CHICAGO (Reuters) - With farm bankruptcies rising and agricultural debt loads soaring, the U.S. Senate has passed a bill that will make it easier for more farmers with larger amounts of debt to file for bankruptcy protection.

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The bipartisan bill - called the Family Farmer Relief Act of 2019 - raises the ceiling on how much debt producers who file for Chapter 12 bankruptcy can have, to $10 million from the previous $4 million.

Chapter 12 is a part of the federal bankruptcy code that is designed for family farmers and fishermen to reorganize their debts. It was created during the 1980s farm crisis as a simple court procedure to let family farmers keep operating while working out a plan to repay lenders.

It costs far more now to run a U.S. farm than it did 30 years ago, according to U.S. Department of Agriculture data. Without this change to the law, bankruptcy experts say, farmers whose debts exceed $4.15 million are forced to use Chapter 11 bankruptcy protection, which is more costly and onerous.

The legislation, passed by the Senate on Thursday and earlier by the U.S. House of Representatives, is headed to the White House for President Donald Trump to sign, lawmakers said on Friday.

The bill aims to help the farm community avoid “mass liquidations and further consolidation in the largest sectors of the industry,” said U.S. Senator Chuck Grassley, the Iowa Republican who introduced the legislation in the Senate in December.

Bankruptcy lawyers and farm groups have long advocated for this change. As the U.S.-China trade war drags on, farm incomes have steadily fallen and shrinking cash flow is pushing some farmers to retire early and others to declare bankruptcy.

“With what’s going on in farmland today - as net income has continued to decrease, all the market uncertainty and the natural disasters - this is a very timely change,” said American Farm Bureau Federation President Zippy Duvall.

Not everyone has been in favor of the change. The American Bankers Association urged lawmakers to oppose the bill and warned “credit terms would tighten considerably for many family farms, with a disproportionate impact on the most distressed farms most in need of credit,” according to a letter dated July 25 and sent to House lawmakers.

A Reuters analysis of Federal Deposit Insurance Corporation data found that - after years of building up their farm lending portfolios in the wake of the U.S. housing meltdown of the late 2000s - top Wall Street banks are now pulling back from the sector as farm incomes are falling and farm loan delinquency rates are rising.