Advice on my next step !!

[satinka]

I have had a small ranching operation for approximately 9 years.

I have been in financial trouble with it since the 3rd year. A combination of not having enough operating $$ to start with, several dry years, poor decisions at the wrong time and increased expenses have put me in a big hole. I owe approximately $50,000 on a loan and currently have 4 cows and a bull. My numbers used to be around 35 head but due to some dying, selling others to cover feed cost, selling some to save house, etc. my numbers are down and at the current high cost I am unable to buy back.

We have been making interest payments ( around $5500 per year)only for about 6 years. This is a huge financial drain as we have been paying all expenses ( hay, feed, land rent, vet, etc) mostly out of our pocket.

Other financial issues have also gone down hill due to partial loss of income from our jobs as a result of the economy. I currently have many bills ( medical & old zombie debt) that is draining us slowly. Much of this could have been taken care of earlier if we were not in the situation with our farm debt.

We were behind on our house by several months but I just set up a repayment plan for the next 6 months to get that worked out. Know my house payment more than doubled for the 6 months and we are just scratching by . We are 30 days late on most everything ( electricity, phone, etc.) except my truck. We have really tried to work this out and get on track but it seems impossible unless we have someone drop 40 or 50 thousand in our lap. We do not waste $$ and the only extra spending we do is on our kids in order to keep their life as stable at this point as possible.

We are middle aged and I am thinking it may be time to talk with someone about this and discuss bankruptcy. My father had to file on the farm back in the day and that is the last thing I want to do but I do not want to be in my mid 50s looking at retirement and still have all this on me.

I am also concerned we will not be able to meet our interest payment this year plus the banker I have always worked with has left. This time around I will have a new banker and I am concerned with what course he will take.

Any and all suggestions, advice or discusion is greatly welcome.

[despritfreya]

Welcome to the forum.

If you want to keep the ranching operation going, you should look into finding a qualified attorney who can discuss with you the filing of a Chapter 12 Look at a Chapter 12 - if you qualify under the definition of "family farmer". The Chapter 12 gives you tons of options as it relates to your secured debt INCLUDING modifying the terms of your current residential mortgage. I am currently representing a "family farmer" and am reducing the amount owed on the residence a substantial amount. Chapter 12's are kind of a hybrid between the 11 and 13 and can work wonders when dealing with lenders, including FSA/USDA.

If you want to shut down, maybe a 7 will be the way to go.

If I have time this evening I will try to get back to this thread but I may not be able to.

Des.

[satinka]

Thanks for the help.

[despritfreya]

Satinka,

Are you wanting to continue in the ranching business?

Assuming you operate as a "DBA", not a corporation or LLC, to "qualify" as a family farmer (thus getting the benefits afforded under Chapter 12)

1. Your total debts cannot exceed $3,792,650
2. Leaving out what you owe on your principal residence (unless the home is tied to the ranching operation) at least 50% of your debt must arise out of the farming (ranching) operation.
3. More than 50% of your gross income for the preceding year (2011 if you file in 2012 or 2012 if you file in 2013) must have come from the farming operation OR if not the preceding year, then for the 2 full years prior to that.

If you operate as a LLC or corporation then the entity would have to file and that does not sound like something needed based upon your post.


Des.