How to File for Bankruptcy in Vermont

The state ranking 49th among the United States in bankruptcies, Vermont is representative of the increasing economic problems in the country. Along with continued consumer credit spending, bankruptcy is becoming more and more common with the poor economic situation. The laws governing these bankruptcy processes are outlined by the federal government, however each state can make their own respective amendments or additions. Vermont is one of these states.

Finding a Bankruptcy Attorney

There are many different forms of bankruptcy, but the majority of cases end up filing for Chapter 7, Chapter 11 or Chapter 13 bankruptcy. In order to chose the right option, hiring a specialized bankruptcy attorney is highly recommended. In addition to this initial choice, there are state specifications for each. Finding the right attorney is often best guided by personal or business referrals, but online services are also available.

Bankruptcy Options

With a bankruptcy attorney, these three common options will be examined to determine what option is best for the situation at hand. Each of the option has differing benefits:

• Chapter 7, or liquidation bankruptcy, because all assets, aside from exemptions, are liquidated for repayment to creditors. Though one loses their property, most debts will be alleviated when using this method of bankruptcy.
• Chapter 13, or rehabilitation bankruptcy, because rather than starting over without debts, the debtor will repay their debts according to an organized three to five year repayment plan created with a bankruptcy trustee and the creditors. This method is best utilized only by those with a continued consistent income.
• Chapter 11, another rehabilitation bankruptcy method, which operates along the same basis as Chapter 13, but is tailored for business bankruptcy, rather than individual. It allows businesses to continue operating throughout the entire process of bankruptcy.

Vermont Exemptions

Of those three common forms of bankruptcy, Chapter 7 bankruptcy is by far the most common choice. Vermont has a unique approach to this form of bankruptcy, with the choice of federal or state exemptions, and in addition, married couples may double the federal exemptions if chosen. Vermont specific regulations are:

Filing the Petition

Filing a petition for bankruptcy occurs after the decision of which Chapter will be most effective for one’s circumstances. To file a petition with the bankruptcy court, an inventory of all of the debtor’s possessions must be taken, making this a vital step for those filing for Chapter 7 bankruptcy because of the possibility of bankruptcy fraud. A “means test” must also be passed before filing for Chapter 7. These petitions are generally answered in 20 to 40 days, and if successful, creditors will be notified immediately. The next step is vital for those filing for Chapter 13 bankruptcy. It is the “341 meeting,” where the repayment plan will be created with a bankruptcy trustee and the creditors.