Chapter 12 Bankruptcy in Orlando is a legal process designed explicitly for family farmers and fishermen. It allows these individuals to understand their debts and prepare a plan to repay them over a period of three to five years. However, many misconceptions and myths about Chapter 12 bankruptcy can confuse people.
Here are some of the most common myths about Chapter 12 bankruptcy.
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Chapter 12 bankruptcy is only for farmers and fishermen with large operations.
Fact: While Chapter 12 bankruptcy is primarily designed for family farmers and fishermen, it applies to individuals who derive a significant portion of their income from farming or fishing operations, regardless of the size of their operation.
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Filing for Chapter 12 bankruptcy will result in the loss of assets and property.
Fact: Unlike Chapter 7 bankruptcy, a liquidation bankruptcy, in Chapter 12, the individual can keep their assets and property, including their farming or fishing operation. Additionally, the individual can continue operating their business during repayment.
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Filing for Chapter 12 bankruptcy is not a good option because it does not discharge the debt.
Fact: While Chapter 12 bankruptcy does not discharge debt, it allows individuals to reorganize their debts and create a repayment plan based on their income and expenses. This can make it more manageable for the individual to repay their debts and can improve their financial situation over time.
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Chapter 12 bankruptcy is only for farmers and fishermen deeply in debt.
Fact: While Chapter 12 bankruptcy is primarily designed for individuals with a significant amount of debt from farming or fishing operations, eligibility is not a requirement. The individual must meet certain criteria, including being a family farmer or fisherman, having a regular income, and having significant debt from farming or fishing operations.
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Chapter 12 bankruptcy is a rare process; few people file for it.
Fact: While Chapter 12 bankruptcy is not as common as other types of bankruptcy, it is still available to eligible individuals and can give them a fresh start. According to the U.S. courts, in 2020, there were around 1,300 Chapter 12 bankruptcy cases filed.
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Filing for Chapter 12 bankruptcy will ruin my credit score.
Fact: Filing for Chapter 12 bankruptcy can impact one’s credit score, but the repayment plan is based on the individual’s income and expenses, making it more manageable to repay their debts. Additionally, the individual can continue to operate their farming or fishing business during the repayment period, which can help to improve their financial situation over time.
In conclusion, Chapter 12 bankruptcy is a legal process designed for family farmers and fishermen. It allows these individuals to reorganize their debts and create a plan.
