Home< / Types of Bankruptcy / Chapter 12 / Qualifications / Comparison
Chapter 12 Qualifications / Comparison to Chapter 13 -

      Under Chapter 12 there are a number of requirements needed in order to file. There are also advantages and disadvantages when filing Chapter 12 as compared to Chapter 13. As part of the strategy a comparison test with both Chapter 12 and 13 may be needed. Filing the correct chapter according to your financial situation may be in your best strategy when filing bankruptcy.

Types of Bankruptcy (Business, Consumer and Municipal)
  • Chapter 7 - Can be filed by individuals, partnerships and corporations. The most common type of bankruptcy filing
  • Chapter 9 - Adjustment of debts of a municipality
  • Chapter 11 - Most individuals filing Chapter 11 are involved in business in some capacity
  • Chapter 12 - Adjustment of debts of a family farmer or fisherman
    Discharge, Hardships and Exemptions in Chapter 12
  • Chapter 13 - Available for individuals only, no corporations or partnerships may file
  • Chapter 15 - Bankruptcy, reorganization and insolvency cases that have assets, debtors, creditors, and other interested parties in multiple countries

Deciding to File and Comparison to Chapter 13

Listed below are a number of topics that may be helpful when deciding to file Chapter 12. Some of the topics include Chapter 12 qualifications as well as comparison to Chapter 13.

 Who Can File - Chapter 12 can be filed by an individual, an individual and spouse, and by a partnership or corporation; Chapter 13 can only be filed by individuals.

 Farming/Fishing Requirement - The debtor must be engaged in a farming or commercial fishing operation.

  How Much Can You Owe - A Chapter 12 family farmer debtor must owe less than $ 3,792,650 in "aggregate debts (liquidated and unliquidated), at least 50% of which (exclusive of home mortgage debt) must be related to the farm operation; and a Chapter 12 family fisherman must owe less than $ 1,757,475 in "family fisherman's debts", at least 80% of which must be related to the fishing operation; these limits are substantially higher than the Chapter 13 debt limits.

 What Type of Income is Required - Chapter 12 debtors must have regular "annual"income, which means that it can be seasonal, and 50% or more of the income must be from the farming or commercial fishing operation.

 When Can a Corporation or Partnership File Chapter 12 - There are 5 additional requirements for a corporation or partnership to file Chapter 12. 
a). At least ½ of the stock or equity musts be owned by one family.
b). The family or family relatives must operate the farming or fishing business.
c). More than 80% of the assets of the corporation or partnership must be related to the farming or fishing business.
d). At least 50% of the farming business' liquidated debt (except for mortgage debt on one family home) must be related to the farm operation, with this figure being 80% for commercial fishermen.
e). If a corporation, the stock cannot be publicly traded; partnerships and corporations are not allowed to file Chapter 13.

 Credit Counseling Needed - To be eligible to file Chapter 12 (or any other chapter) the debtor must have completed a credit counseling course from an approved credit counseling agency within 180 days prior to the filing of the case, per Bankruptcy Code Sections 109 and 111.

 180-Day Bar to Re-filing - Chapter 12 (or any other chapter) cannot be filed by a debtor if during the 180 days prior to the petition, a bankruptcy petition was dismissed by the court for willful failure to appear or abide by the orders of the court, or if the prior case was voluntarily dismissed by the debtor after creditors sought relief from the automatic stay to foreclose upon liened property, per Bankruptcy Code Sections 109(g), 362(d) & (e).

 Payment Schedule - In Chapter 12 cases, the plan payments are made annually; in Chapter 13, they must be made monthly.

 Deadline for First Chapter 12 Plan Payment - In Chapter 12, there is no deadline for making the first plan payment, whereas in Chapter 13, under 11 U.S.C. Section 1326(a)(1), the first payment is due 30 days after the plan is filed.

 Deadline to File a Plan - A Chapter 12 debtor has 90 days to file a plan, per 11 U.S.C. Section 1221 & Federal Rule of Bankruptcy Procedure 3015; a Chapter 13 debtor gets only 14 days (absent court-approved extension) to do so.

 Stretching Out Mortgage Debt More than 5 Years - A Chapter 12 debtor can extend payments on secured debt past the 5-year plan period, under Bankruptcy Code Section 1222(b)(9); this cannot be done in Chapter 13.

 Chapter 12 Trustee - Like Chapter 13, under 11 U.S.C. Section 1202(a), the Court appoints a Chapter 12 Trustee (usually a "standing trustee"), whose job it is to administer the case and act as a disbursing agent, and advise and assist the debtor with the plan, and with other duties virtually identical to that of a Chapter 13 trustee.

 Chapter 12 is Voluntary - Like Chapter 13, Chapter 12 is voluntary only, and creditors cannot force a debtor into Chapter 12 via an involuntary petition.

 Chapter 12 Co-Debtor Stay - Like Chapter 13, Chapter 12 provides a "co-debtor" stay which prohibits creditors from going after co-signers of the debtor's consumer debts.

 Property Includes After-Acquired Property - Property acquired during the course of the case becomes property of the bankruptcy estate, under 11 U.S.C. Section 1207(a); this is similar, but not identical, to the provisions of Chapters 11 and 13.

 Chapter 12 Debtor in Possession ("DIP") - Like Chapter 13, the Chapter 12 debtor remains in possession of all of his property as a debtor in possession ("DIP"), under 11 U.S.C. Section 1203; however, unlike Chapter 13 (but like Chapter 11), the Chapter 12 DIP can be removed for cause and replaced by the Chapter 12 Trustee, who will then conduct the farming or commercial fishing operation.

 Who Can File a Plan - Since Chapter 12 (like Chapter 13) is purely voluntary, under 11 U.S.C. Section 1221, only the debtor can file a plan; this is different from Chapter 11, where creditors are allowed to propose plans.

 No Disclosure Statement is Required - Like Chapter 13, the debtor is not required to file a disclosure statement.

 Who Can Vote on the Chapter 12 Plan - Just like Chapter 13, the Chapter 12 creditors do not get to vote on the plan, even if they are receiving only pennies on the dollar.

 Who Can Object to a Chapter 12 Plan - Under 11 U.S.C. Section 1224), creditors can object to a Chapter 12 Plan, just like in Chapter 13, if they believe that the plan does not meet legal requirements.

 The Chapter 12 Plan Confirmation Hearing - Under Bankruptcy Code Section 1224, unless cause is shown, the confirmation hearing must be concluded within 45 days of the filing of the Chapter 12 Plan.


Converting to Chapter 7 or Dismissal

      Under 11 U.S.C. Section 1208(a)-(d), the Chapter 12 debtor can convert his case to Chapter 7 liquidation or dismiss it at any time; creditors can move to convert the case to Chapter 7 if debtor has committed fraud, and can seek to have it dismissed "for cause".

Written by Henry Rendler

   Search Site
Filing Bankruptcy



Bankruptcy Law




Types of Bankruptcy

   Chapter 7

   Chapter 9

   Chapter 11
   Chapter 12

       - Qualifications

       - The Discharge

   Chapter 13
   Chapter 15
Debt Advice
   Avoiding Bankruptcy
   Debt Consolidation
   Bankruptcy Alternatives
   Life after Bankruptcy
The Court
   US Bankruptcy Courts
The Trustee
   341 Creditors Meeting
Find Attorney by State
   New Hampshire
   New Jersey
   New Mexico
   New York
   North Carolina
   North Dakota
   Rhode Island
   South Carolina
   South Dakota
   West Virginia
   Washington DC
   US Territories

Selecting an Attorney
   Attorneys & Bankruptcy
     What You Should Know

   Bankruptcy Specialist


Site Map - Copyright © 2009 - 2012 - All Rights Reserved - www.Bankruptcy-Attorney.com - Disclaimer and Privacy Policy - About Us