Nearly 9.5 million acres in Florida are farmland. The state boasts approximately 50,000 farm operations making it an important state for agriculture. But farms require a lot of capital to run and debts can stack up quickly.
With increasing land values and a higher demand for crops and livestock, farmers throughout the country are turning to bankruptcy as a way of coping with rising debts.
In August, President Trump signed the Family Farmer Relief Act of 2019 to make declaring Chapter 12 bankruptcy easier. Under the previous law, the debt relief limit for farmers was $4.3 million. That limit is now set at $10 million and aims to make filing Chapter 12 simpler and more appealing than Chapter 11.
Chapter 12 VS. Chapter 11
Chapter 12 bankruptcy was created for farmers seeking financial relief and accounts for fluctuating land values, trade policies, weather concerns, and growing consumer demand. Farmers with regular income can file Chapter 12, which is meant to be a fast process for repaying debts within a period of 3 to 5 years.
Chapter 11 is often used by corporations for restructuring purposes but is tedious, expensive and complex. Prior to the new Chapter 12 debt relief limits, farmers were pushed into Chapter 11 leaving many farms in flux while awaiting bankruptcy decisions. The new debt relief limits should make it faster for farmers seeking debt relief to negotiate with creditors, determine a repayment plan, and get back on their feet quickly.
How to File
A member of a family farm (50% of total debts and income must come from a farm) is eligible to file for Chapter 12 bankruptcy. When Chapter 12 is filed, all collections are halted. A court-appointed trustee will follow the processes set forth by the Bankruptcy Court and the Bankruptcy Code to begin collecting monthly payments.
The trustee will then disburse said monies to the creditors pursuant to the reorganization plan. Farmers will be required to show all paperwork and work with the trustee to repay debt.
If you are a farmer struggling with debt and need help, consider filing Chapter 12. This is probably the fastest and least painful way to begin repaying farm debt. Call us at (800) 391-4337 if you need help with filing or with any paperwork. We will help you get your farm back up and running as soon as possible.