Advantages of Chapter 12 Bankruptcy for South Dakota Farmers and Ranchers

Farms and ranches are often liability-heavy businesses and the recession of 2020 has hit them particularly hard. Fortunately, federal law provides a tailor-made way for those primarily engaged in agricultural pursuits to ease the burden of debt without sacrificing their livelihood. Chapter 12 of the U.S. Bankruptcy Code makes it possible for farm and ranch owners to pay off their debts more easily and come out financially stronger.

You may qualify for Chapter 12 bankruptcy if you are an individual or married couple who earns at least 50 percent of your income from agriculture and you have no more than $4,153,150 in debt, at least 50 percent of which derives from agriculture. Unlike a Chapter 7 bankruptcy, you don’t need to satisfy a means test.

As soon as you file a Chapter 12 petition, an automatic stay prevents your creditors from taking any steps to collect their debts from you, except through the bankruptcy proceeding. A bankruptcy trustee appointed to manage your case meets with you and your creditors to discuss a plan to repay your debts on a realistic timetable. The bankruptcy court then decides whether to approve the plan. The court may do so even if some creditors object, as long as the court concludes the plan is reasonable. Then, you must make payments to the trustee for distribution to your creditors, usually for the next three to five years. At the end of the process, the court will discharge your debts, preventing any further efforts to collect whatever you didn’t pay.

Chapter 12 offers distinct advantages for people in agricultural pursuits that other forms of bankruptcy do not allow. Specifically:

  • You can make seasonal payments to coincide with crop and livestock sales.
  • You can lease or sell your property with court approval, possibly without tax liability.
  • You may be able to reduce your secured debts to the current market value of the property for which you incurred the debt.
  • You may be able to stretch out the payment term for certain debts.
  • You may be entitled to a hardship discharge of your remaining debts if you can’t pay them because of a medical condition or natural disaster.

The experienced Chapter 12 bankruptcy lawyers of Anker Law Group, P.C. in Rapid City, South Dakota are ready and able to help you determine if Chapter 12 is right for you. If it is, we will work to protect your interests while guiding you through every step of the process. Call us at 605-519-5967 or contact us online to schedule an appointment.

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    Rapid City, South Dakota 57701