Under Chapter 12, family partnerships and corporations that satisfy the eligibility criteria, as well as individuals, may be debtors. [See 11 USC Sections 101(18)(B), 101(19A)(B).
A Chapter 12 debtor need only have sufficient "regular annual income"- thus including irregular or seasonal income. [11 USC Sections 101(19), 101(19B)]
Helping family farmers continue farming serves as the primary purpose behind Congress’ adoption of Chapter 12. In re Indreland, 77 B.R. 268, 270 (Bankr. D. Mont. 1987) (quoting with approval In re Tart, 73 B.R. 78, 81 (Bankr. E.D.N.C. 1987).
Chapter 12 is a reorganization for family farmers and fisherman that is modeled after Chapter 13, where the debtor retains his property and pays creditors out of future income. Farming operation is defined in the Bankruptcy Code as follows: Farming operation includes farming, tillage of soil, dairy farming, ranching, production and raising of crops, poultry, or livestock, and production of poultry and livestock products in an unmanufactured state. [11 U.S.C. § 101(21)]. Individuals are “family farmers” if: they are engaged in “farming operations”, their debts do not exceed $3,544,525, at least 50% of the noncontingent, liquidated debts (excluding any debt for their principal residence) arose out of their farming operations. See 11 USC §104(b); and they receive at least 50% of their gross income from farming in the preceding tax year or in each of the second and third tax years proceeding filing. [11 U.S.C. § 101(18)(A)].
If eligible as a Chapter 12 debtor and you are delinquent on promissory note payments, filing under this chapter may allow you to file a motion to value your real property with the goal of nd re-mortizing the loan based upon the value of the real property rather than the amount owed and making payments at a reasonable rate of interest over a reasonable amount of time (e.g., 30 years at 5%, although every case is different). Chapter 12 Plan terms are typically 36 months.
The Office of the United States Trustee imposes requirements upon Chapter 12 debtors, including filing monthly operating reports during the case. Furthermore, any professional compensated in the case must be approved and employed by court order.