There are many contributing factors that are associated with financial adversity. The most common reasons include overwhelming debt, illness, divorce, foreclosure, or losing one’s job.

In fact, the average credit card debt in Vermont is a whopping $5,244 per person. In addition, foreclosure rates are also as staggering, one out of every 6,774 VT homes is currently in foreclosure.

If you have found yourself in similar situations, then you are more than likely struggling with other personal issues that come with living in debt. The fear of losing your vehicle, home or your income can drain a person physically. You may have even considered Claiming Bankruptcy .

If you are thinking “Should I File Bankruptcy?” you are surprisingly not alone. Around a million people file bankruptcy each year in the United States. Bankruptcy is a means created by the US Government to help struggling Americans find relief from uncontrollable debt. You may want to consider filing bankruptcy if it’s best for you.

What Is Bankruptcy?

Bankruptcy provides people with the chance to resolve their debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by an individual or by spouses jointly. When the bankruptcy is done, the filer will ‘exit’ with a fresh new start.

During a bankruptcy, a trustee is appointed to oversee the deatils of the matter. His or her responsibilities differ and depend on whether the person has filed for Chapter 13 or Chapter 7 bankruptcy.

Did you know that Vermont ranks #48 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 115 out of every 100,000 residents.

What Is The Difference Between Chapter 7 And Chapter 13?

Individuals or couples in Vermont, who claim bankruptcy, will elect to file under Chapter 13 or Chapter 7 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information

Chapter 7

The trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding, In exchange for dissolving all past due debts.

Debtors that were listed on the bankruptcy filing will be repaid with the proceeds collected during liquidation

Chapter 13

If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. The individual will be allowed to retain his or her valuable assets over a 3- to 5-year time frame.

In order to decide which type of bankruptcy a person can file, they will have to determine their ability to repay under the Bankruptcy Means Test.

What Is A Bankruptcy Means Test?

The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It considers your:

  • income and expenses
  • household size and composition
  • debt-to-income ratio

If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.

What Are Bankruptcy Exemptions?

The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.


  • Real property or mobile home to $125,000, including outbuildings, rents, issues, and profits. Spouse of deceased owner may claim. Tenancies by the entirety are exempt without limit as to debts of one spouse. Spouses living together may not double this amount. However, spouses living separately and filing a joint petition may claim a separate homestead exemption for each separate property.

Personal Property

  • Motor vehicles up to $2,500; clothing, goods, furnishings, appliances, books, musical instruments, animals and crops up to $2,500 total; refrigerator, stove, freezer, water heater, heating unit and sewing machines; health aids; bank deposits up to $700; wedding ring; jewelry up to $500; 500 gallons of oil, 5 tons of coal or 10 cords of firewood; 500 gallons of bottled gas; lost future earnings for yourself or a person you depended upon; personal injury and wrongful death recoveries for a person you depended upon; 1 cow, 10 sheep, 10 chickens, 3 swarms of bees, and feed to last 1 winter; 1 yoke of oxen or steers, 2 horses, 2 harnesses, 2 halters, 2 chains, 1 plow and 1 ox yoke; growing crops up to $5,000.


  • All wages if received welfare during the proceeding two months.


  • Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
  • IRAS and Roth IRAs to $1,283,025.
  • State employees.
  • Self-directed accounts including IRAs and Keoghs as long as contributions were made more than 1 year before filing; other pensions.
  • Teachers.
  • Municipal employees.

Public Benefits

  • Veterans’ benefits, Social Security, and crime victims’ compensation needed for support.
  • Workers’ compensation.
  • Unemployment compensation.
  • General assistance; aid to blind, aged, and disabled.

Tools of Trade

  • Tools and books of trade up to $5,000.

Alimony and Child Support

12-2740 – Alimony and child support needed for support.


  • Life insurance proceeds if policy prohibits use to pay creditors.
  • Life insurance proceeds if insured is not the beneficiary.
  • Group life or health benefits.
  • Annuity contract benefits up to $350 per month.
  • Health benefits up to $200 per month.
  • Fraternal benefit society benefits.
  • Unmatured life insurance contract (but not credit insurance policy); disability or illness benefits needed for support; life insurance proceeds for a person you depend upon.


  • $400 of any property; plus $7,000, less any amount claimed for clothing, goods, furnishings, appliances, books, musical instruments, animals, crops, motor vehicle, jewelry, tools of trade, and growing crops .

Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.

Filing Bankruptcy Alone vs. Filing With An Attorney

You are not required by law to hire an attorney to declare relief. People are permitted to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not for the faint of heart.

Filing Bankruptcy without an Attorney

A simple Chapter 7 case that doesn’t have a lot of debtors or assets may be easy to manage on your own.

A basic bankruptcy that doesn’t involve an attorney might look like:.

  • Your income is below the state median;
  • You have no property;
  • Your debts will be considered dis-chargeable.

Working With An Attorney

In most cases, it is usually in one’s best interest to work with a bankruptcy lawyer. A bankruptcy attorney is there to represent you and not the creditors.

An attorney is also accustomed with exemption laws. Plus, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.

While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.

What Does Bankruptcy Include?

Once you file for bankruptcy in VT, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.

In any event, Bankruptcy will be able to include:

  • credit card debt
  • protection from eviction
  • avoidance of foreclosure
  • utility bills
  • medical expenses

Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.

Final Thoughts And Considerations On Filing For Bankruptcy In Vermont

As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.

Bankruptcy Courts In Vermont

Federal Building
11 Elmwood Avenue
Burlington,VT 5401
Vermont Bankruptcy Court


Additional Vermont Resources

Foreclosure Help Program

Disability SSDI Benefits