The Senate on Thursday cleared legislation raising the limit for farms to qualify for reorganizing their debts under agricultural bankruptcy law.
The bill, which had already passed the House, would more than double the debt limit to $10 million. The cap was set originally at $1.5 million in 1986 with passage of the Chapter 12 law and was raised to $3.2 million in 2005 and indexed to inflation. The limit is currently $4.2 million.
The Senate passed the bill by voice vote, clearing it for President Donald Trump’s signature.
“For family farms whose assets are largely tied up in land and essential equipment, reorganizing debts can be particularly challenging when falling on hard times,” said Sen. Chuck Grassley, R-Iowa. “As low commodity prices force farmers to take on more debt, this bill guarantees a safety net is in place for more farmers who need help getting back on their feet.”
According to USDA data, the average value of U.S. cropland has more than doubled since the $3.2 million cap was set.
Bankers raised concerns about raising the limit, saying it would increase their risk.
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