Chapter 12 of the Bankruptcy Code is reserved for “family farmers” and “family fisherman” and provides reorganization and tax benefits to those who qualify. Farmers, particularly dairy farmers in the Midwest, have been hit hard by the falling price of milk in recent years.
Currently, there is a statutory cap on the amount of debt that a farm can have in order to be classified as a "family farmer" and therefore qualify for Chapter 12 relief. Senators Charles Grassley (R-Iowa) and Amy Klobuchar (D-Minn), are set to reintroduce a bill that would raise the current cap from $4.1 million to $10 million, thereby increasing the number of farms who would qualify for relief.
Proponents argue that the $4.1 million cap is simply too low and that even non-mega farms can easily reach this threshold given the high costs of land and machinery. Meanwhile, lenders not in favor of an increase to the cap have argued that such an increase might lead to higher borrowing costs for farmers.
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