Farm bankruptcy filings hit a six-year high this spring. In April alone, 62 family farmers filed Chapter 12 across the country. That is the largest single month since February 2020 and more than double the same month a year earlier. Filings had already risen 46% in 2025, from 216 cases to 315, and Pennsylvania saw a 160% increase.
None of this is about bad management. It is arithmetic on three lines of the income statement.
Fuel
Retail diesel reached $5.85 a gallon on September 4, 2026. That is an all-time record, above the $5.816 peak from June 2022, and it rose 17 cents in two days. Farm diesel was $4.65 a gallon in early August, 54% higher than a year before, after touching nearly $5.50 in May. The Owner-Operator Independent Drivers Association put it plainly for the freight side: when rates are already low, a sharp diesel increase eats whatever margin is left.
Harvest is the most fuel-intensive stretch of the year, and it is arriving with diesel inventories unusually low heading into fall refinery maintenance.
Fertilizer
Anhydrous ammonia sat at $915.50 a ton on August 7, up 16% from a year earlier and 23% above 2024. DAP was $912.22 a ton, 24% above 2024. Potash was $490 to $505. Fall applications will cost more than they have in years.
Debt
Farm sector debt is forecast to reach $624.7 billion in 2026, a record. Net farm income is forecast at $153.4 billion, down 2.6% after inflation, and roughly 29% of that figure is government payments rather than the market paying for the crop. More operators are carrying operating loans into the next year, and some now need credit approval just to plant.
Behind on a farm loan or facing a sheriff sale? Talk to us before the sale date.
Call (610) 255-7500What this means if you are the one holding the note
A margin squeeze does not announce itself. It shows up as a renewal that gets harder every year, a fuel bill that goes on the operating line, and a lender who asks for updated financials more often. By the time there is a foreclosure complaint, most of the useful options have already expired.
Chapter 12 is built for exactly this situation. It lets a family farm write secured debt down to the value of the collateral, stretch land debt over 20 or 30 years, keep operating through the case, and confirm a plan without creditors voting on it. Capital gains tax from selling farm assets during the case is treated as unsecured debt under section 1232, which changes the math on selling ground to fund a plan.
Do you qualify for Chapter 12?
Three questions. Takes 20 seconds. Nothing is sent anywhere until you choose to contact us.
Chapter 12 is very likely available to you. Filing stops a foreclosure, repossession or sheriff sale the day it hits the docket, and you keep operating. The sooner we talk, the more options you keep.
Chapter 12 may not fit, but that does not mean you are out of options. About 14% of farm bankruptcies since 2021 were filed under Chapter 11 instead, and Subchapter V is often a better fit for larger or mixed operations.
Operations that assume they are not eligible, and are wrong
- A family farmer can carry up to $12,562,250 in debt.
- Incorporated family operations qualify if more than 80% of asset value relates to the farm.
- Commercial fishermen qualify under the same chapter, with a $2,568,000 limit.
- Operations above the ceiling can still reorganize under Chapter 11. About 14% of agricultural bankruptcies filed since 2021 went that route.
If the 2026 numbers describe your operation, the conversation to have is now, while the lender still wants a deal and before a sale date fixes the timeline for you. We handle Chapter 12 and farm Chapter 11 cases in Pennsylvania, New Jersey, New York and Maryland. Read more on our Chapter 12 bankruptcy page.
Frequently asked questions
Can I keep farming during a Chapter 12 bankruptcy?
Yes. You stay in possession of the operation and keep running it. Chapter 12 was written so that a farm can restructure without being shut down.
Will filing Chapter 12 stop a foreclosure sale on my farm?
Yes. The automatic stay takes effect the moment the petition is filed and stops the sale, along with repossession and collection, while the case proceeds.
What is the Chapter 12 debt limit in 2026?
A family farmer can have up to $12,562,250 in aggregate debt. A family fisherman can have up to $2,568,000. Operations above those limits can still reorganize under Chapter 11.
Do commercial fishermen qualify for Chapter 12?
Yes. Chapter 12 covers family fishermen as well as family farmers. The debt limit is lower and at least 80% of fixed debt must come from the fishing operation.
Sources: American Farm Bureau Federation; Farm Policy News, University of Illinois; farmdoc daily, University of Illinois (Aug. 2026); Axios (Sept. 4, 2026); National Agricultural Law Center; USDA forecasts via Adams and Reese; uscourts.gov. Figures current as of September 2026.
