From Debt to Deliverance: Wade
Note: This is the final installment of a three-part blog series about ABLS clients and their debt resolution stories. In March and April, we shared the debt restructuring stories of retired and active Iowa farmers Jerry and Deb, and Paul and Linda, respectively. In this blog, meet a third Iowa farmer: Wade. Wade had his hands full with two business ventures in northern Iowa. He was farming several hundred acres of corn and soybeans, and co-owned a small trucking business. Then, in the space of four years, it all turned sour. From bad to worse As Wade tells it, “I was farming with a business partner at a trucking company. He got himself in a little trouble. I had to buy him out, which wasn’t a bad deal, but then four years after that I ended up going through a divorce. After getting through that, the president of the bank I was working with retired and the loan officer I was working with left – all in about three months. A whole new crew of people came in and the new president wouldn’t work with me.” The banker wanted Wade to liquidate assets to meet his loan payments. Wade began by selling his cattle and some machinery. It wasn’t enough and the bank encouraged Wade to sell his land. Wade was on a path to leaving farming altogether. He didn’t want that to happen. Piecing together a solution We met Wade in 2017 and began piecing together a debt restructuring plan. As with the two farm couples we featured before, Chapter 12 bankruptcy was the best option. The bank fought the February 2018 bankruptcy filing that called for Wade to use cash collateral to plant crops that spring. Ultimately, the bankruptcy plan was confirmed that December. Wade got to keep his remaining machinery and land. He’s running a more efficient operation today, and is coming off the best two years he’s had as a farmer. What’s more, he still runs his trucking company. Wade says he wouldn’t still be farming without the legal help he received from Joe Peiffer and financial advice from Keith Starr. “Joe and Keith made me a way better manager than I was before,” he says. “Now, I’m taking every purchase into consideration and paying cash. It’s nice to have cash in the bank, when before it was always buy it now and pay for it later. Working with Joe and Keith changed my whole perspective.” Time is of the essence “I would recommend any farmer in a situation like mine to talk to them,” Wade says. “They can probably fix things so you don’t have to go the full nine yards (toward exiting farming) like I had to. “My biggest regret is – and I can’t stress it enough – is that I didn’t talk to them sooner.” If farm debt is becoming unmanageable for you, be proactive and reach out to us. Don’t wait – do it today. At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our attorneys and financial strategist will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow.
From Debt to Deliverance: Paul and Linda
Note: This is the second of a three-part blog series about ABLS clients and their debt resolution stories. In March we shared the story of retired Iowa farmers Jerry and Deb and the debt restructuring plan we developed for them. In this blog meet another Iowa farm couple, Paul and Linda. An average crop in 2012, a worse crop in 2013 and no crop in 2014 was the beginning of Paul’s and Linda’s woes in eastern Iowa. Paul described what happened next: “We lost one of the farms that we were (working), and that was a third of our acreage for farming. So we didn’t have enough acres to cover our leftover expenses the following year. Plus, the co-op we were working with was hedged-to-arrive and had a change of management, and those people didn’t understand hedge-to-arrive, and forced us to sell at a high tide and we were on the wrong side of the market. That left a deficit that was impossible to overcome.” On top of that, the couple’s bank had a change in management. The new management didn’t understand farming. Paul told bank managers if they wouldn’t work with him on loan repayment he would have to declare bankruptcy and face a tax bill he and Linda couldn’t afford. Body shop, healthy body, and hope We first met with the couple in 2015, shortly after Linda was diagnosed with a form of blood cancer. We determined they couldn’t work through their debt issues outside of bankruptcy, even with the income Paul received from his body shop business. Paul and Linda filed for Chapter 12 in April 2016, and the bankruptcy court confirmed their reorganization plan in early 2017. Paul was able to continue running his body shop and, in fact, has expanded his business. Linda is now cancer-free and sells essential oils. The couple no longer farm but still live in their home post-bankruptcy, and the Chapter 12 addressed their tax bill. It all works out “I grew up on a farm and farmed for 40 years. It was a way of life,” Paul says. “To stop farming was very difficult, but when you have someone like Joe Peiffer reassuring you that everything will work out, it was an easy decision to file Chapter 12.” If farm debt is becoming unmanageable for you, be proactive and reach out to us. Don’t wait – do it today. At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our attorneys and financial strategist will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow.
From Debt to Deliverance: Jerry and Deb
Poor crops. A barn fire. Disabling injuries. New bank managers who don’t know you and are less cooperative than the ones they replaced. Our clients have experienced devastating events like these, and more. Events that threatened to leave them destitute. In this month’s blog, and in April and May, we’ll share stories of three farm families who accumulated stifling debt and came out the other side with financial stability and peace of mind working with us. We begin with Jerry and Deb: Jerry and Deb were living comfortably on their eastern Iowa farm. Between raising Simmental cattle breeding stock, Jerry’s construction business, and Deb’s job at a local community college, all was right with the couple entering the new millennium. Trial by fire, and then some Then came 2002. A barn fire destroyed their feed inventory, and most of the machinery housed inside. Insurance was $60,000 short of replacing what was lost. “It was almost a precursor of what was to come,” Deb says. A 2005 drought hurt Jerry’s hay production, forcing him to dip into winter feed for his cattle. Moving hay one day Jerry was thrown from a four-wheeler, breaking both arms. He recovered just in time to shatter a leg and ankle in 2006 when a scaffold he was standing on gave way. Further pain arrived in 2008 when the farm economy cratered. The couple rapidly accumulated hundreds of thousands of dollars of debt. Their bank demanded loan payments – money Jerry and Deb didn’t have. Foreclosure loomed large. “In 2006 I felt we could come out of it, so we kept plugging away,” Jerry says. “Then 2008 hit and the financial institution matter happened, and I thought that would be the end of us.” An alternate bankruptcy plan Jerry and Deb talked with financial advisors, who recommended they file Chapter 11 bankruptcy. Jerry refused, convinced there was a better way. “I gave Joe Peiffer a call and he said, ‘No, you don’t want to file Chapter 11. You should file Chapter 12,’” Jerry says. “He probably knew the Chapter 12 tax code better than anyone else in Iowa.” Chapter 12 was written in the wake of the farm crisis in the 1980s, but Joe had recently helped rewrite it to give family farmers tax relief. Chapter 12 is specific to family farmers and fisherman and allows them to avoid foreclosure and reorganize their operations or liquidate in a controlled manner. Freedom from debt Over the next 12 months we met several times with the couple and accompanied them to mediation with the bank. Jerry and Deb sold some acreage and more cattle as we began crafting a bankruptcy plan. The Chapter 12 plan was filed in late 2009 and called for complete liquidation. The rest of the farm was auctioned off. “We sold the remaining ground, buildings, the construction equipment, farm equipment, household items and our home, all in one day,” Jerry says. Through Chapter 12 Jerry and Deb were able to discharge $49,741 in 2009 federal and state income taxes for pre-petition sales and approximately $25,000 taxes for the post-petition sales of assets. Today, Jerry and Deb are retired and living in northwest Arkansas, debt- and worry-free. “We would not have the life that we’re leading today if it weren’t for Joe,” Deb says. If farm debt is becoming unmanageable for you, be proactive and reach out to us. Don’t wait – do it today. At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our attorneys and financial strategist will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow.