Publications: Bankruptcy

Issue Brief: Potential Chapter 12 Bankruptcy Changes

Drew Mitchell, Research Fellow; National Agricultural Law Center
Elizabeth Rumley, Senior Staff Attorney; National Agricultural Law Center

This short informational piece provides essential background, current events, relevant legal issues, and additional resources regarding the proposal to expand the Chapter 12 bankruptcy debt limit. Specifically, it discusses the proposal, its status, and the effect it would have on producers who are attempting to file bankruptcy under the provisions of Chapter 12.  Download this article. Posted 8/13/19, Updated 8/27/19



Bankruptcy Reform and Family Farmers: Correcting the Disposable Income Problem

Susan A. Schneider Assistant Professor of Law and Director Graduate Program in Agricultural Law University of Arkansas School of Law

This article focuses on the last amendment to the Bankruptcy Abuse Prevention and Consumer Protection Act—the assessment of disposable income.  It is an amendment that has not been widely reported, nor does it appear to have been the subject of significant congressional debate.  It is set forth in one very short section of the bill,  but it reverses over a decade of misinterpretation of the plain language of the original Chapter 12 disposable income requirement.  It is a significant change that promises to enhance the likelihood of successful family farm reorganizations throughout the country.    Download this article Posted: September 19, 2006



Who Gets the Check: Determining When Federal Farm Program Payments Are Property of the Estate

Susan A. Schneider Associate Professor of Law Director, Graduate Program in Agricultural Law University of Arkansas

This article addresses the sometimes arcane intersection of farm programs and bankruptcy by confronting the fundamental question:  When is the federal farm program payment property of the bankruptcy estate?  The article begins by identifying some of the most important characteristics of the wide array of federal farm programs necessary to form the framework for the legal analysis.  It then addresses the property of the estate inquiry, meshing existing precedent with commentary and specifically examining the recent circuit court options on this issue in the context of disaster relief.  Based on this analysis, the article concludes with comments regarding future decision making and new farm programs     Download this article Posted: June 5, 2006



Are You a Debt Relief Agency?  You Might Be Surprised and You Should Be Concerned

Susan A. Schneider Associate Professor and Director, Graduate Program in Agricultural Law University of Arkansas School of Law

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law on April 20, 2005 as Public Law No.109-8.  Most provisions of the bill were not immediately effective but rather took effect with respect to cases filed on or after October 17, 2005.  This massive new act makes profound changes in bankruptcy law, some of which are controversial.  The requirements regarding “debt relief agencies” provide an example of a particularly controversial change that has generated concern among the bar.   The definition of this term by the new act is expansive, and if a person or entity falls within the term, violating the act’s requirements can result in serious consequences.   This article provides an overview of the definition of a debt relief agency and the requirements now in place for such entities.  It also discusses challenges to the requirements that have been brought in the courts.     Download this article Posted: May 25, 2006



An Introduction to Chapter 12 Bankruptcy: Restructuring the Family Farm

Susan A. Schneider Associate Professor and Director, Graduate Program in Agricultural Law University of Arkansas School of Law

Chapter 12 bankruptcy is a special section of the Bankruptcy Code that provides for the restructuring of the debts of a family farm or family fisherman’s business.  It provides powerful tools to debtors, sometimes enabling them to reduce their debts or restructure their payments so that they can continue farming or fishing as their livelihood.  Chapter 12 was first created in October 1986  and was recently made permanent by The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (the 2005 Bankruptcy Act).   Chapter 12 has been an important tool for farmers in financial distress, both as a bankruptcy option and as a base line for negotiations outside of bankruptcy.  This article provides an overview of Chapter 12 as amended by the 2005 Bankruptcy Act.    Download this article Posted:  October 25, 2005



Bankruptcy Reform: Changes to Chapter 12 – Adjustment of Debts for a Family Farmer

Susan A. Schneider Associate Professor of Law Director, Graduate Program in Agricultural Law University of Arkansas School of Law

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 became law on April 20, 2005.  While much of the new law is directed toward consumer bankruptcy reform, it also includes a number of important changes to Chapter 12 of the Bankruptcy Code.  This article discusses these changes.    Download this article Posted:  September 14, 2005



Bankruptcy Reform and Family Farmers

Susan A. Schneider Associate Professor, University of Arkansas School of Law Director, Graduate Program in Agricultural Law

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 passed the Senate on March 10; it passed the House of Representatives on April 11;  and it was signed by the President on April 20, 2005, marking the conclusion of almost a decade of contentious debate.  Most provisions of the bill will not be effective for six months from enactment.  Much of the new law is directed toward consumer bankruptcy reform, and some of the most controversial aspects of it, e.g., means testing for Chapter 7 relief, have been reported widely in the media.  The important aspects of the law that will directly affect farmers, however, have received little attention.  The main provisions affecting farmers are summarized in this article.    Download this article Posted:  August 30, 2005



Determining the Proper “Cramdown” Rate of Interest in Agricultural Bankruptcies Post-Till v. SCS Credit Corp.

Harrison M. Pittman Staff Attorney The National AgLaw Center

On October 2, 1998, Lee and Amy Till purchased a used vehicle from Instant Auto Finance in Kokomo, Indiana.  Little did they know that the events of that day would evolve into legal battles before a bankruptcy court, a federal district court, a circuit court of appeal, and the United States Supreme Court.  Nor could they have known that those events would culminate in a legal precedent that helped resolve one of the most significant issues in Chapter 11, 12, and 13 bankruptcies: how to calculate the appropriate “cramdown” interest rate.  In Till v. SCS Credit Corp., the United States Supreme Court held in a plurality decision that the so-called “formula approach” is the appropriate method for determining the adequate rate of interest in a Chapter 13 cramdown.  The “formula approach” requires that the prime national interest rate serve as a baseline for determining the appropriate cramdown interest rate and that the rate be adjusted, if necessary, based on the risk of nonpayment.  Download this article. Posted:  Oct. 18, 2004



Agricultural Zoning, Bankruptcy, and the Rural Homestead

Robert Laurence Robert A. Leflar Distinguished Professor of Law University of Arkansas School of Law

Suburban sprawl meets farmland preservation:  much has been written about this phenomenon, both in the popular press and in the scholarly journals.  In this article, I will discuss one very small part of the problem.  Suppose that in reaction to fears of suburban sprawl, a county imposes an agricultural zoning regime that, among other things, prohibits the division of land into too-small parcels in order to protect its agricultural use and rural character.  Suppose that a married couple, deeply in debt, live in such a county, on a farm of 350 acres subject to a zoning restriction prohibiting the division of the property into lots smaller than eighty acres.  And suppose further that the laws of the debtors’ state protect their homestead from creditors, irrespective of value but only up to forty acres.  The question is how should a court – state or federal bankruptcy – react to this situation?  How much of the 350 acres should be sheltered from creditors?  And what about the zoning restriction that would not seem to allow the creation of a forty-acre free-standing homestead for the debtors?   Download this article. Posted: Aug. 18, 2003.



Husband and Wife Farmers in Agricultural Bankruptcies: The “Tools of the Trade” Exemption

Harrison M. Pittman Staff Attorney The National AgLaw Center

This article examines the “tools of the trade” exemption as it applies to agricultural bankruptcies involving husband and wife farmers.  The first part provides a general discussion of some of the issues that debtors and creditors must consider when claiming certain property as exempt from “property of the estate.”  This includes a brief discussion of what “property of the estate” means under the Bankruptcy Code, as well as the state and federal lien avoidance options available to a debtor.  This article also provides a discussion of the “tools of the trade” exemption, including a brief examination of the “tools of the trade” exemptions available under state and federal law.  Finally, this article analyzes the “tools of the trade” exemption as it applied in two recent agricultural bankruptcies involving husband and wife farmers: In re Lampe and In re Kieffer.    Download this article. Posted: Oct. 9, 2002.