Agriculture is a noble but unpredictable profession. Even the best, most experienced farmers can have a few bad seasons close together due to circumstances beyond their control. Unusual weather patterns, including unseasonably hot or cold days and high or low levels of rain, can wreak havoc on many kinds of crops.
A field or crop that has gone years without any pest problems may suddenly get attacked by insects or develop a blight that requires that the farmer burn an entire field. Unpredictability isn’t the only risk a farmer has.
Unlike many other careers, working as a farmer often ties directly to your living situation. It is common for farmers to live on the land they work. That means that if the farm is operating in the red, you run the risk of the business failing and losing your home. For farmers struggling but still determined to make their business work, filing for Chapter 12 bankruptcy could be a way to protect their investment and keep things going until they’re able to start generating income again.
Chapter 12 bankruptcy specifically protects farmers
There are multiple kinds of bankruptcy, and each of them has its own benefits. However, Chapter 12 bankruptcy is arguably the most exclusive form of personal bankruptcy. It is only available to those who work in professional fishing or in farming.
In Chapter 12 bankruptcy, a farmer can restructure their debt, renegotiate repayment schedule, apply an automatic stay to collection activities, including foreclosure on the farm or repossession of critical machinery, and take steps to get their farm on stronger financial footing.
Chapter 12 involves a repayment plan. The farmer will make payments through a trustee as negotiated during early bankruptcy meetings. Circumstances and the total amount of debt will determine how long repayment plans last, but those filing Chapter 12 bankruptcy can expect to make payments for between three and five years.
Chapter 12 bankruptcy is a lengthy process
It will take more than five years to complete Chapter 12 bankruptcy successfully and secure a discharge. However, the very day that you file your initial petition with the courts, you receive that automatic stay that prevents collection activity.
Given how long it takes and how precarious the position of a farmer can be during times of financial difficulty, the sooner you take action to protect your family farm, the better your outcome may be.