chapter 12

[uscangus]

we have a neighbor, who has been a dairyman for many years and many generations. with the downturn of dairy prices, he is trying to acquire
fsa loan for operational help. has any heard of bankers giving loan with chapter 12. what is chapter 12? or is it similar to chapter 13 or chapter 7.

 

[Hoppy72450]

Chapter 12 is basically the same as 13 but some exceptions..Chapter 12 provides additional benefits not available under chapter 13 and chapter 11. Like higher debt ceilings than those under chapter 13, and more advantageous exemptions.

 

[Bonsman]

It will be very difficult, if not impossible, for him to obtain a loan after he files a bankruptcy petition. A chapter 12 case must cash flow--otherwise, the plan is not feasible and will not be confirmed. A Chapter 12 allows the Debtor to pay his secured creditors over time with any "disposable income" going to the unsecured creditors. Many plans are confirmed with the unsecured creditors getting as little as 1% of their debt. The debtor formulates a budget for living expenses and business expenses; pays the secured creditors; and makes payments to the Chapter 12 trustee for a period of 3-5 years. The trustee then takes his cut and pays the remainder to the creditors. Each state is different when it comes to exemptions. Chapter 12 is a good option if he has a lot of unsecured debt. If most of his debt is secured, then it will be more difficult to get a plan confirmed. He needs to find a good bankruptcy lawyer because he can fund a plan by cash, cramdown, liquidating "some" assets, forced use of cash collateral, and many other ways other than a post-petiton loan.

 

[uscangus]

It will be very difficult, if not impossible, for him to obtain a loan after he files a bankruptcy petition. A chapter 12 case must cash flow--otherwise, the plan is not feasible and will not be confirmed. A Chapter 12 allows the Debtor to pay his secured creditors over time with any "disposable income" going to the unsecured creditors. Many plans are confirmed with the unsecured creditors getting as little as 1% of their debt. The debtor formulates a budget for living expenses and business expenses; pays the secured creditors; and makes payments to the Chapter 12 trustee for a period of 3-5 years. The trustee then takes his cut and pays the remainder to the creditors. Each state is different when it comes to exemptions. Chapter 12 is a good option if he has a lot of unsecured debt. If most of his debt is secured, then it will be more difficult to get a plan confirmed. He needs to find a good bankruptcy lawyer because he can fund a plan by cash, cramdown, liquidating "some" assets, forced use of cash collateral, and many other ways other than a post-petiton loan.

you are right bonsman, it is cash flow and has to liquidate his herd of cattles or pursue chapter 12. if he does pursue chap 12, 3-5 is not bad year if he able to keep some of his herds. or, sell all of his herds. thanks, never heard or knew about chap 12.