Bankruptcy may seem like an extreme measure of debt relief in Vermont. On average, the debt situation in the state is comparatively stable, and Vermont is among the states with the fewest filings. But there are still those who do because they are so behind in your bills that they are in danger of losing everything.
Bankruptcy as Debt Relief in Vermont: Exemptions
The most important thing you need to do is to get the professional opinion of a credit counselor. If you can avoid filing for bankruptcy, then do so. However, if after all is said and done, bankruptcy is the only viable debt relief in Vermont for you, then the next thing you need to be aware of are your exemptions.
There are two kinds of personal bankruptcy, Chapter 7 and Chapter 13. Chapter 13 is a simpler process, and takes longer to resolve. It is essentially a repayment scheme, wherein the court decides how much the petitioner can afford to pay monthly, and may compel creditors to accept.
In Chapter 7, you are filing for the right to prevent creditors from demanding payment even though no money is available. You will seek to have the courts rule that whatever debts you can no longer pay for be forgiven. In exchange, you sell off all your assets except for those that are deemed exempted in part or in whole based on a federal- or state-mandated maximum value.
Why is that important? State and federal exemptions to Chapter 7 bankruptcy will allow you to start fresh, but not destitute. You will have the basic needs covered: food, shelter and clothing. In Vermont, there are overlaps between the state and federal exemptions, including:
- Homestead equity
- Other property, with limits
- Furniture, clothing and jewelry
- One vehicle
- Burial plots
- Retirement accounts
- Unemployment, workers’ compensation and welfare benefits
- Life insurance proceeds
- Portion of wages
Vermont bankruptcy law allows you to choose between state and federal exemptions, but you cannot mix and match. You will have to choose carefully because the value may differ considerably. A good example would be homestead equity, which federal exemption pegs at $21,635 for an individual, or $43,270 for a married couple, while state exemption is $75,000. Federal exemption value for the vehicle is $3,450 while state exemption is only $2,500. You need to look into what assets you have to help you decide which exemption type to follow.
Debt Relief in Vermont
You can get professional help from debt relief companies which also handle bankruptcy cases such as Consumer Education Services, Inc., an accredited credit counseling agency under the Bankruptcy Code, or go to a bankruptcy lawyer. Because filing for bankruptcy is a complicated process, it is recommended that you do not file bankruptcy on your own even aside from the exemption question. It is far better to spend for professional debt relief in Vermont than to lose your home, retirement accounts, and so on.