Modern agriculture can be an unpredictable industry. Although technology has led to less laborious farm work, increased yield and less crop loss to pests, things can still go wrong due to factors beyond a farmer’s control. Regardless of how educated, experienced and skilled you might be, your financial success in any given year depends on more than your own ability. It also depends on the markets, the weather and the skill of your workers.
Changes in weather patterns, industrial pollution and even immigration policies that restrict the availability of seasonal workers could all impact your ability to successfully plant, maintain or harvest a crop. The more invested in a single commodity crop a farmer becomes, the more devastating a crop failure can be for their finances.
Despite having the potential for massive income, large-scale, successful agricultural operations are at constant risk of losing financial momentum due to a bad season. Whether you lost a crop because of pests or couldn’t bring in your produce before the weather turned and made it unsafe or unsellable, filing Chapter 12 bankruptcy can mitigate your financial liability after a bad season.
Chapter 12 bankruptcy helps farmers maintain financial equilibrium
When you can’t make payments on your financial obligations, you can face foreclosure on your farm or the repossession of vehicles and equipment you depend on to do your work. You shouldn’t have to worry about losing your family farm, your home, your personal assets and your source of income all because of factors that you could not control.
Leased agricultural equipment can represent many thousands of dollars worth of debt obligations each month, even during the season when you aren’t using the machinery. Similarly, your mortgage on the farmland will come due regardless of whether or not flooding impacted your crops this year.
Chapter 12 bankruptcy will give you the benefit of an automatic stay that will stop debt collection efforts to protect your land and equipment from seizure by creditors due to nonpayment.
Chapter 12 is ideal for those with substantial assets and income
There are other forms of bankruptcy that can offer a faster discharge than Chapter 12, which involves restructuring your debt and repaying some of your creditors. However, between income limits and the requirement to liquidate assets, more aggressive forms of bankruptcy may not be as beneficial to those with substantial assets and successful farming operations.
Not only could your higher overall income preclude you from successfully filing, but your assets could also wind up at risk for liquidation by the courts to repay creditors. Chapter 12 bankruptcy protects your personal assets, your business assets and your future stream of revenue while releasing you from the immediate strain of costs you can’t currently pay.
By renegotiating debts and simplifying the payments you make, Chapter 12 bankruptcy reduces the strain on your income when your otherwise successful farming operation hits a dry spell.