Increases in Farm Debt Leads to More Chapter 12 Bankruptcy Filings

As we continue to move through recovery from the peak of coronavirus outbreaks, farmers are still facing the same financial troubles they have had since the establishment of the Family Farmer Relief Act of 2019. For family farmers and fishers, this act expanded the eligibility and debt limits for Chapter 12 bankruptcy cases, a chapter specifically designed to resolve debts of farmers or fishers who support their family with at least 50% of their yearly income derived from their farming/fishing businesses. If you are a family farmer or fisher struggling to meet debt payments, you’re not alone. Of the current two million farms operating on U.S. soil since 2019, thousands have debts they can’t repay. For those considering filing for Chapter 12 bankruptcy in St. Peter, MN, or the surrounding area, Behm Law Group Ltd. can provide the legal support and advice to help you build a strong case with an effective and manageable debt repayment plan.

Chapter 12 bankruptcy works to reorganize farming/fishing debts and personal debts together into a manageable repayment plan. This repayment plan lasts three to five years depending on the filer’s disposable income. The process overall works very similarly to Chapter 13 individual bankruptcy, but has some aspects that make it more suited to resolve farmer and fisher debts specifically.

Chapter 12 bankruptcy is typically better suited for the financial conditions of a family farmer or fisher because it moves much more quickly and is much less expensive than a Chapter 11 case. It’s also more effective than Chapter 13 bankruptcy given the much larger debt load that will be addressed.

The newest law regarding Chapter 12 bankruptcy was the 2019 Family Farmer Relief Act, which increased the allowed debt limits from $3,237,000 to $10 million, reflecting the increased land values and costs of farming equipment. Due to the current discrepancy between farm products and the operating costs of small to midsize farms and fishing operations, family farms and fishers are facing severe financial imbalances. With more and more seasonal loans taken out to cover these discrepancies and to keep their operations running, farmers and fishers need Chapter 12 reorganization bankruptcy now more than ever. Moving forward, the larger debt allowances for a Chapter 12 bankruptcy case will greatly improve the chances for financial rehabilitative success of family-owned farms. Projections over the next three to five years indicate that many more people will need to protect their family farms by filing for Chapter 12 bankruptcy relief.

To learn more about the Family Farmer Relief Act and filing for Chapter 12 bankruptcy in St. Peter, MN, and the surrounding region, contact Behm Law Group Ltd. at (507) 387-7200 or email at