Thankfully, the Bankruptcy Code provides a separate chapter to assist farm operations facing financial distress. Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years. If creditors can’t reasonably be paid during the course of the plan, the debts can be discharged.
In tailoring bankruptcy law to meet the economic realities of farming, chapter 12 eliminates many of the barriers such debtors would face if seeking to reorganize under either chapter 11 or 13 of the Bankruptcy Code. For example, chapter 12 is more streamlined, less complicated, and less expensive than chapter 11, which is better suited to large corporate reorganizations. In addition, few family farmers find chapter 13 to be advantageous because it is designed for wage earners who have smaller debts than those facing family farmers. In chapter 12, Congress sought to combine the features of the Bankruptcy Code which can provide a framework for successful farm reorganizations.
At the Ahlgren Law Office, PLLC, we can help provide solutions for struggling farm operations. Because this type of bankruptcy is relatively rare, it is important that you consult with a professional who fully understands how Chapter 12 works and the alternatives to filing bankruptcy.
When you are facing financial difficulties in your farming operation, it is important to consider your alternative early. Call us to talk about your specific situation and to discuss both Chapter 12 and the alternatives to a bankruptcy filing.