- September 12, 2024
- Kelvin Birk
- Bankruptcy
Owning and running a farm in Missouri is no easy feat and comes with unique challenges. As a farmer, you’ll likely face financial difficulties from fluctuating commodity prices, high operational costs, and unpredictable weather. These challenges may cause you to sink into debt. But don’t despair; Chapter 11 bankruptcy can be your lifeline.
With it, you can restructure your debt while keeping your farm going. This blog examines how Chapter 11 bankruptcy works and the considerations for Missouri farms. If you need help understanding how Chapter 11 bankruptcy works, contact our attorneys at Birk Law Firm. Call us at 573-332-8585 to schedule a free consultation.
Why choose our Cape Girardeau bankruptcy lawyers?
At Birk Law Firm, we have experience in bankruptcy cases and a broad knowledge of federal and state bankruptcy law. We provide personalized, high-quality services for our clients. Our positive client testimonials show that we have helped several farm owners achieve financial relief and stability.
We understand how discouraging and saddening overwhelming debt can be and will provide you with the legal and emotional support you need to overcome it. We’ll be with you every step of the way, ensuring you feel supported and understood and handling all the paperwork, court appearances, and negotiations with creditors. So, if you need a law firm you can count on, do not hesitate to contact us.
With Chapter 11 bankruptcy, you don’t need to shut down your farm, and we can guide you through the restructuring process.
Understanding Chapter 11 bankruptcy
Also referred to as “reorganization” bankruptcy, Chapter 11 bankruptcy is designed primarily for businesses and individuals with substantial assets and debts. As a farmer, you can file for bankruptcy under this chapter. Chapter 11 allows you to propose a reorganization plan to restructure debts, reduce the amount you owe, and extend payment terms.
One upside of Chapter 11 is that it lacks the debt limitations that apply to Chapter 12 and 13 bankruptcies. To file for Chapter 11 bankruptcy, you will petition the bankruptcy court. This triggers an automatic stay that stops all debt collection and legal proceedings against your farm. Next, you will propose a reorganization plan outlining how your debts will be restructured and repaid.
Your creditors will then vote on the plan; if it is approved by the majority, the court will confirm it. Once you have the confirmation, you must comply with the terms to pay off the debt. Also, your farm will keep running and will not be affected by the legal process.
Benefits of Chapter 11 bankruptcy for Missouri farms
Chapter 11 bankruptcy offers several benefits for farmers, and below are some of them:
Continuation of operations
You can continue farm operations and keep your assets while restructuring your debt. This makes it better than Chapter 7 bankruptcy, which might require liquidating your non-exempt assets.
Flexibility in debt repayment
You can negotiate with your creditors to modify the terms of your debts. This can lower interest rates, extend the repayment period, and reduce principal amounts, creating room for improved cash flow and time to stabilize your finances.
Protection from creditors
Restructuring your debt with Chapter 11 bankruptcy allows you to protect your farm from foreclosure, repossession, and collection actions from creditors.
Opportunity to restructure secured and unsecured debts
You can restructure your secured debts (e.g., equipment loans and mortgages) and unsecured debt (e.g., medical bills and credit card balances). Also, you can discharge some debts when you complete the reorganization plan.
Chapter 11 bankruptcy gives you breathing room to reorganize your finances without losing your farm.
Considerations for Missouri farms
Although Chapter 11 bankruptcy has many benefits, there are factors to consider before choosing it:
- Cost and complexity: Chapter 11 is more expensive and complex than other types of bankruptcy. It requires detailed financial disclosures, ongoing reporting, and legal fees. Therefore, it is best to retain the services of our experienced attorneys to help you navigate the process.
- Feasibility of the reorganization plan: Your reorganization plan must be feasible and realistic, showing that your farm can generate enough income to meet the payment plan.
- Creditor cooperation: For your restructuring plan to be successful, your creditors must cooperate. The only way to do this is by creating a persuasive plan. Therefore, ensure you thoroughly assess your farm’s financial health and revenue projections.
- Long-term viability: Since the goal of Chapter 11 is restoring your farm’s financial health, focus on implementing operational changes and strategies that ensure your future profitability and sustainability.
Alternatives to Chapter 11 bankruptcy
If you think you can’t meet the requirements for Chapter 11, there are other types of bankruptcy you can consider. They include the following:
- Chapter 7 bankruptcy: It allows you to liquidate your non-exempt assets to pay creditors. It is best for individuals and businesses who can’t pay their debt and want a fresh start.
- Chapter 12 bankruptcy: This is for family farmers and fishermen and is primarily for restructuring your finances to avoid liquidation or foreclosure. It is similar to Chapter 13 bankruptcy but is more flexible. In most cases, a Chapter 12 bankruptcy is better for a farmer than Chapter 11 or Chapter 13.
- Chapter 13 bankruptcy: Although this chapter is for individuals with relatively modest debts, you can consider it if you have unsecured and secured debts below the threshold for the year you are applying.
Each of the above has its unique features and requirements. Therefore, consult with our attorneys to determine the best option for you.
Seeking help from a Missouri bankruptcy attorney? Contact Birk Law Firm.
Chapter 11 bankruptcy is complicated; if you decide to attempt it alone, you might make mistakes that jeopardize the entire process. With the help of our attorneys at Birk Law Firm, the process will be easier, and your chances of succeeding will increase. We will discuss your options, assess your debts, and help you develop a feasible reorganization plan.
We will be with you every step of the way, representing your interests and providing guidance. So, if you are a Missouri farmer with overwhelming debt, contact us at 573-332-8585 to learn more about how we can help you.
Attorney Kelvin Birk
Kelvin Birk is a lawyer as well as a certified public accountant, with more than 30 years of experience in accounting and tax and business consulting, and more than 20 years of experience in numerous legal matters. This combined expertise allows our law firm to provide a level of service above that of other firms. Whatever your legal situation, your attorney at Birk Law Firm can counsel you as to the tax implications. We have experience in providing myriad legal representation services to residents of southeast Missouri and other areas.. [ Attorney Bio ]
