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Tag: Can a family farmer file for bankruptcy

have farm bankruptcies increased

have farm bankruptcies increased插图


How many farm bankruptcies were filed in 2019?

Data from the U.S. Courts reveals that for the 12-month period ending September 2019, Chapter 12 farm bankruptcies totaled 580 filings, up 24% from the prior year and the highest level since 676 filings in 2011. For the third quarter of 2019, Chapter 12 bankruptcies decreased slightly to 160 filings, down 2% from the previous quarter.

Why are Chapter 12 farm bankruptcies increasing?

Chapter 12 farm bankruptcies continue to increase as farmers and ranchers struggle with a prolonged downturn in the farm economy that’s been made worse by unfair retaliatory tariffs on U.S. agriculture as well as two consecutive years of adverse planting, growing and harvesting conditions.

Where did farm bankruptcy filings increase the most in 2018?

Oklahoma experienced the largest increase in farm bankruptcy filings, rising from two filings last year to 17 this year. All regions of the U.S. saw an increase in filings, with the largest jumps in the Northwest ( up by 74%) and West (up by 65%).

Can a family farmer file for bankruptcy?

The CARES Act temporarily expanded this limit to $7,500,000. Although Chapter 12 is specifically designed for the family farmer, farmers may file for bankruptcy relief under Chapters 7, 11, 12, or 13. Each provision has advantages and limitations. A voluntary bankruptcy case is commenced by filing a petition with the bankruptcy court.

How many farmers filed bankruptcy in 2019?

Family farmers filed 595 such bankruptcies in 2019, an eight-year high. The number of Chapter 12 bankruptcies has been rising every year since 2014 when there were 361 filings. In 2018, there were 498.

How much did the number of farm bankruptcies grow in 2019?

Data journalist covering technological, societal and media topics. Even though the number of farm bankruptcies in the United States remains well below historical highs, it grew by nearly 20% in 2019.

What is Chapter 12 bankruptcy?

courts recently released data showing the number of Chapter 12 bankruptcies which are defined as a part of the federal bankruptcy code that’s designed to allow family farmers and fishermen to restructure their finances and avoid liquidation or foreclosure.

What percentage of Wisconsin farm income comes from government aid?

According to the U.S. Department of Agriculture, close to a third of projected net farm income in 2019 came from government aid and taxpayer subsidized insurance payments. The dairy industry is one of the sectors suffering the most from farm closures, particularly in Wisconsin.

How many Chapter 12 farm bankruptcies are there?

Data from the U.S. Courts reveals that for the 12-month period ending September 2019, Chapter 12 farm bankruptcies totaled 580 filings, up 24% from the prior year and the highest level since 676 filings in 2011.

How much is farm income in 2019?

USDA currently projects farm income in 2019 to reach $88 billion – the highest net farm income since 2014’s $92 billion, but still 29% below 2013’s record high. In addition, nearly 40% of that income – some $33 billion in total — is related to trade assistance, disaster assistance, the farm bill and insurance indemnities and has yet to be fully received by farmers and ranchers ( Is Farm Income Really Up? ).

How much is farm debt?

Moreover, farm debt in 2019 is projected to be a record-high $416 billion, with $257 billion in real estate debt and $159 billion in non-real estate debt. The repayment terms on this debt, according to data from the Kansas City Federal Reserve, reached all-time highs for a variety of categories.

Which states have Chapter 12 bankruptcy?

Iowa, Kansas, Maryland, Minnesota, Nebraska, New Hampshire, South Dakota, Wisconsin and West Virginia all experienced Chapter 12 bankruptcy filings at or above 10-year highs. As seen in Figure 3, the increase in farm bankruptcies was the highest in Oklahoma at 14, followed by Georgia at 12, California at 11 and Iowa and Kansas at 10 each.

Will farmers benefit from trade assistance?

While filings remain well below the historical highs experienced in the 1980s, the trend is a concern. The support provided to farmers in 2018 and 2019 is expected to alleviate some of the financial stress, however, not all farmers will benefit from trade assistance, farm bill programs, crop insurance or disaster aid.

How many farm bankruptcies have there been in the last decade?

Over the last decade, there have been nearly 5,000 farm bankruptcies – less than a quarter-percent of all farm operations in the U.S. Based on a survey conducted by the Association of Chapter 12 Trustees, more than half of these filings were likely to complete a Chapter 12 reorganization or negotiate a mutually acceptable outcome, which may result in a dismissal of the case or conversion to Chapter 7 ( Farm Bankruptcies Slow, More Aid Needed ).

Where are the most Chapter 12 bankruptcy cases in 2020?

Data at the District Court level indicates that Chapter 12 bankruptcies were the highest in western Wisconsin at 39 filings, followed by Kansas at 35 filings, Nebraska at 32 filings and eastern Wisconsin at 30 filings. The 10 District Courts with the highest number of filings represented 48% of all Chapter 12 bankruptcies during 2020. In 17 districts the number of Chapter 12 farm bankruptcies tied with or reached decade-high levels. These areas include but are not limited to eastern Wisconsin, Iowa, South Dakota, Montana and Vermont. Many of these areas have been hard hit by multiple years of low commodity prices, e.g., corn, soybeans, wheat and cotton, lower yields and low milk and livestock prices.

What are the problems farmers face?

Over the last few years, many farmers have experienced low commodity prices, high production costs, increasing agricultural land values, increasing cash rents, increasing labor costs, and high capital barriers to entry , among other problems. Off-farm income, which many farmers rely on, has also been a challenge given COVID-19 restrictions and inadequate broadband access. For many highly leveraged farmers, including new and beginning farmers, low commodity prices and high input costs could not be sustained.

What are the areas that have been hit by low commodity prices?

These areas include but are not limited to eastern Wisconsin, Iowa, South Dakota, Montana and Vermont. Many of these areas have been hard hit by multiple years of low commodity prices, e.g., corn, soybeans, wheat and cotton, lower yields and low milk and livestock prices. Expand Image.

What is the key to turning the farm economy around?

Key to turning the farm economy around is a COVID-19 recovery, restored demand for biofuels, increased U.S. agricultural trade and new sources of income , such as those from adopting climate-smart practices and ecosystem services markets.

Is USDA suspending farm loans?

According to the Kansas City Federal Reserve, delinquency rates at commercial banks continue to increase, and USDA recently temporarily suspended debt collections, foreclosures and other activities on farm loans to support distressed farmer borrowers. According to USDA, more than 12,000 farmer borrowers will benefit from these recently announced debt suspension plans.

When will the USDA release the farm income forecast for 2021?

USDA’s first Farm Income Forecast for 2021 will be released on Feb. 5.


In 2019, bankruptcy rates in most of the main agricultural States were the highest in at least 15 years.

Chapter 12 Bankruptcy Rates Reflect Downturn in Agricultural Economy

Commodity and farmland prices fell from 2014 to 2019, putting pressure on income and assets farmers use for living expenses and production investments. Farmers have several options for dealing with financial challenges. They might draw down their working capital, postpone capital investments, reduce input expenditures, or seek off-farm employment.

Bankruptcy Rates Are Above 10-Year Averages in Most States

To analyze Chapter 12 bankruptcy rates across States, ERS researchers compared the number of bankruptcies relative to the number of farms that could qualify for bankruptcy. To qualify for Chapter 12, family farmers must meet several eligibility requirements.

Drivers of State Bankruptcy Rates

Chapter 12 bankruptcy trends since 2005 for the top seven agricultural States in terms of cash receipts (California, Iowa, Texas, Minnesota, Nebraska, Illinois, and Kansas) illustrate how economic conditions have evolved for farmers in those States.

How much money will agriculture receive in 2019?

But even with record amounts of help, the outlook for family farms this year doesn’t look promising: farm debt is expected to reach $416 billion in 2019, the highest level ever.

Is hemp a psychoactive plant?

In an effort to increase revenue, farmers in some states are diversifying their agricultural products and planting more hemp. Iowa’s Republican Gov. Kim Reynolds, for example, recently signed legislation in which the state will license and regulate hemp production. Like marijuana, hemp comes from the cannabis sativa plant, but unlike marijuana, hemp is not considered to be psychoactive since it contains very low levels of THC.

Why is the farm industry down?

Experts attribute the farm industry’s downturn to the U.S.’s trade war with China, along with unfavorable growing conditions thanks to droughts and floods.

Which state has the most farm bankruptcies?

Wisconsin had the most farm bankruptcies of any state last year. (Getty Images)

What is a fresh start in bankruptcy?

This fresh start occurs through a “bankruptcy discharge,” which generally releases debtors from personal liability for certain debts, preventing creditors from collecting those debts in the future. The current Bankruptcy Code (enacted in 1978) created six different types of bankruptcy cases.

What is Chapter 7 bankruptcy?

Chapter 7 is a liquidation bank ruptcy. This means that the farmer is getting out of business. The debtor initiates this relief by filing a petition, including a schedule of assets and liabilities, a schedule of income and expenses, a statement of financial affairs, and a schedule of contracts and unexpired leases. This filing creates an “estate” comprising all of the debtor’s property. In a Chapter 7 action, the court appoints a trustee to collect the debtor’s non-exempt assets, reduce some to cash, and make distributions to creditors as provided in the Code. Secured creditors generally retain the benefit of their security interests in particular collateral. An unsecured creditor, upon making a proof of claim, receives payment under Chapter 7 only if proceeds from assets not pledged to secured creditors are available to sell. Then, unsecured creditors generally collect on a pro-rata basis in relation to the amount of their claims, as compared to the overall debt. But first, the trustee must pay the cost of administration and priority unsecured claims, such as child support and tax debt.

How is voluntary bankruptcy commenced?

A voluntary bankruptcy case is commenced by filing a petition with the bankruptcy court. The filing of the petition constitutes an “order of relief.” 11 U.S.C. § 301.

Why is Chapter 11 not a good idea for farming?

It is not well designed for a farming business because of its “absolute priority” rule (described below), its administrative complexity, and its expense.

How many types of bankruptcy are there?

The current Bankruptcy Code (enacted in 1978) created six different types of bankruptcy cases. These bankruptcy provisions are usually referenced by the number of the Chapter in the Code where they are found. Chapter 7 – Liquidation. Chapter 9 – Municipalities.

Why is stripping claims of priority important?

Stripping these claims of their priority was intended to allow Chapter 12 confirmations that otherwise would be denied because of large capital gain or depreciation recapture arising from the sale of farm assets. Before this rule, if a farmer sold assets in an effort to raise cash to allow the farming operation to continue, the tax bill generated by the sale subsumed a good part of the proceeds and robbed the debtor of the cash needed to make payments under a plan. The plan would fail because it would not be feasible.

What is Chapter 11 Chapter 11?

In 2019, Congress passed the Small Business Reorganization Act, which provides a new option for small businesses wishing to reorganize. This new provision, Subchapter V of Chapter 11, is available only to small business debtors with no more than $2,725,625 in debt.

What is a cramdown loan?

Cramdown is where the debtor pays the present market value of the property rather than the amount owed on the loan. For example, if a debtor owes $40,000 on a loan and the underlying asset for the loan is worth $25,000, the debtor can reduce the loan debt to the present market value of $25,000.

What are the advantages of Chapter 12?

This is a great advantage for a farmer under Chapter 12 because the income from the sale will not be restricted to repay a tax claim. One last advantage of Chapter 12 over Chapters 11 or 13 is that Chapter 12 debtors may modify any secured loan through a legal principle called “cramdown.”.

What is an unsecured claim in Chapter 12?

However, for farmers in Chapter 12, tax claims arising from “the sale . . . of any property used in the debtor’s farming operation” are treated as unsecured claims instead of priority claims. 11 U.S.C. § 1232 (a). Unsecured claims in bankruptcy are claims that may not have to be paid in full or at all.

What is Chapter 13 debt?

Debtors in Chapter 13 are individuals “whose income is sufficiently stable and regular,” and the payment plans usually require monthly payments. 11 U.S.C. § 101 (30). Because of the nature of the farming industry, many farmers would have difficulty making regular monthly payments to creditors.

What is Chapter 12 bankruptcy?

A Chapter 12 filing grants a farmer the ability to consider past production expenses, income, and future plans to make their repayment plan is practical.

What happens if a farmer files Chapter 7?

A Chapter 7 filing will cause an immediate stop to all farming activity and each of the farmer’s assets will be liquidated. This type of bankruptcy is the quickest and least expensive, and for a farmer interested in discontinuing their farming operation, Chapter 7 will satisfy that objective.

What is a family farmer?

A “family farmer” includes not just an individual debtor, but also an individual and their spouse, corporations, cooperatives, and partnerships. The Code sets forth specific eligibility requirements for the different types of petitioners.

What are the protections for farmers in bankruptcy?

Farmers have special protections in filing for bankruptcy: ? 1898 Bankruptcy Act ? Bankruptcy Reform Act of 1978 ? Family Farmer Bankruptcy Act of 1986 ? Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005

When was the Bankruptcy Abuse Prevention and Consumer Protection Act passed?

Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) of 2005

When did Chapter 12 bankruptcy start?

Chapter 12 Bankruptcy ? Enacted in 1986 and designed for the adjustment of debts of family farmers with “stable” annual household income. ? Chapter 12 allows for reorganization of debt payments and protected farm from liquidation, subject to a successful discharge of bankruptcy plan. ? Farmer needs to propose and carry out a plan to repay all or part of their debt over a three to five year period.

When was the USDA Agricultural Outlook Forum?

Presentation at the USDA Agricultural Outlook Forum 23 February 2017