Bankruptcy Exemptions in Vermont

Vermont is facing a marked increase in bankruptcy filings, as are many other states. Anyone considering filing bankruptcy should understand the options and determine the best course based on solid advice. In fact, Vermont allows its residents to choose to claim property exemptions based on either federal or state statutes, making the decision-making process even more difficult.

Many of the state exemptions are more generous, but they may not be right for everyone. A bankruptcy attorney can help determine which exemptions are appropriate for each debtor.

How to Keep Your Car

State and federal exemptions differ in this area:

• Federal exemption – $3,225
• Vermont state exemption – $2,500

In addition, those who have outstanding debt secured by their vehicles must continue to make regular loan payments or risk repossession of this property.

How to Keep Your Home

• Federal homestead exemption - $20,200
• Vermont state exemption – $75,000 for property that may include outbuildings, rents, issues, and profits
  • The spouse of a deceased owner may claim
  • Tenancies by the entirety have unlimited exemption concerning the debts of one spouse

In order to keep a home that continues to carry a secured mortgage, the owner must make regular payments or risk foreclosure by the lien holder.

Vermont allows exemptions for other forms of personal property:

• Clothing, goods, furnishings, appliances, books, musical instruments, animals, and crops – up to $2,500 total
• Refrigerator, stove, freezer, water heater, heating unit, sewing machine
• Health aids
• Bank deposits up to $700
• Wedding ring
• Jewelry – up to $500
• Required natural resources such as oil, coal, or cords of firewood
• Lost future earnings for debtor or a person they depend upon
• Personal injury and wrongful death recovery for a person the debtor depended upon
• Farm animals and implements – up to $5,000
• Tools of the trade – tools and books of the trade – up to $5,000
• Any other property – up to $400
• Wild card – up to $7,000, less any amount claimed for clothing, goods, furnishings, appliances, books, musical instruments, animals, crops, motor vehicle, jewelry, tools of the trade, and growing crops

Filing Schedule C of a Bankruptcy Petition

In order to qualify for any federal or state exemptions, the debtor must list every claim on Schedule C and attach it to their bankruptcy petition. The form must include the following details:

• The property claimed
• The federal or state statutes substantiating those claims
• The property exemption value for each claim
• Each claim’s current assessed value (not the market value)

Getting Legal Help

Vermont allows a wide array of exemptions for state residents who are filing for Chapter 7 bankruptcy. However, those exemptions are specific, with precise limitations. It can be daunting for those without a strong legal background to file such a petition. However, a bankruptcy lawyer can not only provide that legal expertise, but help you discover the best choices for your circumstances, enabling you to begin again with a brighter financial future.