Family farmers know that prosperity is never guaranteed. Poor weather, trade disputes, diseases that attack crops and other unexpected events can trigger severe financial crises. One tool that can be useful when a family farm or fishery is facing overwhelming debt is Chapter 12 bankruptcy. This legal process is designed to accommodate the special pressures associated with agricultural operations. 

Though every farm has its own unique qualities and concerns, a look at Chapter 12 filing data can provide a snapshot of health within the agricultural industry. Within the Federal Reserve’s Ninth District, which covers South Dakota, as well as other states within the Upper Midwest and Northern Plains, farm bankruptcies have increased over the past year. 

The Federal Reserve’s survey of agricultural industry lenders also shows signs of potential trouble for the coming year. Waning income, high interest rates and uncertainty over tariffs could mean more insolvencies. Many farmers have reported that prices of fertilizer, seed and feed have been particularly difficult, due in part to trade tensions with Canada. Together, these pressures can create a cash-flow gap that forces some farms to choose between making timely loan payments and meeting basic needs, leading some families to seek court-ordered relief.

Through Chapter 12 bankruptcy, some family farms can survive the tough times by halting creditor actions and developing a reasonable repayment plan. One of the specific benefits of a Chapter 12 proceeding is that it accommodates seasonal income patterns rather than requiring a steady revenue flow. 

Chapter 12 is limited to family farmers and fishermen who meet eligibility requirements, and it is not the right solution in every case. The decision to file should be made with knowledgeable legal and financial advice. An experienced bankruptcy attorney can assess eligibility, explain the likely outcomes and help negotiate with creditors to design a feasible plan that aims to preserve the family business and protect personal and community interests.

If you are a farmer facing mounting debts, prompt consultation with an experienced bankruptcy lawyer can clarify whether Chapter 12 might offer a suitable path forward.

Anker Law Group in Rapid City represents South Dakota and Wyoming farmers in Chapter 12 bankruptcy cases. For a consultation regarding your particular circumstances and options, please call 605-519-5967 or contact us online.