When any business is struggling with debts, it is vital that action is taken early on in order to prevent the situation from escalating. The debt accumulation is likely to be due to a number of external or environmental factors that are largely out of the business owner's control, and internal factors that can be controlled quite easily.
When farms suffer bad luck from poorly timed income efforts or uncontrollable external conditions, the bad luck can be turned around by addressing the issue head on. Many people think that filing for bankruptcy is a "last resort" option; however, it can be a great way for struggling farms to make a positive choice in turning their family business around. It buys them some time to repay their debts and offers a unique opportunity for a business restructure in order to create new sources of income and profitability.
How is it possible to restructure a family farm business through Chapter 12 bankruptcy?
In order to file for Chapter 12 bankruptcy, you must first provide the bankruptcy court with a comprehensive list of all creditors and the types of claims they have with you. You then need to declare your income as it is throughout the year, as well as the property you own and the farming and living expenses you have.
By doing this, you are forced to take a closer look at your business and figure out how you can make it a more profitable one. With the additional profits, you can start to pay off your debts over a defined period of time.