Chapter 12

AAA

DEFINITION of 'Chapter 12'

A U.S. bankruptcy proceeding specifically for family farms or fisheries that gives the farm or fishery owner the ability to reorganize his or her finances and debts while still keeping the farm or fishery. The farm or fishery owner will work with a bankruptcy trustee and creditors to formulate a payment program that will meet his or her owner obligations. This proceeding is available for individually run family farms and fisheries as well as those owned by a corporation or partnership.

INVESTOPEDIA EXPLAINS 'Chapter 12'

Chapter 12 was enacted in 1986 specifically for farms and fisheries to make the bankruptcy process easier for these types of businesses. Prior to Chapter 12, farmers would have to either file for protection under Chapter 11, which can be very expensive and is mainly for large corporations, or Chapter 13, which is mainly for those with relatively small outstanding debts (generally not the case for farms and fisheries).

In order to qualify for this protection, both individuals and corporations must get the majority of income for the farm/fishery operations. There is also a limit on the size of the outstanding debt.

RELATED TERMS
  1. Wage Earner Plan (Chapter 13 Bankruptcy)

    Also known as a Chapter 13 bankruptcy, this enables individuals ...
  2. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  3. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  4. Chapter 13

    A U.S. bankruptcy proceeding in which the debtor undertakes a ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  6. Discharge In Bankruptcy

    A permanent order that releases the debtor from personal liability ...
Related Articles
  1. Investing

    What happens to a company's stocks and bonds when it declares chapter 11 bankruptcy protection?

    Filing for chapter 11 bankruptcy protection simply means that a company is on the verge of bankruptcy, but believes that it can once again become successful if it is given an opportunity to reorganize ...
  2. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

    If a company files for bankruptcy, stockholders have the most to lose. Find out why.
  3. Entrepreneurship

    What are the differences between chapter 7 and chapter 11 bankruptcy?

    Chapter 7 bankruptcy is sometimes also called liquidation bankruptcy. Firms experiencing this form of bankruptcy are past the stage of reorganization and must sell off any un-exempt assets to ...
  4. Investing

    What are Operating Expenses?

    An operating expense is any expenditure made for the purpose of operating a business. These expenses are the day-to-day costs that help keep the business going. Operating expenses are reflected ...
  5. Investing

    What's Overhead?

    Overhead is an accounting term used for expenses that have to be paid even if the business doesn’t earn any revenue. The business would not be able to operate without paying its overhead expenses, ...
  6. Credit & Loans

    Which Credit Cards Are Best After Bankruptcy?

    Building back credit after bankruptcy generally starts with getting a secured credit card. Here's how to identify the best deals among the limited choices.
  7. Credit & Loans

    How do debt relief options affect my credit score?

    Learn how different debt relief options – consolidation, settlement, credit counseling and bankruptcy – could affect your credit score.
  8. Credit & Loans

    How often can I file bankruptcy?

    Learn about some of the limitations placed on debtors who are considering filing multiple bankruptcies, particularly if the filings are only a few years apart.
  9. Credit & Loans

    How do I find a good personal bankruptcy lawyer?

    Read how to find a good personal bankruptcy lawyer, and learn how much you can expect to pay for services if you are considering filing bankruptcy.
  10. Personal Finance

    How do I file a proof of claim against someone who has filed bankruptcy?

    Find out how to file a proof of claim as a creditor when someone who owes you money submits a bankruptcy petition, halting your collection efforts.

You May Also Like

Hot Definitions
  1. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  2. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
  3. Fixed Asset

    A long-term tangible piece of property that a firm owns and uses in the production of its income and is not expected to be ...
  4. Break-Even Analysis

    An analysis to determine the point at which revenue received equals the costs associated with receiving the revenue. Break-even ...
  5. Key Performance Indicators - KPI

    A set of quantifiable measures that a company or industry uses to gauge or compare performance in terms of meeting their ...
  6. Bank Guarantee

    A guarantee from a lending institution ensuring that the liabilities of a debtor will be met. In other words, if the debtor ...
Trading Center