Category: Chapter 12 Bankruptcy

Maintaining a farm in a time of imports and automation can be a complex and financially stressful venture in the Worthington, MN area. But Minnesota values its farmers, and Behm Law Group is no exception. With the support of our lawyers, struggling local farms can start their journey towards financial recovery with Chapter 12 bankruptcy and continue to share in the bounty of our state for years to come.

Financial Recovery

Farming is an unpredictable profession, and few other professions are so utterly left to the whims of nature. Irregular weather patterns can impact crop yields, illnesses may leave cattle or other livestock under-producing, and market prices can spike and drop with little warning. Even a consistently effective and productive farming family can find themselves in need of financial recovery at what may feel like a moment’s notice. In these situations, it’s important to remember that legal options exist that will help you forge a path forward.

Chapter 12 Bankruptcy

U.S. bankruptcy law has concessions built in to provide relief for farmers caught in a tough spot. Chapter 12 Bankruptcy is one such concession. In order to make payments on any money owed, bankruptcy hits the pause button on your debts and gives you an opportunity to reorganize your income and debts. Reorganization under Chapter 12 bankruptcy generally gives you three to five years of structured repayment, so you can spread out any debts into manageable monthly payments instead of existing overwhelming loan terms.

Chapter 12 Bankruptcy for Farms

At Behm Law Group, our financial recovery law professionals can help guide you and your family through a farm recovery program. We’ll work closely with you to create a comprehensive and customized plan. Bankruptcy doesn’t have to feel like a losing game, and with our lawyers on your side, we can help you find your farm’s financial solutions.

Farmers in the Worthington, MN area interested in learning more about Chapter 12 bankruptcy or looking for avenues for financial recovery can contact Behm Law Group at (507) 387-7200 or our website. Call today to discuss bankruptcy options and start making a plan that allows you to keep your farm, keep production going, and keep contributing to Minnesota at large.

Many farming or fishing operations face difficulties year-round, often from the financial conditions that have worsened over the last few years. Low farming and fishing commodity prices and volatile weather conditions have become major challenges, especially for family-owned operations. Due to these problems and more, the rate of family farmer and fisher bankruptcies has gradually increased over the years, and in 2020, hit its highest peak since the Great Recession in 2007–2009. While some cases of farmer or fisher bankruptcies are liquidation bankruptcies that effectively end business operations, the majority of family farmer and fisher bankruptcies are reorganization cases that help filers get back on their feet financially and find permanent debt relief. If you are considering filing a Chapter 12 bankruptcy in Mankato, MN, or the surrounding area to resolve debts and stabilize your family’s farming or fishing operations, Behm Law Group Ltd. can provide legal support and guidance.

Chapter 12 Bankruptcy

Chapter 12 bankruptcy is similar to Chapter 13 wage-earner consumer bankruptcy. Both reorganize the filer’s debts into a manageable repayment plan lasting three (3) to five (5) years, both can provide for the repayment of secured loans under adjusted and more favorable terms, and both will provide for at least some minimal payment to unsecured creditors – usually 10% to 25% of what was originally owed to those unsecured creditors. Another factor they have in common is that filers will be required to dedicate all their available disposable income – income left over after reasonable and necessary living and business expenses are paid – to making payments in a chapter 12 or chapter 13 repayment plan.

Differences Between Chapter 12 and Chapter 13

Yet, there are several differences between Chapter 12 and 13, with the main one being repayment plans and the ways filers make payments. Chapter 13 plans require monthly payments to the bankruptcy trustee, but family farmers and fishers often have incomes that fluctuate with the seasons, so a monthly payment plan can be hard to maintain. Therefore, Chapter 12 plans can allow for seasonal payments or bi-annual payments or even one large yearly payment.

Also, Chapter 12 is different from Chapter 13 in that past production expenses and past incomes from previous years can be considered when a chapter 12 repayment plan is drafted and submitted to the bankruptcy court. This gives chapter 12 debtors more control over the repayment terms of their various debts in the repayment plan.

Repayment Period

During their Chapter 12 repayment period, family farmers or fishers can also sell property designated as “farmland or farm equipment” without negatively impacting their repayment plan and without necessitating higher plan payments to the chapter 12 trustee. This helps farmers and fishers in Chapter 12 bankruptcy pay down their debts and clear secured liens faster.

Farmers

For farmers selling assets/property during their repayment period, there are also some tax advantages. Taxes from the capital gains of the sales of equipment or real estate are treated as unsecured debts, like credit card debts or medical debts, in a chapter 12 case.   Presume a farmer purchased a combine for $100,000 and then sold it for $150,000 while in a chapter 12 bankruptcy.  Any income tax debt as to the $50,000 capital gain from the sale would not have to be paid to the Internal Revenue Service (IRS).   Rather, the tax debt from the sale would be treated and paid as an unsecured debt.

Cramdown

Through Chapter 12 bankruptcy, farmers and fishers also get the benefit of “cramdown”, which means they can cram down the amount of debt on a particular secured loan to the present value of the property item that serves as collateral for the loan.  For instance, presume that a farmer purchased a pickup truck two (2) years ago for $50,000.  Presume that the loan for the pickup truck had an interest rate of 15%.  Presume further that the farmer presently owes $45,000 and that the pickup truck is presently worth $30,000.  In a chapter 12 repayment plan, one can cram the $45,000 debt down to the present $30,000 value of the pickup truck and one can also cram down the accompanying interest rate from 15% to 5%.

To learn more about repayment plans and other aspects of Chapter 12 bankruptcy in Mankato, MN, contact Behm Law Group Ltd. by calling (507) 387-7200 or emailing stephen@mankatobankruptcy.com.

Of the eight American Midwest states, over 127 million acres are made up of agricultural land that, just twelve years ago, generated a market value of over $80 billion annually. That value steadily declined from 2013 to today. Meanwhile, farm bankruptcies climbed to their greatest peak since the 2009 economic crash, with total Midwest cases reaching 595 in the 2019 calendar year.

 

That total reflects a rapidly changing agricultural economy for all farmers, but especially for dairy farmers in the past five years and now for farmers facing COVID-19 restrictions. If you are a family farmer or fisher struggling to make ends meet, Behm Law Group, Ltd. can help you file a successful Chapter 12 bankruptcy case in Pipestone, MN and the surrounding area to reorganize your debts and help you continue your farming operations for the long-term.

 

The Chapter 12 bankruptcy is a process exclusive to family farmers and fishers who generate at least 50% of their annual gross income through agricultural or fishing operations. Chapter 12 is designed to help farmers and fishers resolve debt through a manageable repayment plan lasting three to five years while maintaining fairness to the creditors involved. The goal of Chapter 12 bankruptcy is to provide long-term debt relief – a reorganization of one’s agricultural-related debts under adjusted and more favorable loan terms – for American agricultural operations and allow them to continue successfully under those adjusted terms even after a bankruptcy case has concluded.

 

Dairy Farmers

A complex combination of trade wars, pricing systems, and a general market shift away from some types of dairy products (replacing milk, cheese, yogurt, and other dairy products with a variety of dairy-free alternatives) have all coalesced to create a decline in the overall dairy economy. Hundreds of Midwest farmers have been forced to shift large-scale operations from dairy to the meat industry. Operations like Wylymar Farms in Wisconsin and Jones County Farm in Iowa have rapidly converted dairy farms with hundreds of milk cows into meat farms to stay afloat. In 2018 alone, almost 3,000 dairy farms converted, filed for Chapter 12 bankruptcy, or closed down operations altogether. Farmers filing for Chapter 12 bankruptcy in the Pipestone, MN region and local Southern Minnesota areas can find expert counsel and guidance from Behm Law Group, Ltd. attorneys to help them regain control of their finances and stabilize their farming operations.

 

COVID Struggles

Economic struggles from the past five years aside, farmers and fishers face almost daily updates and challenges regarding COVID-19 related regulations, restrictions, and codes that make it more difficult than ever to maintain steady operations. While the distribution of vaccines promises to offer better conditions in the near future, farms will likely have longer recovery periods from a year of COVID struggles, much of which took place during peak growing, harvesting, and selling seasons. Numbers concerning the effects of the pandemic and 2020 restrictions are still trickling in, and the total financial impact for farmers and fishers after the economic assistance from the various stimulus relief packages has been extinguished will not be known for several months.

 

To learn more about filing for Chapter 12 bankruptcy in Pipestone, MN for long-term debt relief, contact Behm Law Group, Ltd. today at (507) 387-7200 or stephen@mankatobankruptcy.com.

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 stephen@mankatobankruptcy.com.

For many reasons, farmers across the United States frequently struggle financially. Not only is it difficult, especially given our country’s current economic difficulties, to generate a profit from a family-owned farm, but also American farms often incur much debt from the purchase of equipment and the payment of property taxes. Fortunately, the government is aware of the difficulties that many farmers across the nation face, and it works to provide support systems in many ways. Most recently, the CARES Act stimulus support has helped many farmers weather the economic shutdown as a result of COVID-19. When the stimulus support ends, however, family farmers and fishers will still have options for resolving their debts and stabilizing their finances. One debt relief option for farmers and fishers is filing for Chapter 12 reorganization bankruptcy. With the help of Behm Law Group Ltd., you can file a successful case for Chapter 12 reorganization bankruptcy in Pipestone, MN.

 

Chapter 12 bankruptcy is a reorganization type of bankruptcy designed specifically for farmers and fishers who derive at least 50% of their gross income from farming or commercial fishing operations. The Chapter 12 process works to restructure 100% of secured and priority debts and 0%-100% of unsecured debts into a manageable repayment plan. Chapter 12 has some special rules for the circumstances of farmers and fishers, differentiating it from Chapter 13, the other primary form of reorganization  bankruptcy relief for individuals.

 

Right now, the number of Chapter 12 bankruptcy cases that will be filed during the next year is difficult to predict, largely due to the added support of the CARES stimulus act. With the stimulus support, Chapter 12 bankruptcy cases decreased from 509 in the first half of 2019 to 284 in the first half of 2020. Additionally, many bankruptcy courts were closed and online filing was the only option up until as late as June. This closure and limitation to virtual-only filings contributed significantly to reduced Chapter 12 cases.

 

As the country moves forward with much less support from the stimulus act and with bankruptcy courts re-opening, most people expect to see a dramatic increase in the filing of Chapter 12 reorganization bankruptcy cases. Farms will struggle with the continuing COVID-19 restrictions and lowered sales without the unemployment and stimulus support. Potential acts that may be put into place for more COVID-19 stimulus relief are not guaranteed, but farmers and fishers will have the option to file Chapter 12 bankruptcy.

 

Because the majority of U.S. Chapter 12 bankruptcy cases are in the Midwest, Minnesota farmers are among the most at risk for financial difficulties. Taking positive action for debt relief by filing for Chapter 12 bankruptcy might be the best option farmers and fishers have for protecting their homes and businesses in the long run.

 

To learn more about the rates of Chapter 12 bankruptcy in Pipestone, MN, and the surrounding area, or to start your own Chapter 12 case, contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com.

As we continue to move through the devastation of the novel coronavirus outbreak, more and more public gatherings and store fronts are closing down operations. While there are many business owners severely affected by this outbreak, farmers and fishers might be looking at even more long-term negative effects than any type of retail operations.

The COVID-19 outbreak has led to countless farmers’ markets, outdoor year-round markets, local groceries, and many other food sale outlets to be shut down. These closings are creating a serious deficit in family-owned farmer and fisher incomes. If you are struggling with these shutdowns as a family farmer or fisher, Behm Law Group Ltd. can help you find debt relief through Chapter 12 bankruptcy in Windom, MN.

Chapter 12 bankruptcy is a chapter of the bankruptcy code that is specifically designed for family-owned farming and fishing operations that are struggling to make debt payments from month to month. If at least 50% of your annual income is sourced from your farming/fishing operation, you can qualify for Chapter 12 bankruptcy relief.

As a reorganization type bankruptcy, Chapter 12 works to structure your debts into a manageable repayment plan that is suited to your income and through which the debts in your farming or fishing operations can be paid back under terms that are much more favorable to you than the loan terms you may have now. While maintaining fair treatment to your creditors, you can repay your debts under the supervision of a trustee with pre-determined monthly payments during a three- to five-year period.

With prices of farm goods already tipping many farmers and fishers to the point of dipping into their savings, the new blow that COVID-19 outbreaks have had on the global economy and the shutdown of many public markets puts local agriculturalists in a precarious position. Without a clear idea of how commerce will continue to move forward into the growing season, many farmers are unsure of how to plan for the coming months. If coronavirus shutdowns and bans against public gatherings continue in some areas, farmers and fishers may have to file for Chapter 12 bankruptcy relief or find other sources of income.

The additional uncertainty farmers have with the upcoming presidential election only adds more pressure to an already stressful situation. If you are a local farmer or fisher, and you find that your debts are piling up with no clear idea of how they will be resolved, you can turn to the relief provided in a Chapter 12 bankruptcy. Those filing for Chapter 12 are not alone, and many other farmers or fishers have found long-term debt relief through the process. Chapter 12 bankruptcy can provide the long-term relief that farmers and fishers need to constructively address overwhelming debt and stabilize their businesses.

If you are considering filing for Chapter 12 bankruptcy in Windom, MN, we can help. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com for more information.

As we continue to move through the devastation of the novel coronavirus outbreak, more and more public gatherings and store fronts are closing down operations. While there are many business owners severely affected by this outbreak, farmers and fishers might be looking at even more long-term negative effects than any type of retail operations.

 

The COVID-19 outbreak has led to countless farmers’ markets, outdoor year-round markets, local groceries, and many other food sale outlets to be shut down. These closings are creating a serious deficit in family-owned farmer and fisher incomes. If you are struggling with these shutdowns as a family farmer or fisher, Behm Law Group Ltd. can help you find debt relief through Chapter 12 bankruptcy in Windom, MN.

 

Chapter 12 bankruptcy is a chapter of the bankruptcy code that is specifically designed for family-owned farming and fishing operations that are struggling to make debt payments from month to month. If at least 50% of your annual income is sourced from your farming/fishing operation, you can qualify for Chapter 12 bankruptcy relief.

 

As a reorganization type bankruptcy, Chapter 12 works to structure your debts into a manageable repayment plan that is suited to your income and through which the debts in your farming or fishing operations can be paid back under terms that are much more favorable to you than the loan terms you may have now. While maintaining fair treatment to your creditors, you can repay your debts under the supervision of a trustee with pre-determined monthly payments during a three- to five-year period.

 

With prices of farm goods already tipping many farmers and fishers to the point of dipping into their savings, the new blow that COVID-19 outbreaks have had on the global economy and the shutdown of many public markets puts local agriculturalists in a precarious position. Without a clear idea of how commerce will continue to move forward into the growing season, many farmers are unsure of how to plan for the coming months. If coronavirus shutdowns and bans against public gatherings continue in some areas, farmers and fishers may have to file for Chapter 12 bankruptcy relief or find other sources of income.

 

The additional uncertainty farmers have with the upcoming presidential election only adds more pressure to an already stressful situation. If you are a local farmer or fisher, and you find that your debts are piling up with no clear idea of how they will be resolved, you can turn to the relief provided in a Chapter 12 bankruptcy. Those filing for Chapter 12 are not alone, and many other farmers or fishers have found long-term debt relief through the process. Chapter 12 bankruptcy can provide the long-term relief that farmers and fishers need to constructively address overwhelming debt and stabilize their businesses.

 

If you are considering filing for Chapter 12 bankruptcy in Windom, MN, we can help. Contact Behm Law Group Ltd. at (507) 387-7200 or stephen@mankatobankruptcy.com for more information.

 

Farming as a profession has experienced more drastic changes to economic standing in the U.S. during the past 50 years than almost any other types of industry. In the 1970s, farming in Minnesota and across the U.S. was reaching an all-time high, with the value of land meeting higher heights than ever before. Export of goods increased, and farmers were able to get more credit with goals to grow their operations.

 

Unfortunately, the farm crisis in the 1980s quickly led to a downfall of many Minnesota farms and a spike in agriculture bankruptcies. This farm depression is still affecting family farmers and fishers even 20 to 30 years later, and Minnesota’s agricultural industry is walking a difficult road, especially given the ongoing trade dispute with China. If you’re considering filing for bankruptcy as a family farmer or fisher, Behm Law Group, Ltd. can help you build a strong case for Chapter 12 bankruptcy in Mankato, MN.

 

Chapter 12 bankruptcy is a process designed specifically for family farmers and fishers (those who earn over 50% of their gross income from their agricultural operations) who are in debt but maintain a steady income. This bankruptcy process works as a reorganization of debts into a manageable repayment plan suited to your income and expenses lasting three to five years.

 

Though the process of bankruptcy for farms has changed slightly since the 1980s farm crisis, the concept is the same, and Chapter 12 bankruptcy has helped many individuals find debt relief when desperately needed. However, the effect of that crisis is still on the table for a wide majority of farmers. During the time of the crisis, land values dropped an average of 50% towards the end of the 80s, equipment costs rose almost 25%, and the U.S. dollar value weakened considerably.

 

In 1986, Chapter 12 was added to the bankruptcy code under the Family Farmer Bankruptcy Act. By 1999 over 9,550 farms across the U.S. filed for Chapter 12 bankruptcy. Despite this, by 1987, the government issued subsidies to Minnesota farms with a total of just over $712 million.

 

In addition to these changes, the price of milk, wheat, corn, and soy fell gradually over the next decade, adding to the difficulties family farming operations face even now. In 1978, Minnesota was home to about 98,600 family-owned farms. Today, those numbers barely meet 75,000, despite the growth in population and crop demands.

 

The residual effects of the 1980s farm crisis still impact Minnesota farmers today, and the debt relief and long-term security that Chapter 12 bankruptcy provides is a valuable option to many famers. The help of an expert attorney when filing can make all the difference. To get started on your case today, contact Behm Law Group, Ltd. at (507) 387-7200 and begin your petition for Chapter 12 bankruptcy in Mankato, MN.

Across the Midwest, family-owned farms are still struggling to make ends meet after a difficult start to the growing season. Farmers and fishers in the region are facing large debts without an income to match the required monthly payments. Because of these financial difficulties, more and more families are filing for bankruptcy or seeking other forms of debt relief. If you’re a family farmer or fisher and have been unable to make payments on your debts, bankruptcy might be the right path to take. With the help of Behm Law Group Ltd., you can file a successful case for Chapter 12 bankruptcy in Luverne, MN, and find your way out of debt without sacrificing your family business.

In the 1980s, the U.S. government devised a bankruptcy chapter specifically suited to treat the debts of family farmers and fishers. This chapter was based on the bankruptcy laws set up for fishers and farmers in debt during the Great Depression. Today, Chapter 12 works to reorganize debts into a repayment plan tailored to debtors’ income and expenses. This process is similar to Chapter 13, but it’s specific to the debts and expenses of family farmers and fishers.

 

For many purposes, current Chapter 12 laws have worked well to protect family farms and fishing operations while ensuring fairness to their creditors. However, in the face of current farm debts, Congress has introduced a potential reformation of Chapter 12 bankruptcy.

 

Why the change?

Farm debts have been around since farms have existed, but farms themselves have changed even since the 1980s when Chapter 12 standards used today were established. The average size of family farms and fishing operations have increased dramatically in the past 40 years, and the debt amounts have increased accordingly. However, the amount of debt allowed to file for Chapter 12 bankruptcy instead of liquidation bankruptcy has not increased alongside farm sizes and debt amounts. To continue protecting farms from liquidation, some aspects of Chapter 12 need to change.

 

What might change?

Primarily, Congress is proposing increased debt limits for those looking to file for Chapter 12. Family farmers and fishers are currently allowed up to $4.153 million in debt to qualify for Chapter 12, but average debts today are more than double that. Increased costs for property, equipment, supplies, facilities, and fuel all lend themselves to higher debts for farms with lower income overall. To allow more farms to reform with the structure of a Chapter 12 repayment plan, the debt limits need to be raised.

 

With several members of Congress supporting plans for Chapter 12 reform, more family farmers and fishers may be given a chance to repay debts and stay in business for the long term. If you think filing for Chapter 12 bankruptcy in Luverne, MN, or the surrounding area might be the right choice for your farm, contact Behm Law Group Ltd. at (507) 387-7200 today.