FSA Loans and Bankruptcy: What Farmers Should Know

• bankruptcy
• fsa
• farm stress

What should I do first if I am struggling?

Take a breath and gather your papers. Know what you owe, to whom, and what each lender can do if payments stop. Then reach out early. Farmers who talk to their lender or FSA loan officer before a loan goes far behind often have more choices than those who wait.

If the stress feels heavy, you can reach the 988 Suicide & Crisis Lifeline by calling or texting 988. Farm families, your extension office and groups such as Farm Aid also offer support and referrals. Asking for help is a normal, practical step.

Also expect your loan officer to ask whether you could obtain credit elsewhere. If you have been turned down by a bank or have a pending offer, bring that in writing.

How does FSA service a loan that is in trouble?

FSA has procedures for servicing loans of borrowers who cannot make their payments, described in its handbooks. Options can include changing the repayment schedule or other arrangements designed to help a borrower stay on the farm, when the facts support it. Staff must follow written rules and deadlines.

Ask your loan officer what servicing options apply to your account and what you must do to request them. Deadlines may apply, so do not wait. Keep every notice and respond in writing.

Servicing options are decisions made under written rules, and not every request is granted. Responding quickly with complete financial information gives staff the best chance to evaluate your case.

What is bankruptcy in simple terms?

Bankruptcy is a legal process under federal law that can reorganize or discharge certain debts. Farm families may be able to use different chapters, depending on circumstances. Each has different rules about what is protected, what is repaid and how long the process lasts.

This site cannot tell you whether bankruptcy fits your case. An attorney experienced in farm bankruptcy can explain the chapters and how they apply to land, equipment, crops and income.

A farm business can change the picture too. A sole proprietor, a partnership and a corporation each face different rules, and an attorney should look at your actual structure.

How might bankruptcy affect an FSA loan?

A government loan does not simply vanish because you file. How the debt is treated depends on the type of bankruptcy, the collateral, and the specific facts. Secured debts, such as a loan backed by land or equipment, are handled differently from unsecured ones.

Filing also may affect your future eligibility for credit, including FSA programs. Ask your attorney and your FSA office what a filing would mean for current loans, future borrowing and any program participation.

If you receive a notice from FSA, read it from start to finish and note any deadline for responding or for asking for review. Ask the office about appeal rights if you disagree with a decision.

What questions should I ask an attorney?

Look for a lawyer who works with farm debt and bankruptcy, and ask about fees up front. Many county bar associations and legal aid groups can help you find one. Some farm legal groups offer referral lines.

Bring all loan documents, notices and a list of assets and debts to the first meeting.

• Which chapter, if any, fits my situation?
• What happens to my land, equipment and crops?
• How will my FSA loan be treated?
• Are there alternatives to filing?
• What will this cost and how long will it take?
• What should I stop doing right now?

What are other options besides bankruptcy?

Depending on the facts, options may include talking with lenders about restructuring, selling assets on your own terms, state or local farm mediation services, and FSA servicing programs. Many states offer farm mediation, which brings a neutral person in to help you and a creditor talk.

None of these options fits every case, and each has costs. A trusted advisor, an attorney and your extension office can help you compare.

What mistakes should I avoid?

Avoid ignoring letters and calls. Silence makes a hard situation harder. Avoid transferring property to family or friends without legal advice, because that can cause serious legal problems. Avoid paying one creditor in a panic if it leaves the others without notice.

Also watch for people who contact you promising to stop foreclosure or erase debt for an upfront fee. Check anyone's credentials before you pay, and rely on licensed attorneys and trusted public offices.

Last reviewed: November 12, 2026. Written by the Farm Money & Grants Editorial Team. Educational only, not tax, legal or financial advice. See our editorial policy.