Avoid Mistakes When Planning and Filing Virginia Bankruptcy Cases

The best-planned bankruptcy cases go unnoticed. A few debtors glide through the system without attracting attention and receive full discharges in record time. Luck is not involved, but rather each successful debtor begins planning strategically a few weeks or months in advance. These debtors know something that you don’t.

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Virginia Bankruptcy - Chapter 12 Family Farmer

Chapter 12 applies to the adjustment of debts of a family farmer with regular income. Originally enacted in 1986, this form of reorganization of debts is similar to Virginia bankruptcy under Ch. 13, however subject to higher allowances for included debt, special plan provisions, and the unique definition of "family farmer" provided for in 11 U.S.C. 101(18). To be an individual family farmer, the code requires "the individual or individual and spouse engaged in a farming operation whose aggregate debts do not exceed $1,500,000 and not less than 80 percent of whose aggregate noncontingent, liquidated debts (excluding a debt for the principal residence of such individual or such individual and spouse unless such debt arises out of a farming operation), on the date Virginia bankruptcy is filed, arise out of a farming operation owned or operated by such individual or such individual and spouse, and such individual or such individual and spouse receive from such farming operation more than 50 percent of such individual's or such individual and spouse's gross income for the taxable year preceding the taxable year in which the Virginia bankruptcy concerning such individual or such individual and spouse was filed."

Because of the seasonal nature of farming, Congress deemed monthly payments required by other chapters unsuitable for farmers. If qualified, a family farmer filing a Virginia bankruptcy under Ch. 12 must generate at least 50% of their income from farm operations and be capable of making regular payments. If past income is unstable, plan confirmation may be denied.

Chapter 12 Payments in Virginia Bankruptcy

According to 11 U.S.C. 1226, "payments and funds received by the trustee shall be retained by the trustee until confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall distribute any such payment." In practice, the requirement of payments to a trustee while in Virginia bankruptcy under Ch. 12 includes payment of trustee fees which are deducted from amounts paid to creditors. Following the completion of the plan remaining debts are discharged similarly to the restrictions placed on Ch. 13 discharges.

The Code provides numerous options for discharge and reorganization of debts. The benefits and burdens upon debtors varies, and may provide a significant improvement in financial condition. Because the law evolves daily through legislative and judicial decisions, the assistance of qualified legal counsel is essential to gain the maximum benefit allowed by law.

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