Farm Bankruptcies Drop in 2020 Due To Federal Aid
At Narron Wenzel, P.A., we are proud of the fact that our Eastern North Carolina clients come to view us over time as professional partners, delivering the crucial legal advice they’ll need to overcome life's most challenging (and often unanticipated) moments.
At Narron Wenzel, P.A., we are proud of the fact that our Eastern North Carolina clients come to view us over time as professional partners, delivering the crucial legal advice they’ll need to overcome life's most challenging (and often unanticipated) moments. This relationship is particularly important when it comes to issues involving farm bankruptcies. These cases were on the rise prior to the North American outbreak of COVID-19, but have since dropped off considerably thanks in part to federal aid initiatives aimed at helping family farmers avoid the need to file bankruptcy in our very uncertain times. Keep reading to hear more about the current situation in this country and then get in touch with our Smithfield-based team to request your individualized consultation with seasoned bankruptcy attorney David Mills.
What caused farm bankruptcies to decline in 2020?
It has been an unprecedented moment in our history, watching as a global pandemic destroyed public health and personal finances all at once. In an odd twist of fate, however, this crisis may have inadvertently bought a little more time for at-risk family farms in North Carolina and beyond. According to a recent article in Forbes, Chapter 12 family farm bankruptcies fell in 2020 for the first time in six years, largely because federal aid appeared that helped offset pandemic supply chain problems. That said, falling cash receipts and elevated farm debt “portend trouble ahead,” the piece went on to say. This could mean that the momentary respite could be brief.
What is Chapter 12 Bankruptcy?
It is important to understand the terminology and what exactly is involved with a farm bankruptcy situation. As it happens, Chapter 12, the section of the Bankruptcy Code that is associated with the bankruptcy of agricultural businesses, has been modified in recent years so as to increase the qualifying debt ceiling from $4.1 million to $10 million. This is significant because there were many family farms in our area who were previously ineligible to seek bankruptcy as a debt relief option when times got tough. Around here, we make it our mission to help good people recover from bad situations (like overwhelming debt) and allow them to begin again. As such, you can bet that we will uncover the best legal path forward for you and your family.
What are the benefits of Chapter 12 Bankruptcy?
There are many advantages to choosing this course of action. For one thing, Chapter 12 allows for “cramdowns” on debt allowing you to pay the current value of assets rather than the amount still owed on them. Plus, debtors, rather than creditors, can propose a long-term payment plan. Additionally, you are permitted to use, sell, or lease your estate’s property as business dictates without obtaining court approval to put those deals in place. Finally, if for some reason you are enduring hardships or disasters, you may be eligible for a “hardship discharge,” which would free you from your outstanding debt obligations altogether. Overall, with Chapter 12 there is a lot of empowerment for you, as opposed to being left feeling hopeless and helpless in the face of your seemingly insurmountable debt.
What farms are eligible for Chapter 12 Bankruptcy?
We have learned from experience that there is no one-size-fits-all solution to farm-related financial woes. That’s why we want to meet with you in person at our Smithfield, NC office to assess your unique needs and create a personalized plan of attack for getting you and your family back on your feet fast. This may or may not involve filing for Chapter 12 Bankruptcy protection, but there’s only one way to find out.
What is the best way to get started?
All you have to do is call farm bankruptcy attorney David Mills at 919-934-0049 to schedule your consultation today. Our Eastern North Carolina legal team will get right to work on your behalf.