Chapter 12 Bankruptcy – Helping Family Farmers

08 Dec Chapter 12 Bankruptcy – Helping Family Farmers

Chapter 12 bankruptcy and family farmers, two things that go hand in hand.

Aclient recently asked to help her save her home from bankruptcy. Chapter 13 would be difficult because this debtor really needed a mortgage modification. However, this family was special. They took care of horses. They even bred some horses. We looked at the Bankruptcy Code with a magnifying glass and figured out that we could qualify them as a “family farmer” within the meaning of the Bankruptcy Code.

So far, we are just defending the mortgage in state courts in Wisconsin. It turned out that the Bank forgot to give this family any Truth in Lending Disclosures, treating the loan on their house as a “business loan”. That was a big mistake for the Bank. We’ll probably be able to settle with them without having to file a chapter 12 case.

However, in chapter 12, we’d be able to force the bank to modify the mortgage – something which we wouldn’t necessarily be able to do in chapter 13. And in chapter 12, we’d have more leverage than we would even if we decided to file a chapter 13 plan for these honest, hardworking consumers.

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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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