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House Judiciary Committee advances farmer bankruptcy assistance

House Judiciary Committee advances farmer bankruptcy assistance

Bill expands debt cap to be covered under Chapter 12 bankruptcy to $10 million.

The House Judiciary Committee on Thursday passed bipartisan legislation to assist family farmers during this down farm economy. In April, bipartisan members introduced H.R. 2336, the Family Farmer Relief Act, which would ease the process of reorganizing debt through Chapter 12 bankruptcy rules.

During the last work period, Rep. Antonio Delgado (D., N.Y.) testified before the House Judiciary Committee on his legislation and urged bipartisan support.

According to the American Farm Bureau Federation, just 498 farms filed for Chapter 12 bankruptcy last year, compared to nearly 766,000 consumer filings through chapters 7 and 13. Over the last 10 years, there have been 10 million total Chapter 7 and Chapter 13 filings, compared to just 5,039 Chapter 12 filings. It’s clear that the current debt cap has rendered Chapter 12 an inaccessible tool for today’s farm families, Delgado said in his testimony.

“Family farmers are facing alarming rates of foreclosure, and this down farm economy is exacerbated by an outdated filing cap that leaves farmers without options to restructure or repay their debt.” Delgado stated. “I am pleased to see House Judiciary Committee members on both sides of the aisle pass my legislation to get family farmers their long-overdue debt relief. The House took steps to bring the Family Farmer Relief Act closer to the floor so we can give our farmers and growers the flexibility they need to continue operations.”

Delgado introduced H.R. 2336 with House Judiciary Committee ranking member Jim Sensenbrenner (R., Wis.), House Agriculture Committee chairman Collin Peterson (D., Minn.) and Reps. TJ Cox (D., Cal.), Kelly Armstrong (R., N.D.) and Dusty Johnson (R., S.D.). The bill is the House companion to legislation introduced by Sens. Chuck Grassley (R., Iowa), Amy Klobuchar (D., Minn.), Ron Johnson (R., Wis.), Patrick Leahy (D., Vt.), Thom Tillis (R., N.C.), Doug Jones (D., Ala.), Joni Ernst (R., Iowa) and Tina Smith (D., Minn.).

The bill expands the debt cap that can be covered under Chapter 12 bankruptcy from $3.237 million to $10 million. The changes reflect the increase in land values as well as the growth over time in the average size of U.S. farming operations and are meant to provide farmers with additional options to manage the downturn in the farm economy.

Upon its introduction, the American Farm Bureau said this legislation "will help to align bankruptcy law with the scale and credit needs of U.S. agriculture."

The National Farmers Union also endorsed the Family Farmer Relief Act, saying it "will help more family farmers avoid liquidation or foreclosure, allowing them to stay in operation."

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