How do Chapter 12 bankruptcy proceedings work?
Bankruptcy proceedings under Chapter 12 operate similarly to Chapter 13 proceedings, with the inclusion of some Chapter 11 concepts. The main difference in Chapter 12 proceedings is that all property acquired after filing the petition is also added to the estate. Like other bankruptcy chapters, an automatic stay is in effect when the petition is filed. After the petition is filed, an order for relief is mailed to all creditors and a §341(a) meeting is set for 21 to 35 days after filing. If the debtor (i.e., the person declaring bankruptcy) is an individual with domestic obligations, the bankruptcy trustee will give notice to the ex-spouse that he or she has the right to use the services of the State child support enforcement agency to collect support during the case. The trustee must also provide notice to the State child support enforcement agency that a claim was made for domestic support obligations. When the debtor has been discharged, the trustee must give notice to the ex-spouse and child support enforcement agency of:
- The discharge.
- The debtor’s last known address.
- The debtor’s employer.
- The name of each creditor that is not discharged or was reaffirmed.
If the debtor is an individual, credit counseling must be obtained within 180 days before filing the petition. The counseling must be given by a counseling agency that is approved by the United States Trustee. A certificate indicating completion of the counseling must be obtained by the debtor and filed with the petition. If the certificate cannot be obtained before the petition is filed, a statement to that effect must be filed with the petition, and the certificate must then be filed within 14 days of filing the petition. The debtor may file a plan with the petition or within 90 days after the order for relief. The time may be extended upon showing of good cause. If there are no objections to the plan, the court will hold a hearing to confirm the plan within 45 days after the plan is filed. The debtor must prepare a notice and motion to confirm the plan not less than 15 days prior to the confirmation hearing. The notice and motion are mailed along with a copy of the plan to the trustee, all creditors, and equity security holders. A certificate of mailing must be prepared and filed with the court. If the court finds that the plan was filed in good faith, it will enter an order confirming the plan. If objections are filed, the court conducts a preliminary hearing and status conference at the time set for the confirmation hearing to determine the issues, and may enter orders pertaining to discovery. No evidence is taken and no witnesses are heard at the preliminary hearing. The court sets a date for the confirmation hearing. Within 45 days after the plan is filed, the court rules on the objections and enters the appropriate order(s). Objections must be filed within three days of the hearing date. The debtor’s obligation to make payments pursuant to the plan is substantially the same as Chapter 13 requirements. After the debtor performs all obligations required under terms of the plan, the court holds a discharge hearing and discharges the debtor. Within 10 days of the confirmation hearing, the court will consider the debtor’s eligibility for a discharge pursuant to the bankruptcy laws. If the debtor is eligible, the court will discharge the debtor. As you can see from this brief overview, a bankruptcy filing is a complicated matter. If you are contemplating filing bankruptcy under Chapter 12, an experienced bankruptcy lawyer can help you through each step of the proceedings.