In an era of financial instability, most of us have come across terms such as bankruptcy.
According to economists and financial advisors, it is extremely important to learn about key concepts like these to prevent any unexpected financial crisis.
In the United States of America, bankruptcy laws are meant to deal with debt issues of individuals, companies or even the government.
Bankruptcy is categorized under several categories that include Chapter 7, Chapter 9, and Chapter 11 and so on.
These chapters are further classified under three sections.
Chapter 12 also referred to as the Family Fisherman or Family Farmer Bankruptcy is included in both section one and section two.
Family fisherman or family farmer refers to an individual or the individual and his spouse or a partnership or cooperation.
In the case of partnerships or corporations, the firms should be owned solely by a single family unit.
Alternately, in case of individuals or individual and his spouse, the individuals must be involved in either commercial fishing business or farming activities.
Another requisite is that the entire debt amount must not have exceeded $3,544,525 in reference to a farming cooperation.
In reference to a commercial fishing corporation, the limit is $1,642,500.
In addition, over 50% of the family's annual revenue should have come from farming or fishing cooperation.
The guidelines for people who file for bankruptcy under Chapter 12 are similar to those under Chapter 7, 11 and 13.
As per the norms followed under Chapter 12, the debtor is allowed to repay his creditors in small installments.
For this, the debtor has to survive on a fixed budget for a certain period of time.
Furthermore, the debtor cannot seek any new debt during this time period as that can make it further difficult for the creditors to get back their money.