Chapter 7 (The Chapter 12 Bankruptcy (Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income)) (pp. 344-387)
344 chapter title -- after "Family Farmer" add "or Family Fisherman"
345 ¶ 1 -- line 1 -- after "farmer" add "or family fisherman"
line 2, after "annual income." Add the following sentence (Insert 7-1)
Insert 7-1
Effective July 1, 2005, Chapter 12 became a permanent chapter of the Bankruptcy Code.
¶ 1 line 4 -- after "farmers" add "and fishermen"
¶ 1 line 5 -- after "farmers" add "or fishermen"
¶ 1 line 6 -- change § 101(19) to §§ 101(19), 101(19A).
After the first paragraph add Insert 7-2.
Insert 7-2
The following are changes to Chapter 12 caused by Bankruptcy Abuse Prevention and Consumer Protection Act
· Makes Chapter 12 a permanent chapter of the Bankruptcy Code
· Makes Chapter 12 available to family fishermen as well as to family farmers
· Increases the debt limits for a family farmer from $1.5 million to $3,237,000
· Reduces from 80% to 50% the percent of debt attributable to farming operations
· If the trustee or unsecured creditor objects to confirmation, an alternative method is available for determining minimal distributions to unsecured creditors by looking to the value of property to be distributed for a three year period or longer
· Ongoing domestic support obligations are excluded from disposable income
· All domestic support obligations that first become payable after the petition is filed must be paid before a plan may be confirmed
· Before a discharge will be entered the debtor must certify that all domestic support obligations have been paid
¶ 2 #1. Change $1,500,000 to $3,237,000;
#2. Change 80 to 50
#3. After "debtor's gross income for" add "each of the second and third"
¶3 #3. Change $1,500,000 to $3,237,000;
#4. Change 80 to 50
last ¶, line 2 -- after "that required" add the parenthetical "(at the time he filed -- pre-BAPCPA)"
last ¶, line 4 -- after "a significant portion of" -- delete "his income" and replace with "it"
last ¶, line 5 -- delete "rent." and replace with "of real estate."
348 after end of the case (In re Swanson) and before the first paragraph on p.348, add Insert 7-3
Insert 7-3
With the advent of BAPCPA, Chapter 12 is available to a family fisherman. The term family fisherman is defined in 11 U.S.C.A. § 101(19A) to identify who is eligible for Chapter 12 bankruptcy as a family fisherman.
1. the aggregate debt must not exceed $1,500,000;
2. at least 80% of the aggregate noncontingent, liquidated debts must arise out of the debtor’s commercial fishing operation; and
3. more than 50% of the debtor’s gross income for the preceding taxable year must arise out of the debtor’s commercial fishing operation.
For a partnership or corporation to be considered a family fisherman
1. more than 50% of the partnership or outstanding stock must be held by one family or the relatives of one family that conducts a commercial fishing operation;
2. more than 80% of the value of the partnership or corporate assets must consist of assets related to the commercial fishing operation;
3. the aggregate debts must not exceed $1,500,000; and
4. not less than 80% of its aggregate noncontingent, liquidated debts must arise out of the commercial fishing operation.
If the entity is a corporation that issued common stock, the stock must not be publicly traded. 11 U.S.C.A. § 101(19A).
348 ¶1 line 1 -- after "farmers" add "or fishermen"
delete the line with the third bullet point.
8th bullet point -- change "six" to "eight"
349 within Exhibit 7-1 -- title -- change from "Filing the Chapter 12 Petition" to "The Chapter 12 Process"
357 last ¶ #2 delete the text to #2 and replace with Insert 7-4
Insert 7-4
2. A Chapter 12 plan must provide for the full payment of all priority claims (11 U.S.C.A. § 507) unless: (a) the holder of the claim agrees to a different treatment; or (b) the claim is owed to a governmental unit that arises as a result of the sale, transfer, exchange or other disposition of any farm asset used in the debtor’s farming operation, in which case the claim is treated as an unsecured claim that is not entitled to priority under Section 507, but only if the debtor receives a discharge. In other words, the tax attributable to a gain on the sale of a farm asset is treated as an unsecured claim rather than as a priority claim that must be paid in full under the plan.
358 top of page after #3 -- change #4 to #5 and insert a new #4 (insert 7-5)
Insert 7-5
4. A plan may provide for payment of less than all a domestic support obligation owed or assigned to a governmental unit if the plan provides that all of the debtor’s projected disposable income for a 5-year period will be applied to payments under the plan. 11 U.S.C.A. § 1222(a)(4).
359 The Chapter 12 Plan --
change the style of the case so it reads:
In re Oliver, Ronald Milton )
)
Debtor ) Case No.: xx-xxxxx
)
[Address] ) Chapter 13
Last four digits of Social )
Security No.: ______)
Employer’s Tax Identification )
No: ______)
[see Form 16A – enclosed]
Class 1 line 2 change 507(a)(1) to 507(a)(2)
361 first line -- error in citation -- change 222(b)(6) to 1222(b)(6)
363 top of the page -- delete the first example
After the first paragraph explaining the plan (¶ begins "Like Chapter 13") and before the paragraph beginning "Class 1" add Insert 7-6.
Insert 7-6
Since the debtor did not owe alimony or child support, no domestic support obligation was owed, it did not become a factor in drafting the plan.
370 Paragraph beginning "If the Chapter 12 debtor" -- last line -- change citation from 704(8) to 704(a)(8)
Next paragraph -- #1 correct citation so it reads 521(a)(1).
#3 correct the citation so it reads 1202(b). rather than 1202(5).
373 ¶ after the case, line 2 -- add Insert 7-7 after "to dismiss the case"
Insert 7-7
for cause (including the failure to pay a domestic support obligation that became payable post-petition) or for fraud
375-376 Exhibit 7-3 – Replace B9G dated (12/03) with new B9G dated (10/05). This form may be found www.uscourts.gov/bkforms/bankruptcy_forms.html
377-378 Exhibit 7-4 – Replace B9GHdated (12/03) with new B9H dated (10/05). This form may be found at www/iuscourts.gov/bkforms/bankruptcy_forms.html
379 2nd ¶, line 3 -- change 1225 to 1225(a)
change Section 1225 to Section 1225(a)
No. 4, 4th line -- delete the remainder of #4 beginning with "Although" (2 sentences and a citation) and add insert 7-8
Insert 7-8
Although unsecured creditors may not vote for or against a plan, they may object to confirmation. If the holder of an allowed unsecured claim objects to confirmation, the plan may be confirmed over the objection only if one of the three conditions is met:
a. the amount to be paid under the plan on account of such claim is not less than the amount of such claim—that is, the claim will be paid in full even though over time;
b. the plan provides that all of the debtor’s projected disposable income during the term of the plan will be applied to make payments under the plan; or
c. the value of the property to be distributed under the plan during the 3 to 5 year term of the plan, beginning on the date that the first distribution is due under the plan, is not less than the debtor’s disposable income for such period. 11 U.S.C.A. § 1225(b)(1).
Disposable income means income which is received by the debtor but is not reasonably necessary for the maintenance or support of the debtor or a dependent of the debtor or for a domestic support obligation payable to the debtor that first becomes payable post-petition, or for the payment of expenditures necessary for the continuation, preservation and operation of the debtor’s business. 11 U.S.C.A. § 1125(b)(2). It is through the definition of disposable income that the court, Chapter 12 trustee and creditors have the right to provide input on whether the living expenses and business expenses are reasonable or necessary.
380 after ¶ number 6 add number 7 --( Insert 7-9)
Insert 7-9
7. The debtor must pay domestic support obligations that first become payable after filing the petition. 11 U.S.C.A. § 1225(a)(7).
386 Section 13, 4th ¶, line 2 -- change "six" to "eight"
After the last ¶ of Section 13, add Insert 7-10
Insert 7-10
There is an additional impediment to the granting of a Chapter 12 discharge. A court may not grant a discharge unless the court finds that: (a) there is no reasonable cause to believe that the debtor has either been convicted of a felony or there is pending a proceeding in which the debtor may be found guilty of a felony which demonstrates that the filing of the petition was an abuse of the bankruptcy process, or (b) the debtor either owes a debt or there is a proceeding pending in which the debtor may be found to owe a debt arising from a violation of state or federal securities laws, arising from fraud, deceit or manipulation in a fiduciary capacity, arising from a civil remedy under 18 U.S.C.A. § 1964 [civil rights violation], or arising from a criminal act, intentional tort, or willful or reckless misconduct that caused serious physical injury or death to another individual in the preceding 5 years. 11 U.S.C.A. §§ 1228(f), 522(q).
Finally, a discharge will not be granted unless the debtor certifies that all domestic support obligations have been paid, including amounts due before the petition was filed but only to the extent they are provided for by the plan. 11 U.S.C.A. § 1228(a).
387 Add the following to Key Terms --
Domestic support obligations
Family fisherman
1