Chapter 12 Bankruptcy
Arizona Chapter 12 Bankruptcy for the Family Farmer or Commercial Fishermen
Chapter 12 was enacted in 1986 to help family farmers during the 1980s farm crisis. Chapter 12 bankruptcy is a combination of Chapter 11 and Chapter 13, intending to allow family farmers, who can be both individuals or business entities, reorganize their debt.
Most family farmers in recent times were unable to utilize the provisions of Chapter 12 bankruptcy because the debt limits were too low. When the law for Chapter 12 first passed, there were about 6,000 filings the following year. More recently, in 2018, there were less than 500 cases filed nationwide.
This changed on August 1, 2019, when Congress passed the Family Farmer Relief Act of 2019, which increased the 2018 debt limit of $4,153,150 for farmers to $10,000,000. The debt limit for commercial fishermen remained the same at $1,924,550. The Relief Act left all other parts of Chapter 12 unchanged. Following the passage of the Relief Act, there was a 24% increase in Chapter 12 filings from the previous year.
It is projected that the number of Chapter 12 bankruptcies filings will grow as the increased debt limits will make it more useful for businesses and individuals that receive more that 50% of their income from farming operations.
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During our initial consultation, we will help you review your financial situation, assess your options and choose the best course of action for you and your family. To learn more, contact us via Email or by phone at 602-275-3238 to arrange a consultation.to schedule an appointment.
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