The Bankruptcy Basics Pamphlet discusses Chapter 13 and Chapter 11 over the next twenty-one pages. Since I have covered those two Chapters in detail in previous blogs I will refer you to those. The next seven pages of the pamphlet cover Chapter 12. Chapter 12 is referred to as the Family Farmer or Family Fisherman Bankruptcy. The Bankruptcy Code provides that only a family farmer or family fisherman with “regular annual income” may file a petition for relief under Chapter 12. The purpose of this requirement is to ensure that your annual income is stable enough to permit you to make payments under a Chapter 12 plan. But Chapter 12 does make allowances for situations in which family farmers or fishermen have income that is seasonal in nature. Under the Bankruptcy Code, “family farmers” and “family fishermen” fall into one of two categories: 1) an individual or individual and spouse, or 2) a corporation or partnership.

A Chapter 12 bankruptcy case begins by filing a petition with the Bankruptcy Court-Colorado District or where the corporation or partnership debtor has its principal place of business or principal assets. Unless the court orders otherwise, you also should file:

• schedules of assets and liabilities,
• a schedule of current income and expenditures ,
• a schedule of executory contracts and unexpired leases, and
• a statement of financial affairs. Federal Rules of Bankruptcy Procedure 1007(b).

In order to complete the Official Bankruptcy Forms which make up the petition, statement of financial affairs, and schedules, the debtor will need to compile the following information:

• A list of all creditors and the amounts and nature of their claims;
• The source, amount, and frequency of the debtor’s income;
• A list of all of the debtor’s property; and
• A detailed list of the debtor’s monthly farming and living expenses, i.e., food, shelter, utilities, taxes, transportation, medicine, feed, fertilizer, etc.

When a Chapter 12 petition is filed, an impartial trustee is appointed to administer the case. In some districts, the U.S. trustee appoints a standing trustee to serve in all Chapter 12 cases. The trustee both evaluates the case and serves as a disbursing agent, collecting payments from the debtor and making distributions to creditors. Filing the petition under Chapter 12 “automatically stays” (stops) most collection actions against the debtor or the debtor’s property. The stay arises by operation of law and requires no judicial action. As long as the stay is in effect, creditors generally cannot initiate or continue any lawsuits, wage garnishments, or even telephone calls demanding payments. The bankruptcy clerk gives notice of the bankruptcy case to all creditors whose names and addresses are provided by the debtor. Chapter 12 also contains a special automatic stay provision that protects co-debtors. Unless the bankruptcy court authorizes otherwise, a creditor may not seek to collect a “consumer debt” from any individual who is liable with the debtor. Consumer debts are those incurred by an individual primarily for a personal, family, or household purpose. Between 20 to 35 days after the petition is filed, the Chapter 12 trustee will hold a “meeting of creditors.” If the meeting is scheduled at a place that does not have regular U.S. trustee or bankruptcy administrator staffing, the meeting may be held no more than 60 days after the debtor files. During the meeting both the trustee and creditors may ask questions of the debtor who is under oath. The debtor must attend the meeting and answer questions regarding his or her financial affairs and the proposed terms of his or her repayment plan. The parties involved typically resolve problems with the plan either during or shortly after the creditors’ meeting. After the meeting of creditors, the debtor, the Chapter 12 trustee, and interested creditors will attend a hearing on confirmation of the debtor’s Chapter 12 repayment plan. The debtor will receive a discharge after completing all payments under the Chapter 12 plan that has been confirmed in the hearing.

If you have any questions and live in Denver, Aurora, Arvada, Boulder, Brighton, Broomfield, Commerce City, Englewood, Golden, Highlands Ranch, Lakewood, Lafayette, Littleton, Northglenn, Westminster, Wheat Ridge, Colorado please feel free to contact me. Kevin D. Heupel, Colorado Bankruptcy lawyer, 303-955-7570, COBankruptcyHelpEmail, free-consultation form.