Last week, in an article by Joe Mahon of the Federal Reserve Bank of Minneapolis, attorney Joe Peiffer shared valuable insight into the financial state of Iowa farmers. He also highlighted some potentially troubling issues on the horizon.

The main concern Joe raised involves farmers’ borrowing habits. He explained, “…so what they’re doing is that they’re borrowing money on the land,” and as a result, “…increase the amount of payments we’re going to have to make next year.” Refinancing like this does kick the can down the road, but only pushes off addressing the underlying issues farmers face.

Pressure is building for these farmers, and the situation may eventually reach a breaking point. Fortunately for them, farmers can currently restructure their debt thanks to the value of their land.

Land is a finite resource and will likely retain its value. However, other factors—like declining soil quality—could put that lifeline at risk. It’s wise to have a backup plan.

This “ace up your sleeve” could help farmers avoid disaster and start climbing out of debt. While some may shy away from it due to societal stigma, bankruptcy—especially Chapter 12—can be a powerful tool when used properly.

For more details on Chapter 12 bankruptcy, check out our previous blog posts: Chapter 12: The Farmer’s Ally in Debt Recovery and Chapter 12 Bankruptcy: Is it Right for Me? or call us to discuss your situation at (319) 363-1641.