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Chapter 12 bankruptcy or restructure may save lives


As I write this article, it goes without saying that the farm economy is experiencing some tough times. Many farmers have had to make some hard decisions this year.

I have read that help lines for farmers have been worked overtime, with people calling in due to financial strain. It has been said that help lines have been used more than even in the 1980s.

I have also read that depression and mental strain have greatly increased over the past year among farmers, to the point that suicides among them have increased and are outpacing what transpired in the 1980s. It is sad that there are those among us who believe the end has arrived and there are no viable options other than to take one’s own life.

As farmers, we face a large amount of uncertainties. We have unpredictable weather, prices, pests and everything else. Not to mention a year like this year, when we have government policies that can wreak havoc on our lives.

In short, there is no limit to the amount of uncertainty and risk that we take on each year as farmers. Just when things may feel the bleakest, it is important to remember there are options available for farmers who are facing financial difficulty.

One is to seek a work-out with lenders. Having open and honest conversations with a lender often can lead to a positive outcome. With a work-out, the farmer puts forth a plan that is approved by the lender. Sure, some assets may have to be sold under the work-out plan – but if the farm operation can continue, then the goal is met.

In addition, farmers have the option to file a Chapter 12 bankruptcy. In 2017 there were 501 Chapter 12 bankruptcies in the United States. As of July 2018, the number of Chapter 12 bankruptcies is down slightly; however, with the further erosion in grain prices we have seen, it will not be surprising if these increase.

Over the past year, farm operations of all shapes, sizes and commodities found themselves taking advantage of bankruptcy protection. In fact, some extremely large and well-known operations had to seek bankruptcy protection.

It is important to remember that bankruptcy should not be viewed as an ending. In many cases, it allows a farm to be afforded a second chance.

One advantage is that a farming operation can be what is called a debtor-in-possession and maintain control of assets when faced with creditors threatening to foreclose or bring other legal action. This is important because a farm can continue operation, while at the same time seeking to restructure.

There will be many farms this year that will be under financial strain. There is value in having options that avoid depression and mental strain. Most important, there is a tremendous value in having options that avoid a farmer taking his or her life.

Bankruptcy is one such option. Having a viable way forward via bankruptcy can avoid mental strain, depression and loss of life.

In the end, farmers need to keep all options on the table and know that remedies exist that can ensure a positive outcome. At the very least, it never hurts to explore the various options and have a full understanding of what options exist.

I cannot stress enough that in all circumstances, there are options that exist and can avoid mental strain and loss of life.


These articles are for general informational purposes only and do not constitute an attorney-client relationship. John J. Schwarz, II, is a lifelong farmer in Northeast Indiana and has been an agricultural law attorney for 12 years. He can be reached at 260-351-4440,, or visit him at