While it may be ideal for us to tackle our debt before it becomes too high for us to control, we sometimes can’t anticipate a bad crop, our heavy machinery giving out on us or other unforeseen circumstances that come with running a farm.
If you find yourself with significant debts on the table, then three of your best options for dealing with it is to sell any inventory, to liquidate your investments or cash or to sell any liquid assets you can necessary to pay it down.
Many farmers often forget just how expensive it is to house cattle and to store their goods. Although you may not want to get rid of either, selling both your grain and livestock inventories at a time like now when their price is on an uptick may save you significant cash in the long run.
It’s important to remember, however, that whatever money you make by selling these will ultimately be taxed at the standard tax rate, so it’s important for you to take into account the appropriate deductions and expenses to help offset revenue generated.
If you’re fortunate enough to have been able to make investments or to save cash over the course of your farm’s existence, then you may benefit from liquidating it if you’re farm is struggling financially and is overwhelmed by debt.
As a final option, you may also look to assets you have on the farm such as equipment or machinery or land, especially if you can get a competitive rate for them. Before doing so, though, you should carefully weigh the tax implications of doing so.
If you’re struggling financially and you’re unclear as to the options that can be pursued to stop creditor’s calls, then a Tampa Chapter 12 bankruptcy attorney can advise you of your options.
Source: Farm & Dairy, “3 measures to deal with severe farm debt,” accessed May 18, 2018
