The global COVID-19 pandemic has had devastating consequences for the agricultural industry, with farmer sentiment decreasing by 47 points from February to March alone. Responding to concerns over the impact of the COVID-19 pandemic on farm profitability and land values, Congress set aside $23.5 billion for agricultural relief in the U.S., $9.5 billion of which was earmarked specifically for hard-hit producers, including fruit and vegetable growers, farmers who supply local food, livestock producers, and dairy farmers.
While the form that the rest of these funds will take is not yet clear, industry experts are urging the use of direct payments to producers, while other policymakers report another round of direct payments. In the meantime, many family farmers are considering filing for bankruptcy as a means of repaying their debts. To learn more about this process, please contact one of our experienced Chapter 12 bankruptcy lawyers today.
The Economic Impact of COVID-19 on Farmers in Iowa
The agricultural industry, which has suffered in recent years, took another hit last month, as the consequences of the COVID-19 pandemic began to be felt by farmers across the country. Iowan farmers may be at an especially high risk during this time, with one Iowa State University study revealing that early projections show steep losses for Iowa farmers in the coming months, including over $4 billion worth of losses for the ethanol and hog sectors. The study also estimated potential damage of $213 million for farmers who cultivate soybeans, $658 million for the cattle industry, and $788 million for corn producers.
Although Congress allotted $23.5 billion for farmers in the recently enacted coronavirus relief package, many fear that the money won’t be able to sustain the farm sector. Fortunately, some farmers could also qualify for assistance under the Paycheck Protection Program (PPP), which provides guaranteed loans to small businesses, including family farms:
- With fewer than 500 employees; or
- With a net worth of less than $15 million and an average net income of $5 million or less over the last two years.
Many lenders are also being encouraged to alleviate stress on farmers affected by COVID-19 by extending the terms of loan repayments, restructuring borrowers’ debt obligations, and easing loan documentation and credit extension terms for new loans.
Chapter 12 Bankruptcy
Despite the efforts of policymakers, individual lenders, and farmers across the country, many may find themselves considering bankruptcy. The good news is that Chapter 12 bankruptcy proceedings, which are specifically designed for family farmers, enable qualifying individuals to create and carry out a plan to repay some or all of their debts over a relatively short period of time. Chapter 12 bankruptcy proceedings also don’t come with many of the barriers that people face under other chapters of the Bankruptcy Code, but are instead more streamlined, generally less complicated, and less expensive.
To initiate these proceedings, a person must file a bankruptcy petition and complete a number of forms, including a statement of financial affairs and schedules. This in turn requires the compilation of specific information, including a list of all creditors, details about the petitioner’s income, a list of assets, and information about monthly expenses. Once filed, this information will be reviewed by an impartial trustee who serves as an agent in collecting payments and making distributions to creditors. Furthermore, filing a petition under chapter 12 automatically stops the collection actions of lenders.
Call Today with Your Bankruptcy-Related Questions and Concerns
If you own a farm and are considering filing for bankruptcy, please call 712-309-3738 today to speak with one of the experienced bankruptcy lawyers at Telpner Peterson Law Firm, LLP about your options.