The Cassidy Law Firm Blog

Thursday, May 29, 2014

What Is Chapter 12 Bankruptcy in Middlesex County?

Chapter 12 bankruptcy is a specialized, limited form of business bankruptcy meant for farms and fisheries. It is available for all sizes of farms and fisheries, including small family operations. However, the business filing a petition must be a commercial operation — hobbyist fishermen, for example, who sell a few fish to neighbors for extra money would not qualify.

Chapter 12 Bankruptcy in Middlesex County

Businesses in Middlesex County wishing to file for Chapter 12 bankruptcy must meet four conditions. In addition to being a farm or fishery, the majority of the company’s debt and income must be related to the farming or fishing business. If at least 50 percent of the income and debt are not from these industries, the company may not file for Chapter 12. The debts must also not be more than a certain amount. The limits for debt can change, so those wishing to file must consult with a bankruptcy attorney before doing so to ensure their companies qualify.

Chapter 12 is similar to Chapter 11 in that it has a trustee overseeing the progress of the bankruptcy. Debts can be totally discharged but are not always completely wiped out. The creditors have to be paid at least what they would get were this to be a Chapter 7 plan. However, that does mean that in many cases, debts are wiped out and creditors receive nothing.

Chapter 12 proceedings can move quickly. Companies have 90 days from the date of filing to find a suitable payment plan. Hearings must take place within 45 days, which is much sooner than in a Chapter 11 filing. Because of the speed at which a Chapter 12 filing can proceed, it is easy for a business to overlook an important step or consideration. Working with a bankruptcy attorney with Chapter 12 experience would reduce the chances of something being forgotten. It may also be the case that Chapter 11 would be a better choice, or even Chapters 7 or 13. Chapter 12 bankruptcy is uncommon and shouldn’t be approached lightly. Consulting with an attorney about which chapter is best for a particular business is essential.

One more advantage to filing for Chapter 12 in Middlesex County  is that this form of bankruptcy potentially allows portions of secured debts like mortgages to be converted into unsecured debts. That means that some of these debts can be erased if conditions are right.

Contact The Cassidy Law Firm for a free consultation with an experienced New Jersey bankruptcy attorney. Call 732-747-3999 to speak with an attorney about bankruptcy in Middlesex County today.

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