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  4.  » Why tractors and equipment could push farmers into bankruptcy

Why tractors and equipment could push farmers into bankruptcy

As a farmer in Florida, you have your choice of numerous crops, many of which could be very lucrative after you become established. However, farming is far from a cheap profession to pursue. You cannot just pop a few seeds in the ground and just wait for them to sprout.

To farm efficiently and therefore profitably, it will typically need highly-specialized farm equipment. You will need to invest in chemical inputs to amend the soil and stave off pests and crop-destroying blights. Even if you run a biodynamic farm without any large fields of a single crop, you will still need tractors, hay balers and other expensive farm equipment. 

For some agricultural professionals, the financing required to secure farm equipment and tractors may eventually push them toward bankruptcy. 

Farm equipment is prohibitively expensive

Even the most basic tractor with no special equipment included can easily cost $20,000 or even $50,000. Highly-specialized equipment for specific crops could run $250,000 or even more. The financing terms included when you purchase such equipment sometimes do not allow you to resell it when you are done using it anymore. 

Instead, you merely agree to license the equipment from the manufacturer, which means that your purchase is more of a lease. Some farmers may find that the money they owe on those large machines will push their budget past its breaking point. Farmers struggling with overwhelming levels of debt, including secured debt related to their farm equipment, may benefit from considering Chapter 12 bankruptcy. 

Chapter 12 bankruptcy can help reorganize and discharge debt

A Chapter 12 filing offers several key benefits. It is a specialized form of bankruptcy only available to those who make their living off the land or the sea. It allows these professionals to protect their most important business assets while possibly giving them the leverage they need to restructure their debts and make their monthly financial obligations more manageable. 

Although it can be difficult to manage the paperwork and court requirements for a Chapter 12 bankruptcy, the results of such proceedings will be more control over your monthly budget and possibly fewer unsecured debts playing your farming operation. 

Recognizing when you need to consider Chapter 12 bankruptcy could help save your farm or improve your financial circumstances.