Representing Wisconsin Farmers in Chapter 12 Bankruptcy
At Steinhilber Swanson LLP, so many farmers we have seen over the years have waited too long before seeing a qualified farm workout attorney. Many tend to go it alone or trust their bank or banker to give them good advice. Others grant concessions or security interests to trade creditors to which they owe money.
It is important to understand that when you owe money, your creditors do not have your long-term success first on their minds. You need independent qualified advice to survive in today’s farm economy. Before granting concessions or liquidating assets, you should seek independent counsel for advice.
What You Can Expect in Agricultural Bankruptcy
Chapter 12 bankruptcy provides many alternatives for reorganizing a family farm and family fisherman debts. It is the section of the Bankruptcy Code that provides for the restructuring of the debts of a small farm, family farm or family fisherman’s business. This section is a powerful tool that enables farmers and fishermen to reduce or restructure their payments so that they can continue to farm or fish.
Generally, in many cases, Chapter 12 allows the debtor to reduce a mortgage to the current value of the property, reduce the interest rate to the current market rate interest and/or extend the payment period on the debt.
General Overview of the Chapter 12 Process
Chapter 12 bankruptcy provides an orderly framework for financial reorganization:
- Begins with the filing of a petition with the clerk of the bankruptcy court. Careful planning with your attorney is critical prior to filing, as many rights, disclosure requirements, and deadlines are determined by the filing date.
- All creditors must receive notice of the bankruptcy, including all of the debtor’s assets and obligations.
- A trustee and judge will be immediately assigned to the case.
- Within 90 days of filing the bankruptcy, the debtor is required to submit a reorganization plan to the bankruptcy court. The creditors do not need to approve of this plan; the creditors will not have an opportunity to vote on the plan. Only the court can approve the plan for confirmation after hearing from the creditors and the debtor. Confirmation of the plan may last several months.
- There are specific requirements for a plan to be confirmed. These requirements will be discussed with you during your meetings with your attorney.
- Once the plan is completed, the trustee will be dismissed. The debtor will be discharged and continue to make the long-term scheduled payments to the secured creditors directly.
Primary Benefits of Chapter 12 Bankruptcy
The most beneficial aspects of Chapter 12 are the ability to:
- Reduce the mortgage to the current value of the property
- Reduce the mortgage interest rate to a rate that reflects the current market
- Extend the payment period on the debts
Requirements for Chapter 12 Bankruptcy Eligibility
A family farm or fishing business must be family owned or controlled and meet certain eligibility requirements to file, including debt limits and restrictions on what percentage of income is derived from the farming or fishing operation.
Farmers experiencing financial distress are encouraged to discuss these issues with a bankruptcy lawyer. Many of the issues raised here can be very complicated when applied to a specific case. Good legal advice and careful planning are critical aspects to successful bankruptcy reorganization.
Contact Us to Determine if Chapter 12 is an Option for You
Our attorneys at Steinhilber Swanson LLP have experience helping struggling family famers restructure their debts and continue their family tradition in farming. They will review your specific situation in order to analyze the amount of debt, the percentage of the debt that comes from the farming operation, and the percentage of income that comes from the farming operation in order to determine if Chapter 12 bankruptcy is an option for you.
Call 866-381-4391 or contact us online to schedule a consultation. We have offices in Oshkosh, Madison, and Milwaukee.
We are a debt relief agency. We help people file for relief under the Bankruptcy Code.