High direct Government payments and increased Commodity Credit Corporation loans improved the cash income of farmers in 1985. The continuing decline in real estate values reduced farmers' asset and equity levels. Financial difficulties varied widely. Family-size commercial farms and Midwestern cash grain farms experienced the greatest stress. Farms in the Lake States, Corn Belt, and Northern Plains held almost 54 percent of all farm debt. Nationwide, highly leveraged farms (debt/asset ratio greater than 0.4) owed almost two-thirds of all farm debt. Total debt declined by over $7 billion.