Chapter 7 Bankruptcy in Vermont

Vermont is the home of Lake Champlain, the birthplace of Ben & Jerry’s Ice Cream, and home to the Green Mountains, hence its nickname: The Green Mountain State. You’d think that with all of that “green” around, Vermont residents wouldn’t struggle with debt, having a financial status in the red.

Those overwhelming medical bills, tax liens and credit card debts can be alleviated with a Chapter 7 bankruptcy; bringing debtors in Vermont back to “black” with plenty of green… in the form of money, of course.

Filing for Chapter 7 Bankruptcy in Vermont is as Easy as Making Maple Syrup

A Chapter 7 bankruptcy will help you get your life back on track. It wipes out many of your debts, including medical bills, credit card debts, old tax liens and other assorted bills. Your Vermont bankruptcy attorney will be able to help you with the specifics, but some of the things that a bankruptcy, Chapter 7 won’t erase include:

• Student loans
• Money owed from ill-gotten gains and other illegal means
• Certain legal judgments
• Newly filed tax liens
• Child support
• Alimony payments

Turn Your Life Back Around with a Chapter 7 Bankruptcy

The process for filing Chapter 7 bankruptcy is fairly easy. Once you’ve hired a Vermont bankruptcy attorney, he or she will look over your income and assets to see if you qualify. There are two ways to know if you qualify for a Chapter 7 Bankruptcy. The first is easy – all that you need to do is take a look at the chart below. If your income falls within the limits for the size of your family, then you qualify.

However, if your income is above the limits, your Vermont bankruptcy attorney will have to perform a means test to see if you qualify for bankruptcy, Chapter 7. The means test is an official part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, and is a mathematical process that carefully weighs and compares your debts, income and assets. If your debts are deemed excessive, then you can file for Chapter 7. If they aren’t, then you may be able to file for a Chapter 13 bankruptcy.

The income limits for Vermont are as follows:

• Family of 1 - $43,042
• Family of 2 - $57,948
• Family of 3 - $65,829
• Family of 4 - $78,392
• Family bigger than 4 - add $7,500 for each person

After You Qualify

Qualifying is just the first step. Afterwards, your bankruptcy attorney will help you fill out your bankruptcy petition. Before it can be filed, however, you will need to take a credit counseling course. Two courses are required, one before you file, and one after your hearing. These courses are often offered online. Your attorney will suggest a reputable list of companies of where to take your courses. These courses are designed to reeducate those who struggle with debt, so that they will not fall back into the financial pattern.

When you first meet with your Vermont bankruptcy attorney, you will need to bring the following information with you.

• A list of your debts.
• Bank statements and financial records pertaining to certificates of deposit, bonds and stocks
• A list of your assets, with an emphasis on furniture, electronics and jewelry
• Your last six month’s worth or paystubs.
• Last year’s filed tax return

This paperwork is integral not only for the qualifying process, but also for filling out your petition. Once you’ve completed the Chapter 7 bankruptcy petition and undergone the required counseling, your petition will be filed with the court. At this point, a trustee will be assigned to represent your creditors, and they’ll no longer be allowed to contact you. Any questions that your debtors have will have to be directed at either the trustee or your attorney. After a short hearing, the bankruptcy court will process your petition in about 90 days. You will receive a discharge in the mail, and your debts will be officially gone forever.

But What about My Home?

The first and primary question debtors have after figuring out the benefits of discharging nearly all debts is what happens to the assets during and after a bankruptcy. Many think that in exchange for getting rid of debt, they will have to give up all of their possessions. The Bankruptcy Reform Act has changed this.  Debtors are allowed to keep a certain amount of assets and possessions, including a home and other items. Some states, like Vermont, allow debtors to choose between federal and state exemption laws, making asset customization even easier.

State exemptions for Vermont residents include:

• Home exemption: A primary residence worth up to $125,000 is exempt
• Motor vehicle: $2,500
• Personal property:
• 1 wedding ring – 100%
• Household goods including furniture, apparel, pets, books, and other similar items - $2,500
• Other Jewelry: $500
• Appliances – 100%
• Cash in bank - $700
• Farming equipment – includes 100% of the following:
• 500 gallons of gas
• 1 cow
• 2 goats
• 10 sheep
• 10 chickens
• 3 beehives
• 1 yoke of oxen
• 2 teams of horses
• 6 months’ worth of feed
• Growing crops - $5,000
• Benefits and insurance – 100% of the following:
• Fire insurance proceeds resulting from loss by fire of exempt property
• Social security benefits
• Veteran’s benefits
• Disability or illness benefits
• Alimony support or separate maintenance
• Crime victims' reparation awards
• Fraternal Benefit Society benefits
• Vermont Employees Retirement System benefits and funds
• Retirement funds (State Teachers)
• Workmen's compensation benefits
• Unemployment compensation benefits
• Retirement benefits (municipal employees)

It’s important to make a note that the amounts and type of these exemptions for state and federal laws can change annually. Check with your bankruptcy attorney for the most up-to-date information.

Explore the wild areas that Vermont has to offer. With no debt weighing you down, you are free to pursue your dreams and spend time with family and friends. Find a local Vermont bankruptcy attorney today to find out how you can erase your debts and start fresh.

Vermont Bankruptcy Court