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Grassley hesitates to reopen bankruptcy code to boost debt limit

Senator Charles Grassley says there’s no decision yet on whether to increase the debt limit on Chapter 12 family farm bankruptcies.  Some lawyers fear the worsening farm economy will result in bankruptcies that will test the $4 million debt limit on Chapter 12 filings.  The Iowa Republican, who chairs the Senate Judiciary Committee overseeing bankruptcy law, says it’s difficult to bring up bankruptcy legislation just for an agriculture issue.

“There’s so many other things that people want to change in the bankruptcy law,” Senator Grassley said, during a conference call with farm reporters Tuesday, “and we worked through eight years to get bankruptcy reform where it is right now; that happened about 2005 or 2006.”

Grassley says a determination will have to be made whether something can be done to raise the limit without reopening the entire bankruptcy code.

“And if we were going down the path of trying to decide whether to bring this up, it wouldn’t be based on the substance of it,” said Grassley, “it’d be based [on] what else does it raise.”

Chapter 12 bankruptcy has been available for thirty years to allow farmers to continue operating while working with creditors to repay debts as long as they don’t exceed $4 million.  Once the $4 million limit is breached, individuals are then required to file for the more costly and stringent Chapter 11.

It’s estimated that 2015 farm income is 55 percent below what it was at its high in 2013.