Chattanooga Chapter 12 Bankruptcy Lawyers

Helping Farming and Fishing Operations Get Back to Business

If you are a family farmer or fisherman with excessive debt related to your profession, Chapter 12 bankruptcy can help you get your debt under control and stop collection activities. It enables you to resolve debts by restructuring your business and financial assets while maintaining control over your farming or fishery operations.

At Tom Bible Law, we can help you determine if Chapter 12 is right for you and help you throughout the process. With offices in Chattanooga and Tullahoma, we are able to offer experienced counsel and legal representation to residents of Tennessee and North Georgia.

Call our office or complete our online form to schedule a consultation with an experienced Chapter 12 lawyer in Chattanooga at our firm.

What Is Chapter 12 Bankruptcy?

Chapter 12 bankruptcy is a type of bankruptcy established specifically for family farmers and fishermen, allowing them to reorganize their debt while maintaining their operations. In contrast to Chapter 7 and Chapter 13 bankruptcies, which deal with selling assets to repay debts and are geared toward those who earn wages, Chapter 12 offers a customized solution for those with a commercial fishing operation or those in the agricultural industries who are having financial troubles.

When filing under Chapter 12, an extensive repayment plan outlining the distribution of debts over a 3- to 5-year period must be submitted to the court. This plan needs to be practical, proving that the debtor can afford the suggested payments while continuing to support themselves. Working through this payment plan allows the operation to stay in business while paying down debt and getting into a better financial position. When the payments are all made as agreed, the remaining debt is discharged.

Because farming and fishing operations often require a hefty initial investment in land and/or equipment, it can lead to large debt balances that can feel overwhelming. A Chattanooga Chapter 12 lawyer can help with creating this plan, settling debts with creditors, and making sure all legal criteria are met.

What Are Some of the Potential Benefits of a Chapter 12 Bankruptcy?

Our Chattanooga Chapter 12 bankruptcy lawyers at Tom Bible Law are aware of the difficulties that small-scale farmers and fishermen may encounter. One of the many benefits of this form of bankruptcy is that it allows you to customize a repayment plan based on seasonal fluctuations in income, which is especially beneficial for people whose income varies from season to season. For example, a farmer may be able to make higher payments during their highest income months and make lower payments during the winter when sales are low.

Another significant benefit of Chapter 12 bankruptcy is the ability to modify the terms of secured loans, potentially lowering interest rates or extending payment schedules, which can provide much-needed relief and stability. Additionally, it allows for the discharge of certain debts that cannot be repaid under the plan. These modifications and restructuring can reduce your debt to a reasonable amount that you’re actually able to repay instead of drowning under payments you can’t afford.

Filing for a Chapter 12 bankruptcy also allows farmers and fishermen to restructure the debt in a way that reflects the actual value of the collateral. This restructuring is sometimes referred to as “cramming down” debt. Cramming down debt basically lets you change some of your secured debt into unsecured debt that can then be discharged. For example, if you have a property that you bought for $500,000 but is now only worth $300,000, a Chapter 12 bankruptcy may help you adjust the secured loan to the value of the property. You would then continue to make payments to the creditor for that $300,000. This adjustment can be a complex process, so it’s important to talk with an attorney about how this works and how it may benefit your operation.

If you’re a family farmer or fisherman facing financial difficulties, consulting with a knowledgeable Chattanooga Chapter 12 attorney at Tom Bible Law can provide you with the guidance needed to explore your options and devise a plan to restore your financial stability. Reach out to us for a consultation to see if Chapter 12 bankruptcy is a suitable path for your unique circumstances.

The Chapter 12 Bankruptcy Process

Once you decide to file for Chapter 12 bankruptcy, you must then file a petition with your local bankruptcy court. Depending on your situation, you must also include specific forms and documents, such as financial documents, tax returns, and a list of creditors. It’s important to ensure that your petition is properly completed and that you submit all the necessary supporting documentation. If not, you risk your petition being rejected by the court.

To be eligible for Chapter 12 bankruptcy, you must meet the following conditions:

At least half of your gross income for the previous year must have been from farming or fishing
At least 80% of your debt must be related to your professional fishing operations
At least 50% of your debt must be related to your farming operation
You must earn enough regular annual income to be able to make debt payments over a 3- to 5-year period
You must not owe above a certain amount of debt (varying based on profession)

As soon as you file your petition, it puts an automatic stay on any creditor actions, and this includes any consumer debt that may not be part of your bankruptcy filing. This inclusion ensures that creditors can’t repossess property or take any other adverse collection action against you while the bankruptcy is being processed.

The next step is for the court to appoint a trustee. The trustee is the person who oversees the bankruptcy case and is responsible for collecting payments from the debtor and making sure those are disbursed to the creditors as outlined in the repayment plan. The trustee will gather the creditors and the debtor together to discuss the repayment plan. Once all parties agree on a plan, a hearing will be scheduled, and the judge will approve the plan.

The repayment plan for a Chapter 12 bankruptcy is generally fairly lengthy, taking an average of 3 to 5 years to fulfill. At the end of this time period, when all of the payments have been made as agreed, the rest of the debt is discharged.

What Is the Debt Limit for Chapter 12 Bankruptcy?

The U.S. Bankruptcy code outlines specific limits on how much debt a family fisherman or farmer can have when filing for Chapter 12 bankruptcy. The debt limit for a family farmer is $11,097,350. The debt limit for a family fisherman is $2,268,550. These numbers may be adjusted for inflation and other factors, so it’s important to work with a bankruptcy attorney to ensure you have the latest information.

If your debt is currently higher than these limits, there are some steps you can take to bring your overall debt under the limit. For example, you may be able to sell off some assets or land to pay enough of the debt to be under the total debt limit. An attorney can help you understand what your options are to get your operation in a financial situation to be able to move forward with a Chapter 12 bankruptcy.

Chapter 12 Repayment Plans

After filing your petition, you must provide the court-appointed trustee with a complete list of your liabilities and assets within 15 days and meet with them (and potentially your creditors). Within 90 days, you must file a repayment plan detailing how you intend to pay off your debts. Typically, the repayment plan is income-based and outlines a payment schedule lasting 3 to 5 years, with the specific amount and length of time varying based on your specific situation.

Creditors will also receive notification and can make certain claims on behalf of their interests. The court will review these claims and determine how and when each of your debts should be paid off (whether they should be paid with existing assets or through the repayment plan).

In order to be approved by the court, your repayment plan must meet certain criteria, especially regarding the amounts paid for each type of debt (secured and unsecured) and which debts are given priority in a repayment plan. If a plan does not meet these criteria, the court may request an adjustment hearing, where all parties will negotiate modifications. Once a plan is confirmed, all obligations outlined within it are legally binding on you and the creditor.

Alternatives to Filing for Bankruptcy

Filing for bankruptcy is a big decision, and it’s one that shouldn’t be made lightly. Bankruptcy can have long-term negative effects on your farming or fishing operations, and it can be difficult to restructure and move forward with a profitable business. A Chapter 12 bankruptcy also stays on your credit report for 10 years, which can affect your personal credit as well. For these reasons, filing for bankruptcy is generally a last resort. It can help to talk to an attorney about potential alternatives to a bankruptcy case before moving forward. These include:

Debt consolidation or modification, which can help you lower your interest rate or get payments into one lump sum that is more manageable
Negotiating with creditors to settle outstanding debts, which can help you decrease your overall debt balance or lower your payments
Liquidating assets to pay down debt, which should be done carefully and under the advisement of a bankruptcy attorney to prevent overliquidation and keep you from being able to file bankruptcy later on if necessary
Taking advantage of government assistance programs, which can provide loans, grants, and other relief
Leasing out land or assets to others as a means of bringing in more income

Talk to a Chapter 12 bankruptcy attorney about whether these alternatives can help you alleviate debt and put your overall finances on a positive trajectory without resorting to a bankruptcy filing.

Legal Counsel on Chapter 12 Bankruptcy

At Tom Bible Law, our Chapter 12 bankruptcy attorney is ready to answer your questions. With decades of legal experience and thousands of successful cases, the attorneys at our firm will do everything we can to help you get the most out of Chapter 12 bankruptcy as a debt relief option. Our team will help you evaluate your situation and legal options, as well as advocate on your behalf during negotiations with creditors and the court concerning the terms of your repayment plan. Whether it’s through Chapter 12 or some other debt relief option, it’s our goal to help you achieve a sustainable financial situation.

If you’re ready to take control of your debt through Chapter 12 bankruptcy, call 423-874-6628 to discuss your case with our Chattanooga bankruptcy lawyers.