Last week President Bush signed into law an extension of Chapter 12 bankruptcy protection for family farms. Chapter 12 allows family farms to protect land and equipment from creditors while reorganizing and pulling the business out of debt. The protection, which was set to expire on June 30, has been extended to December 31.
The provision has been extended nine times since originally passed in 1986. However, attempts to make the protection permanent have failed.
Supporters say family farms need Chapter 12 protection as other bankruptcy laws do not adequately protect them. In addition, Chapter 12 filings by family farms has risen by 60 percent during the past year.
A family farmer is defined as one with debts of $1.5 million or less of which 80 percent comes from farming operations.
San Francisco Chronicle