Chapter 12 vs. Chapter 13 Bankruptcy

For individuals and businesses going through financial hardship, filing for bankruptcy is among the promising options to achieve debt relief and find a financial fresh start. Chapter 12 bankruptcy is available for family farmers and fishermen, whereas Chapter 13 bankruptcy is available to individuals earning regular wages who are overwhelmed with debt. An experienced Arkansas bankruptcy attorney can help evaluate your unique situation and explore your possible options.

At Bond Law Office, we have the experience and resources to advise and guide individuals and business owners through the complexities of bankruptcy filings. We are available to discuss your unique financial situation and help you understand your possible options. Also, we can enlighten you about the benefits and drawbacks of Chapter 12 and Chapter 13 bankruptcy and guide you through the entire bankruptcy process from start to finish. Our firm is proud to serve clients throughout Fayetteville, Waldron, Fort Smith, Harrison, Mena, and River Valley.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy is a reorganization bankruptcy that is made available for family farmers and fishermen. This bankruptcy option permits family farmers and fishermen to restructure their finances and avoid liquidation or foreclosure.

When you petition for Chapter 12 bankruptcy, you will be able to continue running your farming or fishing operations. Within 90 days of petitioning for bankruptcy, the debtor (farmer or fishermen) must propose a repayment plan that is spread over three to five years.

The bankruptcy court will appoint a trustee to oversee your entire bankruptcy case. The trustee will review your supporting documents, monitor your business operations, advise the bankruptcy court, and collect the payments specified in the repayment plan.

Who Qualifies?

You may qualify for Chapter 12 bankruptcy if:

  • You are an individual (husband or wife) engaged in a farming or commercial fishing operation.
  • You are a partnership or corporation engaged in farming or commercial fishing operations.
  • Your total debts (secured and unsecured) are less than $10 million for farming operations or $1,924,550 for commercial fishing operations.
  • More than 50% of the total debts that are fixed in amount are related to the farming operation.
  • More than 80% of the total debts that are fixed in amount are related to the commercial fishing operation.
  • More than 80% of the value of the partnership or corporate assets are related to the farming or commercial fishing operation.
  • The corporation's stocks are not publicly traded.

When Is Chapter 12 a Good Option?

Filing for Chapter 12 bankruptcy might be a good option if:

  • You operate a farming or fishing business.
  • You plan to keep your farming or fishing business afloat.
  • You need more flexibility and control over the restructuring.

An experienced bankruptcy attorney can review your financial situation and determine whether Chapter 12 is the right option to reorganize your business.

Chapter 13 Bankruptcy

Chapter 13 bankruptcy, also known as "wage earner's" bankruptcy, is available to individuals who earn a decent income but are going through a difficult financial situation. This option allows you to pay off some or all of your debts over an extended period with your future income.

In Chapter 13, you will propose a repayment plan to the creditor to pay down your debt using your potential earnings. The repayment plan will be structured over a period of three to five years. When you file for Chapter 13 bankruptcy, you will be allowed to keep your assets, including your home and cars.

Who Qualifies?

You may qualify for Chapter 13 bankruptcy in Arkansas if:

  • You have a "regular source of income."
  • Your income is more than the state's median for your household size.

When Is Chapter 13 a Good Option?

Chapter 13 may be a good option if:

  • You own lots of assets, and you intend to keep them.
  • The majority of your debts are non-dischargeable tax, domestic support debts, or student loans.
  • You have a regular source of income.

A knowledgeable attorney can review your financial situation and decide whether Chapter 13 is the right option to achieve financial relief.

Hiring an Experienced Bankruptcy Attorney

Filing for Chapter 12 or Chapter 13 bankruptcy in Arkansas involves several complexities. Determining your eligibility, filing a bankruptcy petition, creating a repayment plan, and attending court proceedings can make the entire process stressful and overwhelming. As a result, it is never advisable to navigate the bankruptcy proceedings by yourself. Therefore, when considering filing for bankruptcy, it is important that you speak with an experienced bankruptcy attorney for proper guidance and to help navigate key decisions.

At Bond Law Office, we are dedicated to offering experienced legal services and knowledgeable guidance to clients in bankruptcy legal matters. We can review your financial situation and help you understand your available bankruptcy options. Whether you are filing for Chapter 12 or Chapter 13 bankruptcy, our team can enlighten you about the benefits and drawbacks, determine your eligibility, help with the required documentation, and represent you during the court proceedings. We will craft a strategic plan to protect your assets and finances and help you avoid potential pitfalls.

Bankruptcy Attorneys in Fayetteville and Fort Smith, Arkansas

Contact Bond Law Office today to schedule a simple consultation with an experienced bankruptcy attorney. Our team can guide you through every step involved in filing for Chapter 12 or Chapter 13 bankruptcy from start to finish and help you make informed decisions. We proudly serve clients throughout Fayetteville, Waldron, Fort Smith, Harrison, Mena, and River Valley.


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