President Bush signs Chapter 12
Bankruptcy Protection into law
MADISON - A measure extending special protections to family farmers who reorganize their debts was signed into law by President Bush. U.S. Rep. Tammy Baldwin (D-Wisconsin), one of the major
supporters of the law, expressed her support for extending Chapter 12 bankruptcy protections for struggling farmers, but hopes these protections will be permanent.
"I have drafted legislation that makes Chapter 12 permanent," Baldwin said. "It allows family farmers to protect their land and equipment while pulling themselves out of debt."
Baldwin points to fact that the number of Chapter 12 filings has risen 60% in the past year. "With unusual weather, fluctuating prices and a weak national economy," Baldwin noted, "our family farmers are hurting. This is just one tool to help them make it." The Wisconsin lawmaker authored similar legislation enacted into law in previous years that also extended Chapter 12. Since this concept of protecting assets of family farmers reorganizing their debts became law in 1986, the law has been extended for six months 9 different times.
"As someone who authored bills on Chapter 12," Baldwin added, "I know just how valuable this avenue is for family farmers. That is why we should make it permanent - so family farmers know this avenue will be available if they have to reorganize their finances."
This current extension of Chapter 12 bankruptcy will make the new expiration date Dec 31, 2003. Farmers with debts up to $1.5 million dollars can qualify - if 80% of that debt is related to farm operations. In normal bankruptcy proceedings, all assets are subject to liquidation. Under Chapter 12, land and equipment is exempt, allowing a family farmer to keep farming.
"Farming is a way of life in Wisconsin, and its in serious trouble," Baldwin said. "Unless we see higher milk prices, lower fuel costs and perfect weather, we will have many farmers take advantage of Chapter 12 this year. And that's what it is there for. It's not a handout by any means," she concluded, "it just gives farmers a little breathing room."
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