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How Chapter 12 bankruptcy can help with rising tractor costs

Tractors, combines and row crop cultivators have become larger and more complex in recent years. New agricultural equipment can easily cost six or seven figures. Those operating farms typically need to finance equipment purchases.

They then need to ensure that they generate enough revenue to keep up to date on their loans. Otherwise, they might risk the company repossessing the tools that they require to run their farms. A few bad harvests or an injury that leaves a farmer unable to perform certain functions on their own could cause substantial financial hardship for a previously successful agricultural enterprise. Farmers might then be at risk of losing the equipment that allows them to run an efficient and successful farm operation.

As tractor and equipment costs rise, more farmers may be at risk of repossession. In some cases, farm owners may need to consider a Chapter 12 bankruptcy as a means of preventing repossession and regaining control over their farm finances.

How Chapter 12 bankruptcy can help

Chapter 12 bankruptcy is only available to certain types of professionals, including farmers. The Chapter 12 bankruptcy process is similar to other types of bankruptcy in that the filer receives an automatic stay that takes effect the same day that they file paperwork with the court.

The filer has to work out a repayment plan with certain lenders and creditors. They commit to a multi-year financial plan that allows them to pay off or reduce the balance owed on various business debts. They can eventually discharge certain eligible debts.

A farmer who has fallen behind on their payments for equipment can avoid repossession efforts with a timely bankruptcy filing. They may also be able to negotiate more flexible and sustainable terms with their lender.

In theory, a successful filing can help agricultural professionals return the loan for farm equipment to good standing. They might be able to reduce their monthly payments or move missed payments to the end of the repayment period instead of them being immediately due during a time of financial difficulty.

Agricultural professionals who are at risk of losing the resources that make their careers possible often need help planning the best path forward. Preparing for a Chapter 12 filing and taking action quickly may help agricultural professionals avoid losing the equipment that they have invested in and rely on to run their farms.