New Bankruptcy Tools for Farmers and National Guard & Reservists

Many of you may not even be aware that there is a Chapter 12 option for filing bankruptcy. Not enacted by Congress until 1986, Chapter 12 is an extremely specific type of bankruptcy that was added later due to economic pressures on family farmers and fishermen in the US. This particular chapter of bankruptcy was not considered a permanent option until 2005—and while it is similar to Chapter 13 in terms of the reorganization factor—Chapter 12 offers more detailed benefits and tools for farmers or fisherman who do have a source of income, even if it is just seasonal (and at least half of their income must be derived from farming or fishing duties).

Now, additional help is available for farmers headed into bankruptcy after President Trump signed the Family Farmer Relief Act into law on August 23, 2019. With this Act introduced into the House on April 18, 2019, Chapter 12 is now further strengthened in helping farmers who may be having difficulty repaying back substantial loans. Specifically, the Family Farmer Relief Act provides a higher debt limit, thereby increasing the number of people who may benefit from filing a Chapter 12 bankruptcy case.. Previously, the debt limit for farmers hoping to file for chapter 12 was $4.3 million. As of August 23, 2019, the debt limit was increased to $10 million.

Some members serving in the military may continue to benefit by the National Guard and Reservists National Debt Relief Extension Act of 2019. This Act is critical for many National Guard and Reservists who are exempt from the means test, making it easier to qualify for a Chapter 7 case, for a certain period of time related to when a person was on active military duty. This exception may provide eligibility for Chapter 7 when it otherwise would not be an option. Chapter 7 is a liquidation bankruptcy allowing in part for the discharge of most unsecured debts within five to six months. The Extension Act, which will keep the relief in force for another four years, serves to extend the benefits of the National Guard and Reservists Debt Relief Act of 2008, which originally provided this exemption to certain military members.

You probably have many questions about bankruptcy, including which type of bankruptcy will work best for you,  how much you will have to sacrifice (very little in many cases), and whether you will have to go to court. Speak with a skilled bankruptcy attorney from the offices of H. Lehman Franklin, P.C. Call now to learn more at 912-764-9616, or contact us online.