Today's economy makes it difficult for family farmers to support their families. Economic downturns can put you into a financial crisis that might be impossible to get out of without help. If you've reached the end of your rope and the creditors are hounding you, it might be time to consider filing for chapter 12 bankruptcy protection.
Chapter 12 bankruptcy is available to family farmers and fishermen. This bankruptcy protection allows family farmers to seek protection from debtors while avoiding foreclosure and liquidation. If you're going to file for chapter 12 bankruptcy protection, it's important that you avoid making costly mistakes. Here are four mistakes you should avoid while filing for bankruptcy.
Missing Court Dates
If you've decided to file for chapter 12 bankruptcy protection, you'll be required to attend several court dates, including scheduled meetings with your court-appointed trustee. If you fail to attend those meetings, you could face court-ordered penalties. You could also have your bankruptcy case dismissed. If your case is dismissed, you will have to go through the filing process all over again. Unfortunately, if your chapter 12 bankruptcy is dismissed due to your non-appearance, you will not be allowed to file another petition for bankruptcy protection if the dismissal occurred within the past 180 days.
Taking On New Debt
Once you file for bankruptcy protection, the trustee in charge of your case will provide the courts with a complete list of your outstanding debts. This is particularly important if you have already entered into a repayment plan that the trustee has signed off on. Taking on new debt could interfere with your ability to make the necessary payments on your outstanding bankruptcy debt. To avoid problems with your bankruptcy case, don't take on any new debt until your bankruptcy has been discharged by the courts.
Failing to Modify
Under chapter 12 rules, family farmers have the right to request modifications to the payment plan if circumstances change. However, the courts can't make modifications if they don't know about the changes that have taken place. If you run into further financial problems during the bankruptcy repayment period, be sure to request a modification with the courts as soon as possible.
Falling Behind on Payments to Trustee
If you file for chapter 12 bankruptcy, the courts will require you to enter into a repayment plan that must be agreed upon by your creditors and your trustee. If you fall behind on those payments, you run the risk that your bankruptcy agreement will be voided. If it's voided due to non-payment of debt obligations, your chapter 12 could be converted to a chapter 7 liquidation bankruptcy. If that happens, you will be in danger of having your assets liquidated to pay off your outstanding debt. If you feel you will fall behind on your payments, contact your trustee as soon as you can to avoid conversion.
If you run a family farm, and you've fallen into debt, chapter 12 bankruptcy is an opportunity for you to keep your farm and get out of debt. The information here will help you avoid costly mistakes that could affect your bankruptcy.
For more information and legal advice, talk with a bankruptcy attorney in your area.