Hawaii Debt Relief Attorney Helps Clients Understand Bankruptcy Distinctions: Chapter 12 vs. Chapter 11

How do you protect your business if you are a fisher, farmer or rancher in the state of Hawaii, and your business is having financial difficulties? It is important to know that there are ways out of your struggles. Bankruptcy is an institution that is there for you to help you start fresh and make your business viable. Keeping control of your business operation is key to your success and you can do it with the protection offered by federal law.

It is important to know the differences between types of bankruptcy. Chapter 12 bankruptcy is a bankruptcy created for “family farmers” and also includes commercial fishermen, other types of agricultural operations, as well as ranching. If you have a family business in which the majority of income comes from the farming or fishing operation, you can file for Chapter 12. Once the filing is made, the debtor is assigned a trustee. The debtor continues the operations while proposing a repayment plan. The court decides whether to accept the plan of repayment plan altogether. Once the plan is decided upon, it can last anywhere from three to five years.

Filing for Chapter 12 can make a lot of good, fiscal sense to the struggling fisher, farmer or rancher in the state of Hawaii. First of all, under Chapter 12 filing, debtors do not have to liquidate their assets — they actually get to keep everything, not just the items that meet the legal exemption, provided they commit to pay their “disposable income” to creditors. Also, in most Chapter 12 filings, the debtor is repaying only a percentage of what he or she actually owes – a great advantage to a family farming operation that is drowning in debt.

A Chapter 11 bankruptcy, it is similar to Chapter 12 in that it is for businesses and individuals, and but it is different in that there is no limit regarding the amount of money owed by the debtor. The current debt limit for Chapter 12 is over $10 million. Chapter 11 may be a good idea for a small business seeking to restructure and continue in operation if it is owned by a partnership, limited liability company, or corporation that is not engaged in farming or commercial fishing or does not otherwise qualify for Chapter 12. Chapter 11 is the only bankruptcy option for individual business debtors who want to reorganize, but may owe too much money to meet Chapter 12 or 13’s eligibility requirements.

No matter your situation, you need a qualified, experienced Hawaii debt relief lawyer who can help advise you as to where to turn and how to proceed with a bankruptcy filing. Successful confirmation and successful family businesses are my goal. Serving the Big Island for a decade and practicing bankruptcy for more than three decades, Barbara L. Franklin will work for you to get your family business back on track. Call her today.