How Bankruptcy Can Help You Keep Your Family Farm The twenty-first century has not been kind to small business, and continued pressure from large scale farming has made it increasingly difficult for family farms to stay afloat. That’s the bad news, but the rise in consumer preferences for organic, sustainable, non-GMO and heirloom products is breathing new life into small farming. Farmers can plan to modernize and build for the future after Chapter 12 Bankruptcy helps them turn things around financially. An experienced Chapter 12 bankruptcy attorney can help you restructure and discharge debt, while keeping your farm and its plans for the future. Chapter 12 Bankruptcy Was Created For Family Farmers In 1986, Chapter 12 Bankruptcy was passed provisionally, to help financially distressed family farmers during a period of tightening credit. It was not permanently signed into law until 2005. It’s a simplified and streamlined type of bankruptcy, tailored specifically to the needs of small farmers under pressure from large agri-businesses. It provides for repayment of debts over a period of 3-5 years which is long enough to allow for relatively low payments. It requires that the debtor’s annual income is regular and stable, but will allow for seasonal payments at times of the year when cash flow is optimal. Chapter 12 relief is available to an individual, a husband and wife or a corporation or LLC mostly owned by one family. Chapter 12 allows debtors to “cram down” debt, paying back only the current value of the asset, which may be much lower than the original debt. Unlike other types of bankruptcy, the creditor does not need to approve the plan. There may even be tax benefits to the farmer using Chapter 12 Bankruptcy. The law was amended last August to increase the amount of debt to $10,000,000.00, allowing many more struggling farmers to make use of it. The best way to find out if you qualify is to speak to an experienced Chapter 12 Bankruptcy attorney. Can I Get Immediate Relief with Chapter 12? The filing of the petition for Chapter 12 relief puts an automatic stay on most collection actions against the farmer and his property. The clerk of the court will notify all creditors whose names you have provided and advise them of the stay. Once the stay is in effect you are protected from most wage garnishments, lawsuits and even from calls from creditors demanding payment. There’s even a provision of the automatic stay that protects co-debtors from collecting consumer debts from anybody that owes money jointly with the debtor. You can find out if you are eligible for immediate relief by speaking with an experienced Chapter 12 Bankruptcy attorney. The Chapter 12 Bankruptcy Process The first step is filing a voluntary petition requesting relief. The court will appoint a bankruptcy trustee, but for Chapter 12 their duties are mostly administrative. You will be able to continue your business as usual after filing. The court will request a repayment plan within 90 days of filing, but that deadline can be extended. The court has 45 days to approve your plan after it is filed and reviewed by the trustee. The plan must divert all “disposable income” towards paying off debts, which is money left over after business expenses and the maintenance and support of the debtor’s family. If the court confirms the plan, remaining debt is discharged after the payments are made. It should be noted that some obligations, such as child support and alimony, cannot be discharged. The case can be dismissed if the court does not confirm the plan or you fail to make the required payments. You can also choose to dismiss a Chapter 12 case or convert it to another type of bankruptcy such as Chapter 7. If you are seriously interested in Chapter 12 bankruptcy, you should speak to an experienced attorney as soon as possible to find out if you qualify. The attorneys at Anker Law Group have over 60 years combined experience navigating the bankruptcy laws. Call us today at (605) 718-7050 to schedule your free initial consultation.