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Consumer Bankruptcy Law and Practice: About the Form

The short title form of caption is prescribed for general use in filing papers in bankruptcy cases. It should not be used on the petition, the notice of the meeting of creditors, the order of discharge, and the documents relating to a chapter 11 plan (Official Forms 101, 309, 312, 313, 314, 315, and 318), which require the full caption set out in Official Form 416A. See Fed. R. Bankr. P. 2002(m). The title specifies that this form can be used when section 342(c) of the Bankruptcy Code is not applicable.

Consumer Bankruptcy Law and Practice: 17.4.3.2 Exemptions for “Tools of Trade” and “Livestock”

The federal exemptions and almost all state-formulated exemptions provide protection for “tools of trade.”287 This category is of special interest to farmers, allowing exemption of the tools utilized in the farming operation.288 A minority of courts exempt farm implements as “tools of trade” only if they are smaller, hand-held tools,289 but the majority view is that farm equipment and implements may be exempted under a functional or “use” test subj

Consumer Bankruptcy Law and Practice: 17.4.3.3 Lien Avoidance Under Section 522(f)

Section 522(f) lien avoidance provisions for exempt property and tools of trade impaired by judicial liens and non-possessory, non-purchase money security interests are available for farmers under all bankruptcy chapters.297 In many cases, a farmer will be able to recapture some farm equipment and reduce the amount of repayment to a secured creditor because a blanket non-purchase money interest covers the equipment.298 However, lien avoidance in this situation will be limited to farm eq

Consumer Bankruptcy Law and Practice: 17.4.3.4 Section 552 Lien Dissolution

Section 552 governs the postpetition effect of a security interest, dissolving that interest with respect to most collateral obtained after filing. This protection is particularly important in farm bankruptcy in that most farm security agreements include an “after-acquired” property clause that provides that the security interest will attach to property that the debtor acquires in the future. Section 552(a) automatically cuts off the creditor’s security interest in certain after-acquired property.

Consumer Bankruptcy Law and Practice: 17.4.3.5.1 Introduction

A chapter 12 debtor-in-possession has the same powers to avoid liens and recapture property as trustees under chapters 7 and 11 and debtors-in-possession under chapter 11.317 These avoidance and recapture abilities are analyzed elsewhere in this treatise.318 This subsection concentrates on avoidance and recapture issues of special interest to farmers.

Consumer Bankruptcy Law and Practice: 17.4.3.5.3 Preferential transfers

Several kinds of transfers to farm creditors may be preferential, subject to recapture under section 547(b). Recovery of preferences can provide the farmer with needed working capital, can redistribute the debtor’s assets more equitably among creditors, or can go to satisfy secured debts.

Consumer Bankruptcy Law and Practice: 17.4.3.5.4 Avoidance of improperly perfected security interests and statutory liens

The chapter 12 debtor-in-possession also is entitled to use the “strong-arm powers” of a trustee, including the power to avoid unperfected security interests.332 Attorneys for farmers are well advised to check all creditors’ security interests to determine whether they have properly attached and were perfected.333

The debtor may also be able to avoid a statutory lien if the requirements of section 545 of the Code are met.334

Consumer Bankruptcy Law and Practice: 17.5.9 Other Plan Provisions

Section 1222(b)(11) specifically authorizes the inclusion of any appropriate provision in a chapter 12 plan so long as it does not contravene the confirmation standards of sections 1222 and 1225.701 This allows for quite a bit of creativity in fashioning a workable chapter 12 plan. Nevertheless, counsel should never let this creativity obscure the primary—and pragmatic—goal of confirmation.

Consumer Bankruptcy Law and Practice: 17.6 Denial of Confirmation

In the event confirmation of a chapter 12 plan is denied, the court may dismiss the case under 11 U.S.C. § 1208(c)(5).720 This is the anticipated route when it appears to the court that no feasible plan can be constructed or when confirmation standards cannot possibly be met given the factual circumstances of a case.

Consumer Bankruptcy Law and Practice: 17.7.1 Scope of the Chapter 12 Discharge

The chapter 12 discharge is a hybrid of some of the discharge provisions available in other chapters.724 Like chapters 7 and 11, but unlike chapter 13, the discharge in chapter 12 excepts debts that are nondischargeable pursuant to section 523(a).725 Like chapter 13, the chapter 12 discharge excepts long-term indebtedness when the maturity date is beyond the life of the chapter 12 plan.726 The chapter 12 discharge also excepts secured indebtedness

Consumer Bankruptcy Law and Practice: 17.7.3 Revocation of Discharge

Revocation of discharge in chapter 12 cases is addressed by section 1228(d). On request of a party in interest and notice and hearing within one year after discharge under this section, the court may revoke such discharge only if such discharge was obtained by the debtor through fraud, and the requesting party did not learn of such fraud until after the discharge was granted. Unlike chapter 11, in which the discharge is issued at confirmation, the discharge in a chapter 12 case is issued at the end of the case.

Consumer Bankruptcy Law and Practice: 17.8.2 Postconfirmation Indebtedness

Indebtedness incurred by the debtor after confirmation of a chapter 12 plan must be paid by the debtor separate and apart from the plan and not as a part of the chapter 12 proceeding.774 Unlike chapter 13, chapter 12 does not have a provision to allow postpetition indebtedness accrued for taxes, approved by the trustee, or incurred upon an emergency basis to be folded back into the plan.775

Consumer Bankruptcy Law and Practice: 17.8.3 Revocation of Confirmation

The confirmation of a chapter 12 plan may be revoked if the order of confirmation was procured by fraud.780 Revocation must be requested by a party in interest within one-hundred-eighty days of the entry of the order confirming the plan.781 Notice and a hearing are required prior to revocation.782 If confirmation is revoked, then the court will dispose of the chapter 12 case by dismissal, or, if appropriate, by conversion to chapter 7, unless the c

Consumer Bankruptcy Law and Practice: 17.4.4.4 Stay Limitations for Repeat Filings

The 2005 amendments added a provision to section 362 that authorizes the lifting of the automatic stay thirty days after the petition is filed if an individual debtor has filed a bankruptcy that is dismissed and then refiles under chapter 7, 11, or 13 within one year of the dismissal.360 Chapter 12 is notably absent from the list of included chapters, so a debtor may be able to refile under chapter 12 without concern for this provision.

Consumer Bankruptcy Law and Practice: 17.4.5 Objections to Discharge

As in chapter 13, the chapter 12 debtor is granted a discharge at such time as the debtor has completed making all of the payments called for by the plan, other than payments made extending beyond the plan period.364 The scope of the chapter 12 discharge, however, is similar to that available in chapter 11.365 Unlike the broader chapter 13 discharge,366 the confirmation and consummation of a chapter 12 plan will not discharge debts that would be no

Consumer Bankruptcy Law and Practice: 17.4.6.1 Voluntary Dismissal

As under section 1307(a) for chapter 13 debtors, section 1208(b) allows the family farmer debtor, upon their own request, to dismiss a chapter 12 proceeding at any time without permission of the court, unless the case is in chapter 12 as a result of a conversion from either chapter 7 or 11.370 Any waiver of that right of conversion is unenforceable.371 If the case is a conversion to chapter 12 from either chapter 7 or chapter 11, then court approval upon notice and hearing is required prior to d