Editor’s note: The following is an excerpt from “Chapter 12 Bankruptcy, Hope for Financially Stressed Family Farms.”
There are probably few words that have a more negative connotation in the farm business world as bankruptcy. Often seen as giving up or quitting, farmers often try to avoid bankruptcy at all costs as they pride themselves on their independence and self-reliance. However, Chapter 12 bankruptcy is not for quitters. In fact, it is designed for those family farms that are willing to keep fighting to keep their farm going despite being severally financially stressed.
What is Chapter 12 Bankruptcy?
Chapter 12 bankruptcy is a special section of the bankruptcy code that provides debt restructuring for family farms and family fisherman. First created in 1986 during a nationwide farm financial crisis, Chapter 12 was made permanent in 2005. Chapter 12 allows family farms to reduce debt load and restructure debt so that the farm may become viable into the future.
Source: Ohio State University