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In Utah, bankruptcy claims give consumers and business owners an automatic stay. The stay provides them with a safeguard that prevents the immediate loss of property and assets. The stay remains if the court approves of the case. The case also helps these individuals by presenting them with a structured repayment plan to settle their debts. The following are FAQs answered by a Bankruptcy Attorney about chapter 12 bankruptcy.
What is Chapter 12?
Chapter 12 is similar to chapter 13 in that it is a reorganized payment plan. However, this chapter is designed for family-owned farms and fishing companies. The claimant must be either an individual who acts as the owner, or they must file a joint motion with a spouse. For this chapter, the farm cannot have debts that exceed $3,237,000. A fishing company cannot owe more than $1,500,000.
What Individuals Qualify for Chapter 12?
Again, the company must be family-owned and operated. It can possess a license for a corporation. However, it must be operated by a family that has a controlling interest in the company. The company cannot be overseen by a board of directors that aren’t related.
Why is This Chapter Chosen by These Companies?
These bankruptcy claims don’t prevent the company from operating. The owner continues working and generating an income during the case. In comparison to chapter 11, the owner maintains full control over the operations of the company and won’t suffer financial losses due to restrictions. Chapter 11 is available to all companies and isn’t restricted to farms or fishing companies only.
How Far Back Should the Attorney Assess the Debts?
The attorney needs income statements for the last three years. The documents provide a clear picture of how the company utilizes its resources. The process enables the attorney to create a repayment plan based on income and outgoing expenses. They evaluate a more appropriate opportunity for paying off debts without suffering a major financial loss.
Are There Restrictions that Apply to Cash Collateral and Payroll?
Yes, the court must provide them with permission to use cash collateral to pay their workers. The cash collateral is used as directed in the repayment plan. They need prior approval to use any generated cash.
In Utah, chapter 12 bankruptcy claims help family-owned farms and fishing companies settle their debts. The chapter presents protection against creditors who want to seize assets. Families that need help contact an attorney now.
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