Those falling into the first category must meet each of the
following four criteria as of the date the petition is filed in order
to qualify for relief under chapter 12.
The individual or husband and wife must be engaged in a farming
The total debts (secured and unsecured) of that farming
operation must not exceed $1.5 million.
Not less than 80% of the total debts which are fixed in amount
must be related to the farming operation.
More than 50% of the gross income of the individual or the
husband and wife for the receding tax year must have come from the
Please consult your tax advisor or attorney for complete details.
Since its enactment, there has been a
substantial amount of litigation concerning whether a person is
eligible for Chapter 12. Generally, the debtor must be actively
involved in farming operations in order to be eligible. If merely
renting out the farmland for cash rent, the debtor will not likely be
found to be engaged in farming.