Running a business as a family farmer can be challenging, and cash flow can be difficult to have under tight control, especially due to seasonal fluctuations in income. Therefore, if a farmer has difficultly due to cash flow problems at certain points in the year, it can mean that they run into excessive debts because of unfavorable loan interest rates and late payment fees.
This situation can form a vicious cycle, and farmers might believe that it is impossible to get out of the debt that they have found themselves in. However, this is not the case, and it is important that farmers know about how filing for bankruptcy can help them.
Can bankruptcy really help farmers?
Chapter 12 bankruptcy is a type of bankruptcy filing that has been specifically created for farmers and those with commercial fishing operations. It has been tailored in this way in acknowledgment of the fact that farmers and commercial fishers rely heavily on seasonal markets. Therefore, they often struggle with seasonal cash flow problems.
How does Chapter 12 bankruptcy work?
Chapter 12 bankruptcy helps farmers create a debt repayment plan that is in place for three to five years. This plan is created based on realistic income expectations for each month of the year, and the payments are calculated in accordance with what would be affordable and reasonable. In this way, a Chapter 12 applicant would have a program that could help him or her be free from his or her debts.
If you are interested in filing for Chapter 12 bankruptcy as a Florida farmer, it is important to consider whether you believe that it would be the best choice for you.
Source: The Balance, “What is Chapter 12 Bankruptcy,” accessed April 12, 2018