Idaho Chapter 12 Lawyer

Bankruptcy is a federal court process that allows individuals and businesses in Idaho to either eliminate their debts or repay them under a payment plan.

The person or business that has filed a bankruptcy case is called the debtor. A creditor is any person or business to whom the debtor owed a debt on the date the bankruptcy case was filed.

A bankruptcy discharge releases the debtor from personal liability for certain types of debts. The discharge is a permanent order prohibiting the creditors of the debtor from taking any form of collection action on discharged debts.

Chapter 12

Chapter 12 is one type of bankruptcy. It allows farmers and fisherman in Idaho to repay their debts over time. Under chapter 12, debtors propose a repayment plan to make installments to creditors over a three to five year period.

Chapter 12 is less complicated and less expensive than chapter 11. Chapter 12 permits a Idaho family farmer to attempt to restructure its debt, usually with the main secured creditor, in order to keep ownership and use of a farm.

Chapter 12 allows Idaho family farmers to adjust their debts according to a plan. A plan is not effective unless it's confirmed by the court. The debtor remains in possession of property and may continue to operate the debtor's business unless the court orders otherwise.

Chapter 12 Eligibility Requirements

Chapter 12 is available to two categories of debtors:

Family farmers with regular annual income
Family fisherman with regular annual income

Definition of Family Farmer with Regular Annual Income

The definition of family farmer with regular annual income is very broad and was designed to allow nearly every person who qualifies as a "family farmer" to be eligible for chapter 12 relief. A Idaho family farmer includes individuals, corporations and partnerships as long as it is family owned.

Additionally, to be eligible, the Idaho family farmer must have regular annual income out of which plan payments may be made. A chapter 12 plan will only be confirmed if the court finds the debtor will be able to make all proposed payments. If the court makes such a finding, then the debtor presumably has income sufficiently stable and regular to fund a plan and should meet the eligibility definition. The source of the income does not need to be farm related.

Maximum Debt Limit

The maximum debt limit for a Idaho family farmer is $3,544,525. The debt limit is calculated using all debts owed by the debtor.

Discharge of Debts

The debtor will receive a discharge after completing all payments under the chapter 12 plan as long as the debtor certifies that any domestic support obligations have been paid. The discharge has the effect of releasing the debtor from all debts provided for by the plan. The creditors who were provided for either in full or in part under the plan may not initiate or continue any legal or other action against the debtor to collect the discharged obligations.

Debts Not Discharged

Some categories of debts are not discharged in chapter 12 proceedings. Those categories include:

Debts for alimony and child support
Money obtained through filing false financial statements
Debts for willful and malicious injury to person or property
Debts for death or personal injury caused by the debtor's operation of a motor vehicle while intoxicated
Debts from fraud while acting in a fiduciary capacity, embezzlement or larceny

Two Types of Discharge

A debtor who has completed making all payments under the plan, other than long-term payments on secured claims, is entitled to receive a discharge. This type of discharge is sometimes referred to as a "full-compliance" discharge. A debtor who has not completed making all payments may nonetheless receive a discharge under certain circumstances if approved by the court. This type of discharge is referred to as a "hardship discharge."