With 315 filings, farm bankruptcies were up 46% from 2024.
Declining farm receipts and rising expenses, primarily in crop markets, led to an increase in the number of U.S. farms filing for Chapter 12 bankruptcy in 2025.
Based on data from the U.S. district bankruptcy courts, Chapter 12 filings increased to 315 in 2025, up by 99 (46%) from 2024. This marks the second increase following a four-year downward trend in farm bankruptcies, yet it is still lower than the last peak at 599 filings in 2019.
Chapter 12 was introduced in bankruptcy law as a temporary measure in 1986 and became permanent in 2005.
Among the 24 major dairy states (Table 1), Chapter 12 filings totaled 185 for the year ending Dec. 31, 2025, up from 120 in 2024. The total does not necessarily mean the filings were by dairy operations. Among those states, 2025 filings were highest in California (33), Kansas (18), Colorado (17), and Wisconsin and Georgia (each 16).
Chapter 12 bankruptcy does not mean the loss of the farm. Designed for family farmers with “regular annual income,” Chapter 12 bankruptcy allows financially distressed farmers to restructure financials and propose a repayment plan – usually over a three- to five-year period.
The number of U.S. farms filing for Chapter 12 bankruptcy during 2025 is still quite low compared to previous years, when filings hit 599 in 2019 and 560 in 2020. Previous high filings hit 723 in 2010, 712 in 2003 and 637 in 2011.
The USDA’s Farms and Land in Farms report, released on Feb. 13, estimated the number of farms in the U.S. for 2025 at 1,865,000, down 15,000 farms from 2024. In 2025, 48% of all farms had less than $10,000 in sales, down slightly from 48.1% in 2024, and 78.8% of all farms had less than $100,000 in sales, also down slightly from 78.9% the prior year. In 2025, 9.9% of all farms had sales of $500,000 or more, up slightly from 9.8% in 2024.
Looking ahead to 2026, net farm income is forecast to decline slightly. The USDA’s 2026 Farm Sector Income Forecast was released on Feb. 5. Specific to dairy, 2026 cash receipts from milk sales were forecast at $42.5 billion, down $6.2 billion (12.8%) from the forecasted 2025 cash receipts, due to lower prices. The 2025 estimate is down $2 billion from the $50.7 billion in 2024 milk cash receipts.
The Farm Sector Income Forecast projected 2026 Dairy Margin Coverage (DMC) program payments at $122.9 million, which is lower than the record high of $1.2 billion in 2023.
Lower cash receipts are expected to be offset some from higher direct government farm payments, and the USDA forecasts declining feed costs but higher outlays for livestock purchases in 2026.
Across the entire agricultural sector, debt-to-asset levels are forecast to increase slightly to 13.75% in 2026. Working capital is forecast to decrease 9.2% in 2026 relative to 2025.
