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Agricultural Bankruptcy


Chapter 12 bankruptcy provides many alternatives for reorganizing a family farm and family fisherman debts. In practical terms, in many cases, Chapter 12 allows the debtor to reduce a mortgage to the current value of the property, reduce the interest rate to the current market rate interest and/or extend the payment period on the debt, and to greatly reduce unsecured obligations.

Farmers experiencing financial distress are encouraged to discuss these issues with a bankruptcy attorney. Many of the issues raised here can be very complicated when applied to a specific case. Good legal advice and careful planning are critical aspects to a successful bankruptcy reorganization.

The attorneys at Steinhilber Swanson LLP have experience in helping the struggling family farmer restructure their debts to enable them to continue their family traditions in farming. If you have questions regarding farm or fisherman bankruptcy or whether bankruptcy would be appropriate for you, please call our office for an appointment with one of our bankruptcy attorneys.

More Information on Agricultural Bankruptcy

Chapter 12 is the section of the bankruptcy code that provides for the restructuring of the debts of the small farm, family farm, or family fisherman’s business. This section is a powerful tool that enables farmers and fishermen to reduce or restructure their payments so that they can continue to farm or fish.

A family farm or fishing business must be family owned or controlled and meet certain eligibility requirements to file, including debt limits and restrictions on what percentage of income is derived from the farming or fishing operation. These requirements will be discussed in detail with each client when meeting with one of our attorneys. Our attorneys will review your specific situation in order to analyze the amount of debt, the percentage of the debt that comes from the farming operation, and the percentage of income that comes from the farming operation, and determine if Chapter 12 bankruptcy may be an option for you.

What You Can Expect During Your Chapter 12 Bankruptcy

A. A Chapter 12 Bankruptcy will provide an orderly framework for reorganization. This begins with the filing of a petition with the Clerk of the Bankruptcy Court. However, careful planning with your attorney is critical prior to filing, as many rights, disclosure requirements, and deadlines are set with the filing date.

B. All creditors must receive notice of the bankruptcy and all of the debtor’s assets and obligations must be included in the case.

C. A trustee and judge will be immediately assigned to the case.

D. Within 90 days of filing the bankruptcy, the Chapter 12 debtor is required to submit a reorganization plan to the bankruptcy court. The creditors do not need to approve of this plan; the creditors will not have an opportunity to vote on the plan. Only the court can approve the plan for confirmation after hearing from the creditors and the debtor. Confirmation of the plan may last several months.

E. There are specific requirements for a plan to be confirmed. These requirements will be discussed with you during your meetings with your attorney.

F. Once the plan is completed the trustee will be dismissed, the debtor will be discharged, and the debtor will continue to make the long term scheduled payments to the secured creditors directly.