Chapter 12 Bankruptcies Increasing in Midwest and Southeast

(WASHINGTON, DC) Chapter 12 bankruptcy was created in 1986 in response to the poor economic conditions that plagued agriculture, including low commodity prices, low farm income, record farm debt, and tight agricultural credit markets. Modeled after Chapter 13 bankruptcy, Chapter 12 provides reorganizational advantages and financial relief specifically for a family compared to other chapters. Chapter 12 also provides a quick and predictable process for farmers to reorganize debt to avoid asset liquidation or foreclosure. According to the American Farm Bureau Federation, California’s 408 filings over the last decade were the highest in the country. Georgia was second with 353 filings and Wisconsin third with 341. Overall, Chapter 12 bankruptcies were the highest in the Midwest at 1,511 filings, followed by the Southeast at 1,484 filings.