The prospect of bankruptcy is extremely scary – but hiding from financial problems is the worst thing you can do.
“The first thing that I always hear from the creditor is, ‘The farmer quit talking to me. I don’t know what’s going on, so I have to do something,’” said Gerry Friesen, a “recovering farmer” who now operates a mediation service.
“You can’t bury your head in the sand and refuse to communicate. You need to communicate. That’s step No. 1.”
And once they start looking for help, farmers quickly find they have many options, said Friesen, project co-ordinator of the Farmer-to-Farmer workshop series. They can include payment deferrals, debt consolidation, refinancing, right sizing, diversification, selling assets, and winding down an operation prior to quitting.
When working with farmers, Friesen often starts by taking away the stigma that goes with the prospect of bankruptcy.
“I tell farmers when I meet with them that we’re going to look at all options, from the one extreme of winning the lottery, which gets a chuckle because we’d all like to win it, to the other, which is bankruptcy,” he said.
“When I mention that, suddenly the word bankruptcy didn’t bother them as much anymore.”
Many people see applying for help (which is free) under the Manitoba Farm Mediation Board as an admission of failure or defeat, but the earlier a farmer goes into mediation the better, as it keeps more options open.
“It’s on a ‘without prejudice’ basis,” said Friesen. “You can sit and discuss options with your banker and creditors, and nobody can hold that against you. It’s confidential and a safe environment.
“One on one with bankers can be intimidating – I certainly felt that way. You have a third party that’s helping you along, so it’s a better environment.”
Usually, the result is something that both sides are happy with.
“Farmers often ask, ‘How long do I have until I am thrown out onto the street?’ Well, I have never seen a creditor throw someone out into the street. Usually there are ways and means of working things out.”
BANKERS DON’T WANT TO FARM
Friesen tells the story of one farmer who was either in deep denial or struggling with mental health issues. A neighbour noticed his land had been advertised in a mortgage sale and called Friesen, who found out that the creditor was simply trying to force the issue due to lack of communication, and was in fact still willing to work with the farmer.
“The lender does not want your farm,” said Friesen. “They have the ability to allow stuff to go on for only so long, then they have to do something. Very often, it’s a matter of lighting a fire under someone’s butt.”
Farmers don’t like to hear the word bankruptcy, but it is a good way to get rid of a lot of unsecured debt, and then continue farming with a fresh start.
“Farmers get a ton of exemptions under the Bankruptcy Act in Manitoba – if nothing else, you should at least look at it,” said Friesen, adding that many trustees offer free consultations.
Manitoba Agriculture, Food and Rural Initiatives currently offers funding for an agri-advisory program, in which farmers can apply to have a consultant look at their operation to determine possible courses of action. Business development specialists at local GO Offices can provide details, he added.
There are many tools at the farmer’s disposal, and the most important one is knowledge of the law and the limits on what creditors can do. If you are concerned about your financial situation or faced with creditors who are starting to take action, know your rights and don’t make an uninformed, panicked mistake, said Friesen. He recalled how one farmer, who received a menacing phone call demanding an $8,000 payment with a weekend deadline, promptly rushed out and sold his Bobcat for less than half of what it was worth to raise the cash.
In fact, the lender was unsecured, and had no right to repossess any property at all.
“They say that information is power. Certainly that’s the case if you’re a farmer. You do have power and you do have rights,” said Friesen.
Next in the United Waysponsored Farmer-to-Farmer workshop series, “Around the Kitchen Table: Building better communication on the farm,” will be held April 13, 2 to 4 p.m., in the boardroom of the Brandon GO Office. daniel. [email protected]
“Youcan’tbury yourheadinthe sandandrefuseto communicate.You needtocommunicate. That’sstepNo.1.”
– GERRY FRIESEN
Some farm items exempt
There are other tidbits of good news for farmers in dire financial straits.
In a bankruptcy, for example, unsecured livestock, essential farm machinery, farm tools up to $7,500, one vehicle, and a quarter of land are generally exempt from seizure by creditors.
Also, the Manitoba Farm Mediation Board, which was formed in 1986 under the Family Farm Protection Act, protects farmers against loss of their farms during tough economic times. Simply put, a creditor cannot foreclose on farmland until the farmer has had a chance to go through a free-of-charge mediation process.
Worried about not being able to make payments on new equipment? A lender cannot repossess farm machinery without the approval of the Manitoba Farm Machinery Board, and even if they do take it, they must keep it in safe storage for at least 10 days. That gives the owner a bit of time to try to come up with the money to get it back. – Source: www.ruralstress.ca