The rough year that was 2020 followed a 2019 that was especially hard on farmers. With two straight difficult years behind us, it’s increasingly likely that family farmers will need to rely on special protections afforded by the bankruptcy code.
In a review of the general financial outlook for farming, the American Farm Bureau (AFB) views promising numbers with skeptical eyes. According to the AFB, while it appears that farms had a profitable year, the good numbers hide a dire truth: cash receipts for farms fell 3% from 2019. Considering that 2019 saw a 20% increase in family farm bankruptcies and you’ve had a difficult run for family-owned-and-operated farms.
Farmers look ahead and prepare
Winter is a traditional time of preparation for Wisconsin farmers. While you’re looking to next season, it might serve to assess your debts honestly. If you’re not sure you can manage them, you have options available to you.
Chapter 12 Bankruptcy is designed to offer farmers simpler, easier repayment organization plans than other forms of bankruptcy. This chapter specifically helps families avoid going through a liquidation bankruptcy. In short, chapter 12 allows you the protections of bankruptcy without losing your farm.
Am I eligible?
There are some stringent requirements to count as a “family farm” in the bankruptcy code for both individuals and corporations. The basic needs for eligibility in both cases require that:
- You, or your corporation, are in the business of farming.
- Your debts cannot exceed $4,153,150
- At least 50% of those debts must be related to your farm, not counting your home.
- 50% of your income must be from the farm
However, a corporation has a few more requirements, and it is in your interest to speak with a bankruptcy attorney about eligibility if you decide to move forward.
Saving the family farm
Family farms are a lifeblood. They are a history. If the last few years have been rough on you, you can absolutely take steps that will preserve that history for the next generation. And you don’t have to do it alone.