Family Farmer Relief Act
On August 23, 2019, the Family Farmer Relief Act of 2019 became law.
“With farm loan delinquencies and bankruptcies rising, struggling family farmers now have a stronger tool within the Bankruptcy Code for achieving a financial fresh start,” the American Bankruptcy Institute, an association of bankruptcy professionals, said in a news release. “ABI commends the Congress for developing this important bill into law.” Kelvin Birk with Birk Law Firm is a member of ABI, which is one of many ways that he keeps up-to-date on recent developments in bankruptcy law and the most advantageous techniques to use in each bankruptcy case that he files.
The Family Farmer Relief Act of 2019 was introduced to update chapter 12 of the U.S. Bankruptcy Code to reflect the economic challenges facing distressed farmers. Chapter 12 was added to the Bankruptcy Code in 1986 to provide reorganization relief to family farmers and fishermen to more properly handle this specialized area of bankruptcy law. Farm sizes have increased substantially since 1986; meanwhile, net farm income has declined since 2013. A survey released on Aug. 15 by the Federal Reserve Bank of Chicago found that Midwest bankers were reporting that the percentage of farm loans their customers are having problems repaying hit a 20-year high in the second quarter of this year. The Family Farmer Relief Act of 2019 raised the debt limit for chapter 12 filings to $10 million.
The Family Farmer Relief Act reinforces chapter 12 to provide family farmers with a durable tool to deal with the cyclical economic challenges faced in American agriculture, roiled by fluctuating land values, swings in commodity prices, weather calamities and adverse trade policies made by government.
Chapter 12 Bankruptcy continues to provide income tax advantages to farmers using this bankruptcy option over the other bankruptcy options available. A farmer filing bankruptcy is not required to file under Chapter 12, but it is often the most advantageous for those who qualify for it. For those that meet its requirements, Chapter 12 usually provides more benefits and/or less cost than the alternatives, being Chapter 7, Chapter 11 and Chapter 13.
If you have questions about how the Family Farmer Relief Act might impact your bankruptcy, our bankruptcy attorney can help. Contact the team at Birk Law today to discuss your situation.
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