Signs your farm might benefit from Chapter 12 bankruptcy

On Behalf of | Oct 14, 2024 | Bankruptcy |

From unpredictable weather to fluctuating market prices, many factors can impact your farm’s financial health. If you’re struggling to keep up with debts and facing the possibility of foreclosure, Chapter 12 bankruptcy might be a viable option to help you regain control of your finances. 

Consider some signs that your farm might benefit from this legal process for debt relief. 

You’re falling behind on loan payments

Chapter 12 is a specialized form of bankruptcy specifically for family farmers and fishermen, offering a way to restructure debts while continuing operations. One of the clearest indicators that your farm might need Chapter 12 bankruptcy is if you’re consistently missing loan payments. This could include falling behind on equipment loans, struggling to make mortgage payments on farmland, or being unable to pay off operating loans for seeds, fertilizer, or other supplies.

If you find yourself in this situation, figure out if Chapter 12 can help by allowing you to create a repayment plan that better aligns with your income cycle. This means you can make payments when you have money coming in from harvests, rather than staying locked into a rigid monthly schedule.

Likewise, if you’re facing the threat of foreclosure on your farm property or equipment, farm bankruptcy can:

  • Halt foreclosure proceedings, giving you time to reorganize your debts
  • Allow you to keep your essential farming equipment and land
  • Provide an opportunity to “cram down” secured debts to the current market value of the collateral

This protection can help you maintain your livelihood and preserve your family’s farming legacy.

You’re considering selling off assets to pay debts

If you’re thinking about selling off parts of your farm or equipment just to keep up with debt payments, it might be time to consider Chapter 12. This type of bankruptcy can help you avoid selling off vital assets needed for farm operations that could help you restabilize financially.

You may also be able to discharge some unsecured debts at the end of your repayment plan. Restructuring your debts can also make them more manageable.

Remember, Chapter 12 bankruptcy is a tool to help family farmers weather financial storms and emerge stronger. If you’re experiencing any of the preceding challenges, it is worth exploring this option to protect your farm and your future in agriculture.