At Ag & Business Legal Strategies, we focus on financial matters and cases of insolvency. We represent many business owners like you: business owners facing financial stress throughout Iowa and Northern and Central Illinois. If you’re under water now, what is your creditor doing to help you?
Our licensed attorneys assemble a team of professionals to analyze your goals, assess the reality of those goals, and determine a strategy to accomplish the realistic goals of our clients. Unfortunately, the goal of saving the family farm or business is not feasible for many of our clients. We work closely with bankers, farm managers, business consultants, realtors, appraisers, tax professionals, and other advisors to determine the best strategy available to you. We’ll determine what leverage and bargaining power, if any, you may have on your side.
Please consult us before it’s too late. Many farmers and business owners have waited until they’re in collections before seeking our help. We’d much rather help you before you sign another loan paper. Don’t put your farm or business at risk. Work with the experienced professionals at Ag & Business Legal Strategies. We can help you prevent financial disaster.
Chapter 12: Family Farmer Bankruptcy
Given the very favorable tax provisions of Chapter 12 bankruptcy, we’ve represented many Iowa and Illinois family farmers who have had to “right-size” their operations by selling assets. Doing so often results in substantial income tax liabilities.
We know the difference between corporate farming and the economic challenges faced by family farmers like you. Chapter 12 bankruptcy is unique: it allows you to treat your income taxes that arise from the sale of farm assets used in your farming operation as unsecured debts.
In many situations, using Chapter 12 can allow a family farmer to retain some farming assets after right-sizing the operation without paying the taxes in full. The amount that is actually paid to obtain the discharge of the taxes varies on a case-by-case basis. Some family farmers pay very little; others pay a significant portion of the income taxes.
In addition, Chapter 12, like other bankruptcies, buys you time since the collection activities of most creditors, including the IRS, are stopped by the automatic stay when the case is filed. The automatic stay keeps your creditors, including the IRS and state revenue departments, at bay. With your creditors held at bay, we work with you, your financial advisors, and tax advisors to formulate your individualized bankruptcy plan.
Trust the bankruptcy experts at Ag & Business Legal Services. We will get you started on the road to financial recovery.
Chapter 11: Business Bankruptcy
A Chapter 11 bankruptcy may be chosen by a farmer if your debts exceed the limit for Chapter 12 bankruptcy–$4,153,150. It is also commonly chosen when you own a non-family farm or business to restructure your obligations. A Chapter 11 bankruptcy is considerably more complex than a Chapter 12 bankruptcy.
Your goals are important. At Ag & Business Legal Strategies, we listen to your goals and help evaluate whether they are achievable in or out of a bankruptcy. Not all goals are reasonably attainable in a bankruptcy. Our collaborative approach to problem solving with our clients and their team focuses on attainable solutions to complex financial problems.
Chapter 11 is commonly filed by corporations, partnerships and other businesses or individuals experiencing financial distress. A Chapter 11 allows a debtor to keep operating its business as a “debtor-in-possession.”
As a debtor-in-possession, you have a fiduciary obligation to creditors as your business seeks to restructure its obligations. Thus, the bankruptcy court will have control over your major financial decisions, including sale of assets, borrowing money, using a creditor’s collateral to continue business operations, and payment of professional fees.
Sometimes called a reorganization bankruptcy, the goal of a Chapter 11 filing is to change your payment obligations allowing you to honor your financial commitments, as revised by the confirmed bankruptcy plan. When done properly, this filing should help you rein in expenses and become profitable once again.
Most Chapter 11 cases take between six months to two years to achieve a confirmed plan. Talk to the experienced attorneys at Ag & Business Legal Strategies to see if Chapter 11 is an appropriate solution for you.
Chapter 7: Liquidation Bankruptcy
Business owners frequently have too much debt and need to get creditors off their backs so their debts can be forgiven. The bankruptcy term for debt forgiveness is discharge. Chapter 7 bankruptcy is a tool used to obtain a court discharge of debt. Filing this type of bankruptcy claim stops most collection activities. This can provide a great deal of immediate relief to a beleaguered debtor.
Under Chapter 7 status, you do not have to file a plan of repayment. Rather, your non-exempt assets with equity are gathered by the trustee and sold with the proceeds being used to pay your creditors. You will be allowed to keep some types of “exempt” property, including your salary and any property you purchase after you file for Chapter 7.
It’s important to note that all bankruptcy filings will appear on your credit bureau record for up to ten years. Upon filing a bankruptcy you can lose access to credit cards or lines of credit even if you did not owe that creditor anything on the date you filed your case. Some creditors refuse to extend credit to people that file any chapter of bankruptcy.
A trustee is appointed to review your assets and liabilities and determine what assets can be liquidated with the proceeds used to pay your unsecured creditors.
Unlike the other bankruptcy chapters, Chapter 7 is relatively quick. From filing to debt discharge takes only about three months. In addition, Chapter 7 may be the fastest way to get back on the road to building credit. So, Chapter 7 makes sense for you if you need immediate help and are ready to take the prescribed steps.
While Chapter 7 may sound like a panacea, utilizing a Chapter 7 bankruptcy without carefully considering the tax implications can lead to disastrous income tax results. The professionals at Ag & Business Legal Strategies will work with you and your tax preparer to determine if Chapter 7 is the right bankruptcy for you to consider.