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California Farmers Bankruptcy Protection

Chapter 12 and Farm Bankruptcy in California

In its desire to protect every citizen from dire financial situations, the federal government came up with Chapter 12 bankruptcy code to look into family farmers. The code is specifically tailored to protect farmers with a regular income from actions of creditors. Such a farmer whose significant portion of revenue is realized from farming is referred to as a family farmer. Like any other individual in regular employment and business, these groups of individuals are susceptible to extreme financial situations too.

California laws recognize family farmer bankruptcy protection through the Chapter 12 option. Through this plan, the farmer is protected from the effects of fluctuating land values, commodity prices, emergency events and unfavorable trade policies.

Farmers in California are required to present a Statement of Financial Affairs when seeking to file for Chapter 12 bankruptcy protection. Upon successful petitioning, an automatic stay will be imposed, preventing creditors from collection activity.

A primary difference between Chapter 12 and other bankruptcy codes is that it also extends protection to co-debtors through the ‘co-debtor’ stay.

Upon approval of the Chapter 12 bankruptcy code, the farmer will endeavor to create a debt repayment plan with the help of a court-appointed trustee, while engaging the creditors within the first month of a successful petition.

As a farmer in California, you would greatly benefit from Chapter 12 bankruptcy code when undergoing dire financial challenges that are likely to last for a significant period. From a successful petition, you would be allowed to make payment plans that include regular payment to creditors over three to five years.

You would, however, be required to work with a court-appointed trustee to ensure the debts are cleared at the stipulated time to avoid further challenges. Claims, in this case, would include those that are a priority, secured and unsecured. The primary focus would be on the priority claims such as taxes and costs of the proceeding, followed by those that could be liquidated and finally unsecured debt.