If you file for Chapter 7 bankruptcy in Vermont, the Vermont bankruptcy exemptions can help you keep some or all of your property. If you file for Chapter 13 bankruptcy, the Vermont bankruptcy exemptions may reduce the total amount you must pay your unsecured creditors. (Learn how bankruptcy exemptions work in both Chapter 7 and Chapter 13 bankruptcy.)
Below you can learn what property the Vermont bankruptcy exemptions protect, whether you can use the federal exemptions in Vermont, what happens to exemptions if you are married and filing jointly, and more.
You Can Use Either the Vermont or the Federal Bankruptcy Exemptions
If you file for bankruptcy in Vermont, you can choose to use either of the following sets of bankruptcy exemptions: the Vermont exemptions or the federal bankruptcy exemptions. You cannot mix and match between these sets, you must choose one and use only the exemptions within that scheme.
If you choose to use the Vermont bankruptcy exemptions, however, you may also use any of the federal non-bankruptcy exemptions that apply in your situation. The federal non-bankruptcy exemptions protect property such as federal retirement accounts and veterans’ benefits. You can use both the federal non-bankruptcy exemptions and the state exemptions; you don’t have to choose between the two lists.
Married Couples May Double Some of the Vermont Bankruptcy Exemptions
Unless otherwise stated, if you are married and filing a joint bankruptcy petition, you can double the amount of the Vermont bankruptcy exemption if you both own the property. If only one spouse owns the property, then you cannot double the amount. One notable exception: married couples cannot double the homestead exemption.
Common Vermont Bankruptcy Exemptions
Below are some of the most commonly used bankruptcy exemptions. The statute citations, unless otherwise noted, are to the Vermont Statutes Annotated.
In Vermont, you can exempt up to $125,000 of the equity in your home, condo, or mobile home. §27-101 (Learn more in The Vermont Homestead Exemption.) Married couples cannot double the homestead exemption, unless they are living separately and each claim the exemption for a separate home.
In Vermont, you can exempt the following types of personal property. §12-2740
- appliances, furnishings, goods, clothing, books, crops, animals, and musical instruments, up to $2,500 total
- bank deposits, up to $700
- various livestock
- certain amounts of coal, heating oil, and firewood
- growing crops, up to $5,000
- health aids
- jewelry, up to $500
- wedding ring
- personal injury and wrongful death recoveries and lost future earnings for you or someone you depend on
- stove, heating unit, refrigerator, freezer, water heater, and sewing machine
Motor Vehicle Exemption
In Vermont, you can exempt up to $2,500 of equity in a car, van, motorcycle, truck, SUV, or other motor vehicle. (To learn more, see The Vermont Motor Vehicle Exemption.)
Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans). 11 U.S.C. § 522.
IRAS and Roth IRAs to $1,245,475. (This amount is adjusted every three years. For the most recent figure, see Your Retirement Account in Bankruptcy.) 11 U.S.C. § 522(b)(3)(C)(n); §15-41-30(A)(13)
Municipal employees. §24-5066
Other pensions. §12-2740(19)(J)
Self-directed retirement accounts (such as IRAS, Roth IRAs, and Keoghs), but only those contributions that you made at least one year before filing. §12-2740(16)
State employees. §3-476
Aid to the blind, aged, and disabled and general assistance. §33-124
Crime victims’ compensation if you need it for support. §12-2740(19)(E)
Social security if you need it for support. §12-2740(19)(A)
Unemployment compensation. §21-1367
Veteran’s benefits if you need them for support. §§12-2740(19)(B)
Workers' compensation. §21-681
Tools of Trade
Tools and books used in your trade or profession, up to $5,000. §12-2740(2)
Vermont protects some of your wages from garnishment by creditors outside of bankruptcy. However, in In re Reindeau, 293 B.R. 832 (D.Vt. 2002) the bankruptcy court ruled that you cannot use these wage exemptions in bankruptcy.
Annuity contract benefits up to $350 per month. §8-3709
Disability benefits that supplement life insurance or an annuity contract. §8-3707
Disability or illness benefits if you need them for support. §12-2740(19)(C)
Fraternal benefit society benefits. §8-4478
Group life or health benefits. §8-3708
Health benefits up to $200 per month. §8-4086
Life insurance proceeds for someone you depended on. §12-2740(19)(H)
Life insurance proceeds if the contract states that the proceeds cannot be used to pay the beneficiary’s creditors. §8-3705
Life insurance proceeds if the beneficiary is not the insured. §8-3706
Unmatured life insurance contract, other than a credit life insurance contract. §12-2740(18)
Alimony and child support. §12-2740(19)(D)
In Vermont, you can use the following wildcard exemptions (§12-2740(7)):
- any unused exemption for motor vehicles, tools of the trade, jewelry, household furniture, appliances, clothing, and crops, up to $7,000, and
- $400 of any type of property.
Confirming the Vermont Bankruptcy Exemptions
This list includes some of the more commonly used Vermont bankruptcy exemptions. There may be others. In addition, Vermont periodically updates its exemption amounts and sometimes adds new exemptions. To find the most current laws, visit the Vermont Statutes Annotated on the Vermont legislature’s website. Be forewarned, however, that the exemptions are found in various parts of the code. To save time and ensure you’ve got the correct information, consider consulting with a Vermont bankruptcy attorney.