When you don’t have enough money to pay your bills, filing for bankruptcy in Vermont can be a good solution. The first step in financial freedom is understanding the differences between filing for Chapter 7 or Chapter 13 bankruptcy.
Once you know which chapter is best for you—and it’s time to complete the paperwork—this article will help you find other information you’ll need, such as official bankruptcy forms, Vermont means test figures, credit counseling providers, and your local bankruptcy court. Also, you’ll find an explanation about protecting property in a Vermont bankruptcy.
Official Bankruptcy Forms
Before the Vermont bankruptcy court wipes out (discharges) your qualifying debt, you must first describe all aspects of your financial circumstances on bankruptcy forms, including property, bills, income, expenses, and financial transactions.
You can complete and download the forms on the U.S. Courts form page, then file your paperwork in the Vermont bankruptcy court along with a filing fee or a request for a fee waiver and proof that you’ve completed a credit counseling course (additional information below).
Vermont Bankruptcy Information
Federal law governs bankruptcy filings, but some aspects of Vermont law and procedure play a part, too.
Means Testing and Credit Counseling Information
You can find two types of Vermont-specific information on the website of the U.S. Trustee: means testing figures and approved credit counseling providers.
- Means test data. When you file a Chapter 7 bankruptcy, you’ll need to ensure that your income will qualify and that you pass the “means test.” If the family income exceeds the median income of Vermont, you might pass the test after you subtract certain standard expenses. If you’re lower than the median, you automatically pass. You’ll find the income charts and expense figures on the U.S. Trustee’s website (select “Means Testing Information”). If you file a Chapter 13 bankruptcy instead, a calculation similar to the means test will help you determine your monthly payment.
- Credit counseling providers. Most filers must complete a session with a credit counseling service before filing for bankruptcy and a debt management course before receiving a discharge. You’ll find approved providers on the U.S. Trustee’s website under “Credit Counseling & Debtor Education.” Scroll down to find the District of Vermont.
Vermont Bankruptcy Court Locations
On the Vermont Bankruptcy Court website, you’ll find the court’s local rules and instructions for filing your paperwork (click on “Filing Without an Attorney” under the “For Debtors” tab). The District of Vermont has two divisions. The court clerk will assign your case to the appropriate division based on your county of residence, but the court only accepts paperwork at the Burlington office.
U.S. Bankruptcy Court
11 Elmwood Ave., Room 240
Burlington, VT 05401
(802) 657-6400; (844) 644-7459
U.S. Bankruptcy Court
District of Vermont
151 West Street
Rutland, VT 05701
Vermont Bankruptcy Exemptions
Filing for bankruptcy doesn’t mean losing everything. But it doesn’t necessarily mean you’ll get to exempt (protect) all of your property, either. It will depend on whether the asset appears on the list of Vermont exemptions or the list of federal bankruptcy exemptions. As a Vermont resident, you can choose which list to apply in your case, but you must limit your exemptions to just one list.
If your property doesn’t appear on the exemption list you choose, the Chapter 7 trustee can sell it for the benefit of your creditors. In a Chapter 13 bankruptcy, the process is different. You’ll keep your nonexempt property as long as you can afford to pay for it in the Chapter 13 repayment plan.
Spouses filing a joint bankruptcy in Vermont can double the exemption amount if they both own the property (except for the homestead exemption). If only one spouse owns the property, the exemption cannot be doubled.
Below are some of the most commonly used Vermont bankruptcy exemptions. Statute citations are to the Vermont Statutes Annotated.
- Homestead exemption. Up to $125,000 of the equity in your home, condo, or mobile home. Married couples cannot double the homestead exemption for a single home. (§27-101)
- Personal property. Appliances, furnishings, goods, clothing, books, crops, animals, and musical instruments up to $2,500 total; bank deposits up to $700; various livestock; specific 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; sewing machine. (§12-2740)
- Motor vehicle exemption. Up to $2,500 of equity in a car, van, motorcycle, truck, SUV, or another motor vehicle. (§12-2740)
- Pensions. 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); teachers (§16-1946). (For more information about 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), see Your Retirement Account in Bankruptcy.)
- Public benefits. Aid to the blind, aged, and disabled and general assistance (§33-124); crime victims’ compensation needed for support (§12-2740(19)(E)); Social Security needed for support (§12-2740(19)(A)); unemployment compensation (§21-1367); veteran’s benefits needed 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))
- Insurance. 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)).
- Miscellaneous. Alimony and child support. (§12-2740(19)(D))
- Wildcard. $400 of any property, plus any unused exemption for motor vehicles, tools of the trade, jewelry, household furniture, appliances, clothing, and crops up to $7,000. (§12-2740(7))
Vermont adjusts these exemption amounts periodically, and additional exemptions exist. To make sure you are using all exemptions available and that you have the most recent figures, be sure to check the Vermont statutes on the website for the Vermont General Assembly.
This overview’s purpose is to provide resources that will help a filer find some of the information needed to prepare a bankruptcy filing; however, each filer is responsible for understanding the law. A do-it-yourself book like How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D. can help you make important decisions in your case.
December 13, 2017