Chapter 12 bankruptcy is a specific type of bankruptcy that is especially created for family business owners who work as farmers or fishermen. Therefore, the specifics of the bankruptcy filing are tailored to benefit farmers and fishermen who are struggling financially with their business.
As a farmer, keeping on top of your business, especially when the industry is uncertain, can be very difficult. Many farmers are building up debts that they struggle to have full control of, and they suffer under a great deal of stress and pressure as a result.
Running a farm is difficult business, and times are changing quickly. It is unfortunate that hard working farmers are subject to swiftly changing consumer demand, and it can be impossible to change supply and business models as quickly as the market changes conditions.
Many farms have been struggling with profitability for years. The U.S. Department of Agriculture's (USDA) predictions of profit have been overly optimistic to say the least. When the price is falling on key farming staples such as milk and hogs, farms often have no choice but to look at their bankruptcy options so that they have some relief from their debt.
It's becoming increasingly common for farmers to face financial hardships within their current revenue stream. Credit is becoming more difficult to find and animal produce is harder now than ever to gain profitable returns from. Therefore, many farmers in Florida and across the country are looking into ways that they can diversify their product offering and looking into ways that they can get a fresh start from the debts that they have incurred.
In the years since 2013, farmers across America have endured hardships due to the decreasing real value of agricultural produce such as livestock and crops. Shockingly, between the years of 2013 and 2016, there was a reported 45 percent decrease in the net income of farms across America, on average. This is the biggest drop over three years that have been recorded in recent history.
When you are going through Chapter 12 bankruptcy, especially if you are in the farming business, it is likely that you will be wanting to avoid the liquidation of large assets. Chapter 12 allows for the possibility to do this because it means that you are able to restructure your business so that it is more economically efficient.
Hurricane season is upon us, and Hurricane Irma has tragically led to destruction across Florida. It has threatened our lives, property and unfortunately will have implications for months or maybe even years to come. The full extent of the damage is still not easy to say at this point but it has been predicted that Irma could be responsible for the loss of crop production to the value of around $1.2 billion.
In the case of a Chapter 12 bankruptcy, a voluntary petition should be filed, and after this has been filed, a United States trustee may want to meet with you along with your attorneys. This is generally held within seven to 10 calendar days after the voluntary petition is filed. This meeting will be a general discussion on your financial situation and how Chapter 12 bankruptcy operates.
Bankruptcy under Chapter 12 is designed specifically for family agricultural businesses, such as family farmers and family fishermen. The idea is that the family farmer of fisherman can create a feasible repayment plan over three to five years, which allows them to pay off all or part of their debts without losing their business.