In bankruptcy, a homestead exemption protects equity in your home. Here you’ll find specific information about the homestead exemption in Vermont.
For information about how the homestead exemption works in both Chapter 7 and Chapter 13 bankruptcy, see The Homestead Exemption in Bankruptcy. For more articles on exemptions, see our Bankruptcy Exemptions area.
Under the Vermont state exemption system, homeowners may exempt up to $125,000 of their home or other property covered by the homestead exemption.
In Vermont, if a couple is married and filing jointly, each spouse may not claim a separate exemption. The entire exemption amount for married couples living together remains $125,000. D'Avignon v. Palmisano, 34 B.R. 796 (D. Vt. 1982).
However, if a married couple files a joint bankruptcy petition but is separated and living in different homes, each spouse can claim the full amount of the homestead exemption in his or her separate home. In re Roberge, 307 B.R. 442, 444 (Bankr. D. Vt. 2004) order amended and supplemented, 03-11135, 2004 WL 3522695 (Bankr. D. Vt. 2004).
In Vermont the homestead exemption applies to real property, such as your home and condominium, and the outbuildings and land used in connection with that home or condominium. Mobile homes are also covered in Vermont.
The homestead exemption also applies to rents, issues, profits, and products of any real property.
If the debtor’s property has a value greater than the allowed amount of $125,000, and is part of the homestead, the debtor may decide which portion of the property receives the homestead protections of the allowable amount.
In Vermont you can use either the state exemption system or the federal bankruptcy exemption system (but you can’t pick and choose different exemptions from each system – you have to use all state exemptions or all federal exemptions.)
The federal bankruptcy homestead exemption amount changes every three years. To find the current amount, see our article The Federal Bankruptcy Exemptions. The exemption may be used for homes, condos, co-ops, mobile homes, and burial plots. Married couples may double this exemption. You can find the federal bankruptcy homestead exemption at 11 U.S.C. §522(d)(1) and (5).
(To learn more about which state exemptions apply to you, see Which Exemptions Can You Use in Bankruptcy?)
Before 2010, Vermont required you to file a yearly homestead declaration known as Form HS-122 (a form filed with the county recorder’s office to put on record your right to a homestead exemption) before you filed for bankruptcy in order to claim the homestead exemption. Since 2010, you are no longer required to file a yearly homestead declaration; the 2010 homestead declaration remains on record until the property is sold.
However, you must file a homestead declaration, now known as Form HS-131, when you purchase a property that will be used as your homestead or if there is a change in the use of your current homestead.
Contact your county recorder for information on how to file a homestead declaration. You can also visit the Vermont Department of Taxes website for the proper forms at www.state.vt.us/tax/propertyadj.shtml.
If property is held as a tenancy in the entirety, it means the property is jointly owned by a married couple as a single marital entity, not as individuals.
In Vermont, if you hold property held as a tenancy by the entirety, the entire home is exempt against debts owed by only one spouse.
In Vermont, if a person dies and leaves a spouse, the deceased’s homestead (valued at $125,000 or less) can be transferred to the surviving spouse, without the spouse having to pay the debts of the deceased before the transfer.
Vermont’s homestead exemption is found in the Vermont state statutes at Title 27, Chapter 3 § § 101-185. To learn how to find state statutes, check out Nolo’s Laws and Legal Research area.
The Vermont Statutes can be found on Vermont’s State Legislature website at www.leg.state.vt.us/statutesmain.cfm.