More Farmers Filing for Bankruptcy Protection, Says Farm Group
Zahradnik, Diana, THE JOURNAL RECORD
More farmers with loans are declaring bankruptcy, according to bankruptcy reports, just as the Farmers Home Administration is intensifying efforts to collect overdue loans.
The rise in bankruptcies is partly due to the protection offered by the new Chapter 12 of the U.S. Bankruptcy Code, which took effect last November, a spokeman with the agency told the .
Bankruptcy filings among Farmers Home Administration borrowers rose 50.8 percent to 3,713 from Oct. 1 through March 31 from 2,461 a year earlier. Those included 883 filed in March, compared with 591 in March 1986.
In addition, 650 farmers quit as the result of bankruptcy action from Oct. 1 through March 31, up 30.5 percent from 498 a year earlier.
A total of 113 bankruptcy filings by Oklahoma borrowers were made between Oct. 1 and March 31, with 18 actually quitting farming because of bankruptcy during the six-month period, the agency said.
The rise in bankruptcies reflects ``a pretty substantial rush'' to the new Chapter 12 federal bankruptcy protection, said Ron Ence of the FmHA, although he said no figures were available to indicate how many of the bankruptcies have been due to the new law.
A year ago, FmHA reported 270,189 borrowers, including 107,847 who were in arrears, a delinquency rate of 39 percent.
The FmHA, an agency of the Agriculture Department, is often called the lender of last resort because its programs are designed to serve borrowers who cannot qualify for loans by banks and other commercial lenders.
As of Jan. 1, the FmHA had a farm loan portfolio of about $28.5 billion, including $26.5 billion in loans made directly by the agency and $2 billion in guarantees to other lenders. Of the total, about $8.5 billion was held by delinquent borrowers.
Under Chapter 12 of the code, farmers owing as much as $1.5 million can declare bankruptcy and seek protection from creditors, much in the manner of procedures available to small businesses. . .
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