Something else many of our readers in Michigan may not know is what goes on in a bankruptcy filing. It's important to know what chapter of the U.S. Bankruptcy Code that you are seeking protection under before you file. This is where expert legal advice can come into play. If you file for Chapter 7 bankruptcy, you may be subjected to asset liquidation and forfeiture. This could be the case for one of the nation's premier organic farms, which recently had to file for Chapter 7 protection.
The farm, which was one of the largest community supported agriculture ventures in the country, had to seek bankruptcy protection, citing insurmountable debt and extensive crop damage as the reasons. In a CSA farm, community members buy shares in the farm and receive produce. The farm had been owned by the same family for decades.
The bankruptcy filing listed $10 million in debts owed to 220 creditors. The owner has said that he wants to continue farming, but the reality of a Chapter 7 filing likely means that he'll have to sell the business and its assets to help pay off the debts. There is the possibility that the farm could stay open, but it will likely be with different owners and a different name.
For individuals filing for Chapter 7 bankruptcy, they should know that there are some protected assets, such as retirement accounts and likely a house if it is the sole residence. Bankruptcy can be a scary prospect, and it can be hard to part with certain assets, but sometimes the fresh financial start is preferable to continuing to suffer under a heavy load of debt.
Source: The Coloradoan, "With Grant Family Farms closed, what happens to the land?" Trevor Hughes, Jan. 8, 2013