Chapter 12 Bankruptcy – Definition

Cite this article as:"Chapter 12 Bankruptcy – Definition," in The Business Professor, updated January 10, 2020, last accessed October 27, 2020,


Chapter 12 Bankruptcy Definition

Chapter 12 is a chapter of the Bankruptcy Code in the United States that is applicable to family farmers or family fishermen. This is a category designed for family farms or fisheries to be kept while the individuals are in the process of settling a debt. Family farmers of family fishermen who are unable to pay their outstanding debts up till a particular period can continue operating their farms and fisheries until the debt is settled.

A Little More on What is Chapter 12 Bankruptcy

Chapter 12 caters for family farmers and fishermen with a regular annual income, this chapter was added to the Bankruptcy Code in 1986 to provide some sort of relief to fishermen and farmers experiencing difficulties in the 1980s. Although similar to Chapter 13, Chapter 12 of the Bankruptcy law provides flexibility to farmers and fishermen as it allows them to make periodic repayments given the nature of their businesses.

Generally, Chapter 12 makes the bankruptcy process easier for operators of family farms and fisheries. With the provision of Chapter 12 of the bankruptcy law, family farmers and fishermen can reorganize the repayment of the debt owed to suit the best seasons in the business.

Farms, Fisheries & Bankruptcy Laws before 1986

Before Chapter 12 of  Bankruptcy law was included in 1986, there was no form of protection specially designed for family farmers and fishermen by the United States government. Although there was some sort of relief provided by the governmnet that farmers and fishermen can leverage on, none of the relief came from the U.S government.

Prior to the inclusion of Chapter 12, farmers only had the option to file for protection under Chapter 11 or Chapter 13 of the Bankruptcy law. Chapter 12, however, has certain eligibility requirements that individuals or corporations operating family farms or fisheries must meet before they can enjoy the protection.

Reference for “Chapter 12”,_Title_11,_United_States_Code…/chapter-12-bankruptcy-basics › Personal Finance › Bankruptcy › Types

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