Chapter 12 is a type of bankruptcy that applies only to farmers and fishermen, allowing them to reorganize their debts and repay them in three to five years while still operating their businesses. Since Congress introduced it in 1986, the U.S. Courts noticed that farm bankruptcies had declined for the past decade. However, there was a slight increase in filings in the Northwest region, like Idaho, from 2021 to 2022. While it is a good thing overall, it may not be as promising as expected.
What this means
When there is a declining amount of farm bankruptcies, it could be an indication that the agricultural industry is doing well. This could be due to better production methods and utilization of technology or even an improvement in economic policies that promote fairness for farmers and fishermen. The news also implies that farmers can manage their debts more efficiently and work towards a better financial future.
However, farmers and Fishermen in Idaho still need to be wary of their financial standing. The increasing amount of filings in the area suggests that there is a need for better financial education and improved debt management practices to prevent bankruptcy.
Applying for Chapter 12
If you are going through a rough patch, you can file a petition for Chapter 12 under Title 11 of the U.S. Code. Like with other types of bankruptcy, you must file a plan specifying how you will pay your debts over three to five years and submit supporting documents such as tax returns, debt schedules and proof of income.
While it may be good news that farm bankruptcies have been declining in recent years, this doesn’t necessarily mean every farmer is out of the woods yet. But with the right resources, more farmers will be able to manage their finances better.