Get an Experienced Farm Debt Mediation Lawyer on Your Side
Get an Experienced Farm Debt Mediation Lawyer on Your Side
Farmers occasionally ask whether farm debt mediation is useful. It is. Rather than write a lengthy explanation, littered with legal jargon, the benefits of farm debt mediation is best demonstrated by comparing the simple example of Rob and Bob.
Rob bought a warehouse as an investment, partly using funds borrowed from Bank Co. After a few years Rob’s tenant, whose rent he relied upon to meet repayments to Bank Co, ceased business. Rob was unable to replace the tenant. Because Rob no longer received rent he was unable to make his loan repayments and he defaulted on his loan. Bank Co, under their loan agreement and mortgage, soon after took enforcement action against Rob and arranged for the warehouse to be sold and the sale proceeds applied to the debt owed. Rob was left unhappy about some aspects of how his bank treated him, but could do little about it since he faced an expensive legal battle with an uncertain outcome to resolve his complaints.
Bob meanwhile ran a farm. Like many farmers he received bank finance that was secured against his farm. Like Rob, Bob also unexpectedly encountered difficult financial circumstances that saw him unable to meet his loan repayments. Bob then also defaulted on his loan. Like Rob with his warehouse, this allowed the bank to take enforcement action under the loan agreement and mortgage to recover their debt. Bob feared the bank would repossess his farm, which it was entitled to do under its mortgage, and have it sold and the sale proceeds applied to his debt.
Before the bank could take enforcement action against Bob though it was required to undertake farm debt mediation. Farm debt mediation legislation captured Bob’s debt because it was a farm debt. The farm debt mediation process delayed Bob’s bank from taking enforcement action against Bob and gave him a structured opportunity to discuss grievances he had with his bank and sensibly consider other options besides a farm sale to resolve the debt owed.
Rob’s bank was never obliged to offer Rob a formal opportunity to resolve his debt. Bob was given this opportunity through the farm debt mediation process. This difference has proven invaluable in many instances I have been involved in. To make the most of your opportunity to resolve your farm debt dispute, contact us and have a lawyer experienced in farm debt matters assist you.
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