half of their total debt. Business entities may also file Chapter 7.   


It’s important to note, business individuals may receive a discharge of debts, but business entities cannot.   


Chapter 11 Bankruptcy 


Chapter 11 is the most commonly referred to type of business bankruptcy case.  Even though Chapter 11 is utilized by business entities, it is also utilized by individuals who are over the limits to file for Chapter 13. 


Chapter 13 Bankruptcy 


This type of bankruptcy is only available for business individuals. Chapter 13 reorganizes the debt of a business individual over a period of three to five years reliant upon the ability to repay creditors.   


Keep in mind: if the business individual’s debts are over specific limits, the individual will need to file a Chapter 11 bankruptcy. 


Related > Commercial Bankruptcy 101 – What Are Your Options? 



Get Help Filing for Chapter 12 Bankruptcy  


Filing for business bankruptcy may help your family farm, fishing company, or seasonal business be able to reorganize and refocus.  If your business is not currently as financially stable as you would like, please consult our experienced commercial bankruptcy attorneys to discuss declaring bankruptcy. We can help you understand your options and help enable your business to move forward.  


We will work for a successful outcome for you; our dedication is part of what makes us recognized as one of the best bankruptcy lawyers in Florida. Jennis Morse Etlinger firm represents clients in Tampa, Sarasota, Orlando, Jacksonville, Tallahassee, Pensacola, Ft. Myers, Miami, Naples. Contact us today 





¹  11 U.S.C. Section 101(18).


Disclaimer: This article does not provide any legal advice as to which type of bankruptcy may be the best option for your business.  Competent legal counsel should be consulted to make that determination.