The Vermont Homestead Exemption

Most people want to know whether they can keep valuable property before filing for bankruptcy—especially a home. If you qualify to use the Vermont homestead exemption, you can protect some or all of the equity in your house. In this article, we explain:

• how much the Vermont homestead exemption will cover
• how to apply it in your bankruptcy case, and
• how to use it to protect your home from creditors outside of bankruptcy.

For more bankruptcy information, read How to File for Bankruptcy in Vermont.

Claiming the Vermont Homestead Exemption

Vermont residents must file a form declaring a property as a homestead. You'll find homestead declaration filing instructions on the Vermont Department of Taxes Homestead Declaration webpage.

When filing for bankruptcy, you'll list your homestead exemption on Schedule C: The Property You Claim as Exempt when completing your bankruptcy forms. Keep in mind that you'll need to meet other requirements to prevent losing your home in bankruptcy. Find out more in Your Home in Chapter 7 or Your Home in Chapter 13.

Homestead Exemptions Available in a Vermont Bankruptcy

Vermont lets filers use either the federal exemption system or Vermont's state exemption system, so you'll have two homestead amounts to choose between. However, you can't mix exemptions from both lists, so you'll want to select the system that will protect your most important assets.

To help you make an informed choice, we've listed both exemption amounts below. We've also included links to more complete federal and state exemption lists so you'll have an easier time deciding which set will work best for you.

If you're married, keep in mind that spouses can double some exemption amounts, but not all. Find out about other filing considerations for spouses.

Property Protected by Vermont's Homestead Exemption

The Vermont homestead exemption applies to real property, such as your home and condominium, and the outbuildings and land associated with that home or condominium. Mobile homes are also covered. To qualify, the dwelling and surrounding land must be your permanent home or "domicile." (Reg. § 1.5811(11)(A)(i)—click here for the full definition.)

Here's an additional benefit that isn't available in many states: In Vermont, if a person dies leaving a spouse, the deceased's homestead exemption can be transferred to the surviving spouse. The spouse doesn't have to use that amount (currently $125,000) to pay the deceased's debts.

If you hold property as tenancy by entirety with your spouse: If one spouse files for bankruptcy—not both—the bankruptcy trustee might be prevented from using the property equity to pay off debts. However, this is a tricky area of law. Talk with a local bankruptcy attorney before filing to ensure that you don't lose valuable property.

Timing Your Vermont Bankruptcy

You can file for bankruptcy in Vermont after living there for more than 180 days. However, you must live in Vermont much longer before using Vermont exemptions—at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.

But suppose you lived in multiple states during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.

Finding the Vermont Homestead Exemption Statute

You'll find Vermont's homestead exemption in the Vermont Statutes Annotated by looking for Vt. Stat. Ann. tit. § 27-101 on the Vermont General Assembly website. Learn about finding state statutes in Laws and Legal Research.

Need More Bankruptcy Help?

Did you know Nolo has been making the law easy for over fifty years? It's true—and we want to make sure you find what you need. Below you'll find more articles explaining how bankruptcy works. And don't forget that our bankruptcy homepage is the best place to start if you have other questions!

We wholeheartedly encourage research and learning, but online articles can't address all bankruptcy issues or the facts of your case. The best way to protect your assets in bankruptcy is by hiring a local bankruptcy lawyer.

Updated April 5, 2022