Chapter Twelve and Chapter Thirteen of the bankruptcy code are both debt repayment plans, but there are several differences between Chapter Twelve and Chapter Thirteen. Chapter Twelve is only for family farmers. Chapter Twelve, unlike Chapter Seven, is a repayment plan, not an automatic liquidation of your property. In Chapter Twelve, you may continue to use your farmland, including your residence, without paying the full monthly mortgage. Instead, you may pay 'reasonable rent,' which is defined as what is customary to the community, as decided by the bankruptcy court. Chapter Twelve also allows you a longer period of time to repay your debts than the three-to-five years normally allowed in Chapter 13, and you have a longer time to file the initial repayment plan. You also can have a longer period of time in which to turn over disposable income to pay unsecured creditors. The disadvantage of filing Chapter Twelve, as with filing any type of bankruptcy, is that there may be long-term consequences. Under federal law, bankruptcies appear on your credit report shortly after you file your papers with the bankruptcy court and remain on there for ten years when you file Chapter Twelve. Having a bankruptcy on your report may make it difficult for you in the future to obtain loans or a mortgage. For information about the advantages and disadvantages of filing Chapter Twelve, be sure to contact a bankruptcy attorney.
