Dairy farmers are experiencing a harsh beginning to spring with the effects of the trade war looming and unpredictable weather over the last few weeks. It puts farmers significantly behind schedule and possibly reduces yearly profits.

Unfortunately, it is not a new problem for farmers. According to the Wisconsin Department of Agriculture, Trade and Consumer Protection, Wisconsin loses around 500 dairy farms each year since 2003. And many operating farms see significant losses due to increased competition and lower prices on dairy products.

Restructuring debts for farmers

Some farmers find themselves in a situation where they need financial relief in order to reorganize farm operations or repay business debts. Luckily, attorneys such as Paul Swanson and John Menn work with local farmers to discuss the benefits of debt restructuring.

Swanson, a specialist in managing creditors and debt adjustment tragedies, has worked with Wisconsin farmers since the first significant farm crisis in the 1980s. He told the Wisconsin State Farmer that the current crisis may be the worst he has ever seen.

Now, many dairy farmers turn to local banks for operating loans, but most small-town banks are acquired by larger entities that do not want to carry any farm loans. It results in lost loans and farmers who have to handle the financial burdens of running a dairy farm.

However, farmers don’t have to feel hopeless. Menn recommends farmers to evaluate their options effectively to avoid “limiting options and putting the whole enterprise under a cloud of desperation.”

Special options for Wisconsin farmers

Wisconsin offers a variety of solutions, including Chapter 12 bankruptcy – a specific chapter for farmers that was instituted in the 1980s. Chapter 12 provides an alternative to reorganize a family farm or a fisherman’s business to repay debt. It is an excellent option for dairy farmers who want to continue operation without liquidating all their assets.

Swanson and Menn said Chapter 12 is a great option but not the sole option. Dairy farmers may consider Chapter 7 or Chapter 11 bankruptcy, but Chapter 12 is relatively quick and is the only chapter with advantage tax treatments.

You don’t have to go it alone

Many farmers fear the negative stigma that surrounds bankruptcy, but Swanson stated he sees many of his former clients and 99 percent of them are grateful that they filed when they did. Consult with a financial advisor or an accountant to decide if Chapter 12 bankruptcy is the best option for your business.