1. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law 6 th Edition Chapter 21 Creditors’ Rights and Bankruptcy

2. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 2 Laws Assisting Creditors Liens: –Consensual. –Statutory. –Judicial. Other Remedies: composition agreements, ABC’s. Suretyship. Liens: –Consensual. –Statutory. –Judicial. Other Remedies: composition agreements, ABC’s. Suretyship.

3. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 3 Liens Consensual Liens. –Personal property as collateral (UCC Art. 9 UCC Secured Transactions). –Real property as collateral (Mortgage). Statutory Liens. –Mechanic’s Lien. –Artisan’s Lien. –Innkeeper’s Lien. Consensual Liens. –Personal property as collateral (UCC Art. 9 UCC Secured Transactions). –Real property as collateral (Mortgage). Statutory Liens. –Mechanic’s Lien. –Artisan’s Lien. –Innkeeper’s Lien.

4. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 4 Liens Judicial Liens: Attachments, Writs of Execution, Garnishment. Mechanic’s Lien: Nonpossessory filed lien on real estate for labor/services. –Case 21.1 AEG Holdings, LLC v. Tri-Gem’s Builders, Inc. (2002). Judicial Liens: Attachments, Writs of Execution, Garnishment. Mechanic’s Lien: Nonpossessory filed lien on real estate for labor/services. –Case 21.1 AEG Holdings, LLC v. Tri-Gem’s Builders, Inc. (2002).

5. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 5 Liens Artisans’ Lien: Possessory lien on personal property for labor done to property. Innkeeper’s Lien: Possessory lien on baggage for unpaid hotel charges. Judicial Liens: Court-ordered seizure/sale of property. –Attachment. –Writ of Execution. Artisans’ Lien: Possessory lien on personal property for labor done to property. Innkeeper’s Lien: Possessory lien on baggage for unpaid hotel charges. Judicial Liens: Court-ordered seizure/sale of property. –Attachment. –Writ of Execution.

6. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 6 Garnishment Judicial order that allows creditor to collect a debt by seizing property of the debtor that is being held by a third party, usually wages.

7. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 7 Creditor’s Composition Agreements Creditors take less than owed on a liquidated debt. Binding on those who agree because consideration given by each depending on one another. Creditors take less than owed on a liquidated debt. Binding on those who agree because consideration given by each depending on one another.

8. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 8 Mortgage Foreclosure Mortgagor (Debtor-Borrower). Mortgagee (Creditor-Lender). Debtor Defaults: Foreclosure - go through court to have sheriff seize, advertise, and sell property. Mortgagor (Debtor-Borrower). Mortgagee (Creditor-Lender). Debtor Defaults: Foreclosure - go through court to have sheriff seize, advertise, and sell property.

9. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 9 Mortgage Foreclosure Money goes to expenses of sale, creditors in descending order of priority, then debtor if any left. If there is still money owed to creditor after foreclosure there is a deficiency, and the debtor is still liable for this. Equity of redemption within statutory period of redemption by the debtor. Money goes to expenses of sale, creditors in descending order of priority, then debtor if any left. If there is still money owed to creditor after foreclosure there is a deficiency, and the debtor is still liable for this. Equity of redemption within statutory period of redemption by the debtor.

10. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 10 Suretyship and Guaranty Promise by a third person (Surety/ Guarantor) to pay a the Creditor a debt owed by Debtor in the event the Debtor does not pay. Principal Debtor Creditor Surety / Guarantor

11. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 11 Surety Express contract between the surety and the creditor. Surety has primary liability. Creditor can demand payment from surety at any time after debt is due. Creditor need not exhaust all legal remedies against the debtor before holding the surety responsible. Express contract between the surety and the creditor. Surety has primary liability. Creditor can demand payment from surety at any time after debt is due. Creditor need not exhaust all legal remedies against the debtor before holding the surety responsible.

12. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 12 Guaranty Secondarily liable, debtor must default, creditor has attempted to collect from the debtor. Statute of Frauds requires guaranty to be in writing. Secondarily liable, debtor must default, creditor has attempted to collect from the debtor. Statute of Frauds requires guaranty to be in writing.

13. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 13 Defenses of Surety & Guarantor Surety can use any of the Debtor’s defenses EXCEPT incapacity, bankruptcy, or statute of limitations. Surety can use his own defenses, EXCEPT fraud between Debtor and Surety that is unknown by creditor. Surety can use any of the Debtor’s defenses EXCEPT incapacity, bankruptcy, or statute of limitations. Surety can use his own defenses, EXCEPT fraud between Debtor and Surety that is unknown by creditor.

14. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 14 Defenses of Surety & Guarantor Material contract modification between Debtor and Creditor will release a gratuitous surety and a compensated surety to the extent he suffers a loss. Surrender or impairment of the Debtor’s collateral releases surety to the extent he is damaged. Release of a co-surety releases surety to the extent he is damaged. Material contract modification between Debtor and Creditor will release a gratuitous surety and a compensated surety to the extent he suffers a loss. Surrender or impairment of the Debtor’s collateral releases surety to the extent he is damaged. Release of a co-surety releases surety to the extent he is damaged.

15. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 15 Rights of Surety & Guarantor Right of Subrogation. Right of Reimbursement. Right of Contribution from Co-sureties. –Sureties in equal amounts. –Sureties in equal amounts, one or more co- sureties missing or insolvent. Right of Subrogation. Right of Reimbursement. Right of Contribution from Co-sureties. –Sureties in equal amounts. –Sureties in equal amounts, one or more co- sureties missing or insolvent.

16. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 16 Laws Assisting Debtors Exemptions (Federal and State). –Homestead. –Personal property. Holder in Due Course does not work against consumers. Truth-in-Lending Act for consumers. Exemptions (Federal and State). –Homestead. –Personal property. Holder in Due Course does not work against consumers. Truth-in-Lending Act for consumers.

17. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 17 Bankruptcy and Reorganization Article I, Section 8 of the U.S. Constitution. Federal jurisdiction. Bankruptcy Reform Act of 1978, amended by Reform Act of 1994. Federal court under U.S. district court, can appeal to district courts. Federally appointed judges. Article I, Section 8 of the U.S. Constitution. Federal jurisdiction. Bankruptcy Reform Act of 1978, amended by Reform Act of 1994. Federal court under U.S. district court, can appeal to district courts. Federally appointed judges.

18. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 18 Types of Bankruptcy Relief Bankruptcy code has 8 chapters. 1,3, 5 - general definitional provisions and provisions covering administration, creditors, debtor and estate. Chapter 7 - liquidation proceedings. Chapter 9 - adjustment of debts of a municipality. Bankruptcy code has 8 chapters. 1,3, 5 - general definitional provisions and provisions covering administration, creditors, debtor and estate. Chapter 7 - liquidation proceedings. Chapter 9 - adjustment of debts of a municipality.

19. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 19 Chapter 11 – reorganizations. Chapter 12 - adjustment of debts of family farmers with regular incomes. Chapter 13 - adjustment of debts of individuals with regular incomes. Chapter 11 – reorganizations. Chapter 12 - adjustment of debts of family farmers with regular incomes. Chapter 13 - adjustment of debts of individuals with regular incomes. Types of Bankruptcy Relief

20. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 20 Chapter 7--Liquidation Chapter 7: Ordinary or straight bankruptcy. All assets are turned over to a trustee. Trustee sells nonexempt property and distributes the proceeds to the creditors. Remaining debts are discharged. Available for any person, individual, corporation, partnership. Railroads, insurance companies, banks, savings and loan and investment companies licensed by the SBA, and credit unions cannot be debtors. Chapter 7: Ordinary or straight bankruptcy. All assets are turned over to a trustee. Trustee sells nonexempt property and distributes the proceeds to the creditors. Remaining debts are discharged. Available for any person, individual, corporation, partnership. Railroads, insurance companies, banks, savings and loan and investment companies licensed by the SBA, and credit unions cannot be debtors.

21. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 21 Filing the Petition Straight bankruptcy is commenced by the filing of a voluntary or involuntary petition in bankruptcy with the bankruptcy court. Voluntary vs. Involuntary bankruptcy.  Straight bankruptcy is commenced by the filing of a voluntary or involuntary petition in bankruptcy with the bankruptcy court. Voluntary vs. Involuntary bankruptcy. 

22. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 22 Voluntary Bankruptcy Petitioner must understand there are other chapters available. Debtor does not have to be insolvent. List secured and unsecured creditors and addresses and amount of money owed. List of all property owned including property claimed; current income and expenses. Petitioner must understand there are other chapters available. Debtor does not have to be insolvent. List secured and unsecured creditors and addresses and amount of money owed. List of all property owned including property claimed; current income and expenses.

23. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 23 Voluntary Bankruptcy Court issues “Automatic Stay”, ordering relief from creditors. Clerk of court gives trustee and Creditors mailed notice of the order within 20 days. Court will deny if “substantial abuse” of Chapter 7. Court issues “Automatic Stay”, ordering relief from creditors. Clerk of court gives trustee and Creditors mailed notice of the order within 20 days. Court will deny if “substantial abuse” of Chapter 7.

24. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 24 Involuntary Bankruptcy Creditors force Debtor into bankruptcy proceedings. (Not against a farmer, charitable institution). Requirements: –12 or more creditors totaling $11,625 in unsecured claims must file the petition, OR –One creditor having a claim of $11,625 may file. Court will order relief if Debtor is generally not paying debts as they come due. Creditors force Debtor into bankruptcy proceedings. (Not against a farmer, charitable institution). Requirements: –12 or more creditors totaling $11,625 in unsecured claims must file the petition, OR –One creditor having a claim of $11,625 may file. Court will order relief if Debtor is generally not paying debts as they come due.

25. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 25 Involuntary Bankruptcy Court will order relief if: –A general receiver, assignee, or custodian took possession of, or was appointed to take charge of, substantially all of debtor’s property within 120 days before filing. Penalties for frivolous petitions against debtors, including Punitive damages. Court will order relief if: –A general receiver, assignee, or custodian took possession of, or was appointed to take charge of, substantially all of debtor’s property within 120 days before filing. Penalties for frivolous petitions against debtors, including Punitive damages.

26. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 26 Automatic Stay Either voluntary or involuntary. Creditors cannot commence or continue most legal actions. Damages for violation of stay. Creditors can get “adequate protection.” –Periodic or one time cash payments or indubitable equivalent. Either voluntary or involuntary. Creditors cannot commence or continue most legal actions. Damages for violation of stay. Creditors can get “adequate protection.” –Periodic or one time cash payments or indubitable equivalent.

27. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 27 Creditor’s Meeting and Claims Ten-thirty days after filing, Court calls meeting of creditors. Debtor is examined under oath about his debts and assets. Within 90 days, Creditors must file “proof of claim” with court clerk. Leases cannot be for more than one year. Ten-thirty days after filing, Court calls meeting of creditors. Debtor is examined under oath about his debts and assets. Within 90 days, Creditors must file “proof of claim” with court clerk. Leases cannot be for more than one year.

28. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 28 Creditor’s Meeting and Claims Allowed unless disputed. If claim is disputed or unliquidated, court will decide value. It is a crime to file false claim. Employment contracts and real estate. Allowed unless disputed. If claim is disputed or unliquidated, court will decide value. It is a crime to file false claim. Employment contracts and real estate.

29. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 29 Property of the Estate Debtor’s Estate includes: –All Debtor’s legal and equitable interests in property presently held, including community property; –Property transferred in a “voidable” transaction; and –Property which Debtor becomes entitled within 180 days after filing. Debtor’s Estate includes: –All Debtor’s legal and equitable interests in property presently held, including community property; –Property transferred in a “voidable” transaction; and –Property which Debtor becomes entitled within 180 days after filing.

30. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 30 Property of the Estate Estate includes (cont’d): –Proceeds and profits from the property of the estate. –After-acquired property such as inheritances, property settlements, and life insurance death proceeds. Estate includes (cont’d): –Proceeds and profits from the property of the estate. –After-acquired property such as inheritances, property settlements, and life insurance death proceeds.

31. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 31 Exempted Property See list in text pages 426-427. States may pass law requiring Debtor use state exemptions. In some states, Debtor may choose state or federal exemptions. See list in text pages 426-427. States may pass law requiring Debtor use state exemptions. In some states, Debtor may choose state or federal exemptions.

32. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 32 Trustee’s Role Court-appointed until first meeting of creditors. Creditors elect permanent trustee Administers estate. Collects proceeds, liquidates assets and pay Creditors in order of priority. Court-appointed until first meeting of creditors. Creditors elect permanent trustee Administers estate. Collects proceeds, liquidates assets and pay Creditors in order of priority.

33. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 33 Trustee’s Role Powers: can get Debtor’s property back from Creditors by asserting the rights of: –Debtor against the creditors. –Lien creditors against the creditors. –Bona fide purchaser against the creditors. –Trustee still loses to the PMSI creditor who perfects within his “magic” 10-day period. Powers: can get Debtor’s property back from Creditors by asserting the rights of: –Debtor against the creditors. –Lien creditors against the creditors. –Bona fide purchaser against the creditors. –Trustee still loses to the PMSI creditor who perfects within his “magic” 10-day period.

34. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 34 The Trustee’s Role Voidable Rights: Trustee can stand in shoes of debtor and assert any lack of capacity or lack of assent. Preferences: A Debtor is not permitted to transfer property or make a payment that favors one creditor over another. –For a Trustee to recover preferential payment, Debtor must be insolvent and transferred property for pre- existing debt within previous 90 days. Voidable Rights: Trustee can stand in shoes of debtor and assert any lack of capacity or lack of assent. Preferences: A Debtor is not permitted to transfer property or make a payment that favors one creditor over another. –For a Trustee to recover preferential payment, Debtor must be insolvent and transferred property for pre- existing debt within previous 90 days.

35. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 35 Preferences (cont’d): –Trustee can use preferential payment to pay a real preexisting debt, not for current consideration. –Creditor gets more than he would in a Chapter 7. –Consumer can transfer up to $600 without constituting a preference. Preferences (cont’d): –Trustee can use preferential payment to pay a real preexisting debt, not for current consideration. –Creditor gets more than he would in a Chapter 7. –Consumer can transfer up to $600 without constituting a preference. The Trustee’s Role

36. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 36 Liens on Debtor’s Property: –Trustee can avoid statutory liens that became effective when bankruptcy petition filed, or when debtor became insolvent. –Can avoid liens which were unperfected on date of bankruptcy. Fraudulent Transfers: Trustee may avoid within one year of filing of petition. –Trustee may proceed under state law for fraud with a 3 year statute of limitations. Liens on Debtor’s Property: –Trustee can avoid statutory liens that became effective when bankruptcy petition filed, or when debtor became insolvent. –Can avoid liens which were unperfected on date of bankruptcy. Fraudulent Transfers: Trustee may avoid within one year of filing of petition. –Trustee may proceed under state law for fraud with a 3 year statute of limitations. The Trustee’s Role

37. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 37 Property Distribution If Secured property: –Consumer debtors. Have 30 days from filing petition or before first meeting of creditors. Debtor must tell what she intends to do with collateral-- keep or surrender. Trustee must enforce within 45 days. –If surrenders: creditor can keep or sell. If creditor keeps = full satisfaction of debt. If creditor sells = can use extra for costs, or can become unsecured creditor for deficiency. If Secured property: –Consumer debtors. Have 30 days from filing petition or before first meeting of creditors. Debtor must tell what she intends to do with collateral-- keep or surrender. Trustee must enforce within 45 days. –If surrenders: creditor can keep or sell. If creditor keeps = full satisfaction of debt. If creditor sells = can use extra for costs, or can become unsecured creditor for deficiency.

38. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 38 Unsecured property: –Paid according to bankruptcy law. –All of one class must be paid before moving to next. –Creditor within last class receive proportionately if not enough. –See Priority List in text. –All creditors paid, trustee gives extra back to debtor. Unsecured property: –Paid according to bankruptcy law. –All of one class must be paid before moving to next. –Creditor within last class receive proportionately if not enough. –See Priority List in text. –All creditors paid, trustee gives extra back to debtor. Property Distribution

39. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 39 Discharge Exceptions. Objections to Discharge. Effect of Discharge. Revocation of Discharge. Reaffirmation of a Debt. Exceptions. Objections to Discharge. Effect of Discharge. Revocation of Discharge. Reaffirmation of a Debt.

40. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 40 Exceptions to Discharge (List on p.429) Claims for back taxes. Claims for amounts borrowed by Debtor to pay federal taxes. Claims against property/money obtained by Debtor under false pretenses. Claims by Creditors who did not know about bankruptcy. –Case 21.2 In Re Jercich (2001). Claims for back taxes. Claims for amounts borrowed by Debtor to pay federal taxes. Claims against property/money obtained by Debtor under false pretenses. Claims by Creditors who did not know about bankruptcy. –Case 21.2 In Re Jercich (2001).

41. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 41 Objections to Discharge Debtor’s concealment of assets. Debtor’s fraud/concealment of financials. Granting of discharge within 6 years of filing the petition. Debtor’s concealment of assets. Debtor’s fraud/concealment of financials. Granting of discharge within 6 years of filing the petition.

42. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 42 Reaffirmation of Debt Debtor may wish to pay a debt notwithstanding the debt could be discharged in bankruptcy. Agreement is filed with court. Debtor can rescind agreement at any time. Debtor may wish to pay a debt notwithstanding the debt could be discharged in bankruptcy. Agreement is filed with court. Debtor can rescind agreement at any time.

43. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 43 Chapter 11-- Reorganization Chapter 11—Corporations. Debtor and Creditors formulate a plan under which the Debtor pays a portion of its debts and is discharged of the rest. Same debtors as are eligible under Chapter 7. Chapter 11—Corporations. Debtor and Creditors formulate a plan under which the Debtor pays a portion of its debts and is discharged of the rest. Same debtors as are eligible under Chapter 7.

44. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 44 Chapter 11 “Fast track” Chapter 11 for small business debtors whose liabilities do no exceed $2 million and who do not own or manage real estate. “Workouts”. “Fast track” Chapter 11 for small business debtors whose liabilities do no exceed $2 million and who do not own or manage real estate. “Workouts”.

45. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 45 Chapter 11 Debtor in Possession (DIP). –Trustee may be appointed. –DIP has same powers as trustee in Chapter 7. Collective Bargaining Agreements. Creditors Committees. The Reorganization Plan. –Must be court approved. –Case 21.3 In re Beyond.com Corp. (2003). Debtor in Possession (DIP). –Trustee may be appointed. –DIP has same powers as trustee in Chapter 7. Collective Bargaining Agreements. Creditors Committees. The Reorganization Plan. –Must be court approved. –Case 21.3 In re Beyond.com Corp. (2003).

46. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 46 Chapter 13— Repayment Plan Chapter 13: Individuals’ Repayment Plans. For individuals with regular income who owe fixed unsecured debts of <$290,525 or fixed secured debts of <$871,550. Not for partnerships, corporations. Case 21.4 In re Anderson (1998). Chapter 13: Individuals’ Repayment Plans. For individuals with regular income who owe fixed unsecured debts of <$290,525 or fixed secured debts of <$871,550. Not for partnerships, corporations. Case 21.4 In re Anderson (1998).

47. ©2005 by West Legal Studies in Business A Division of Thomson Learning Fundamentals of Business Law Miller Jentz 6 th Ed. 47 Chapter 12— Family-Farmer Plan Chapter 12: Family Farmer Plans –“Family Farmer”: 50% of gross income comes from farming and whose debts are 80% farm related. –Procedure for filing. –Content of plan. –Court confirmation. Chapter 12: Family Farmer Plans –“Family Farmer”: 50% of gross income comes from farming and whose debts are 80% farm related. –Procedure for filing. –Content of plan. –Court confirmation.