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Inside Washington

House passes Chapter 12 farmer bankruptcy relief bill

TAGS: Policy
Allstate Financial Group a member billing services company for health clubs that also owned some clubs filed for Chapter 11 bankruptcy in January and the landlord of one of the clubs recently evicted Allstate closing the club for now Photo by Thinkstock
<p>Allstate Financial Group, a member billing services company for health clubs that also owned some clubs, filed for Chapter 11 bankruptcy in January, and the landlord of one of the clubs recently evicted Allstate, closing the club for now. <em>Photo by Thinkstock.</em></p>
Bipartisan bill raises debt limit cap to $10 million.

The House passed bipartisan legislation, H.R. 2336, the Family Farmer Relief Act -- introduced by Rep. Antonio Delgado (D., N.Y.), along 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.) -- which would ease the process of reorganizing debt through Chapter 12 bankruptcy rules.

According to the National Farm Bureau, last year, just 498 farms filed for Chapter 12 bankruptcy. By comparison: 766,000 consumers filed under Chapters 7 and 13. Over the last 10 years, Chapter 7 and Chapter 13 have seen 10 million total filings, compared to just 5,000 Chapter 12 filings.

Delgado said 2018 marked the fourth consecutive year of rising bankruptcy rates as a proportion of the farm population. “This farm economy is exacerbated by an outdated bankruptcy filing cap that leaves farmers without options to restructure or repay their debt,” he said on the House floor.

Delgado added that Chapter 12 was created specifically to provide repayment flexibility and reorganizational advantages for family farms during poor economic times. “Unfortunately, this outdated debt cap has rendered Chapter 12 an inaccessible tool to thousands of farm families,” he said.

“We must do more,” Delgado stated in his speech on the floor.

“The Family Farmer Relief Act’s solution is simple. My one-sentence bill would adjust the debt cap to align with today’s land values and the cost of doing business for today’s farmers. Our legislation modifies Chapter 12 bankruptcy rules to raise the debt cap for eligibility to $10 million. This adjustment will provide farmers additional options to manage the current farm economy and allow farmers to retain assets and remain operational. Allowing farmers increased flexibility is critical to the health and wellness of our family farmers and the upstate [New York] economy at large,” Delgado said.

American Farm Bureau Federation president Zippy Duvall welcomed the bill’s passage. “After several consecutive years of a trying farm economy, updating Chapter 12 bankruptcy eligibility to the current scale and credit needs of U.S. agriculture is a necessity,” Duvall said, adding that the action will “ultimately help family farmers and ranchers avoid extremely difficult bankruptcy proceedings, giving them a better chance to get back on their feet and keep farming.”

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