Bankruptcy in Vermont

Are you contemplating bankruptcy or hiring a bankruptcy attorney in Vermont? Are you tired of creditors calling for payments you can’t make? Maybe looking for a way to get out of debt and have you exhausted all other options? Then bankruptcy might be the solution you seek. It is a legal option that can erase a portion or all of your debts.

Types of Bankruptcy in Vermont

Bankruptcy is a legal process that helps individuals and businesses get a fresh financial start. It eliminates a portion of or all of their debts or financial liabilities. In Vermont, to be approved, individuals must prove they have a hardship that prevents them from staying current on their financial obligations. Keep in mind that not all debts qualify. Some liabilities, such as child support arrears, delinquent taxes, alimony, and student loans generally do not qualify for discharge. Consumers who find themselves falling behind in debt can file either Chapter 7, 11 or 13. To determine which option is right for you, you’ll need to assess your goals, assets, and income. You should also consider working with an experienced bankruptcy attorney.

Vermont has a specialized court that hears only bankruptcy cases. If you are facing these challenges, you will have to appear before the U.S. Bankruptcy Court for the District of Vermont.

Chapter 7 Bankruptcy

Many people find Chapter 7 to be the right solution for their circumstances because it provides them with the opportunity to start over financially. However, before filing for Chapter 7 bankruptcy, you should thoroughly assess your income and ability to repay what you owe. You should also speak with a bankruptcy attorney in Vermont who can help you to decide if a liquidation plan is right for you.

Typically, individuals approved for Chapter 7 lack stable income or have experienced a change in circumstances that has resulted in an inability to manage their debts. Though Chapter 7 erases debts, the tradeoff is you may have to give up certain possessions, such as your home, car or some other assets. However, once you file your petition, an automatic stay goes into effect that requires all collection activity against you like foreclosures and garnishments, to stop temporarily. However, the automatic stay does not prevent all collection attempts. For example, if you owe child support or restitution for a criminal case, you are still liable for those payments.

Vermont Bankruptcy Law states that Chapter 7 is a viable strategy to help you erase debt. You’ll be required to take a credit counseling class, and given a means test to see if your income level qualifies for chapter 7. It’s also important to remember that bankruptcy does not erase certain types of debt, such as debt that stems from alimony or child support. You will still be required to make these payments in full.

Chapter 11 Bankruptcy

Chapter 11 bankruptcy is more complex than other types of bankruptcy. Businesses most often use this, as well as certain types of people. It allows petitioners to restructure their debts with a reorganization plan. This way, they are easier to manage over a determined length of time. This is usually four to 18 months. The main benefit of Chapter 11 bankruptcy is that it does not require petitioners to sell off or liquidate their assets to pay what they owe. It does allow debtors to negotiate with their creditors a reorganization plan. This then enables them to stay current on their debts moving forward.

According to the U.S. Courts, most Chapter 11 cases deal with a business that wished to restructure its debt and pay off creditors, without liquidating assets and losing control of the business. The courts will generally allow a restructuring agreement of 3 to 5 years to take place. However, the plan cannot be so long that the court finds it unfeasible or unfair to the creditor.

Chapter 13 Bankruptcy

Chapter 13 Bankruptcy is a debt restructuring or wage earners plan. In Vermont after you file, the courts will assign a trustee to examine your liabilities and assets and ability to pay bills. Unlike other types of bankruptcy, Chapter 13 involves you restructuring your debt with a three to five-year repayment plan. The flexibility of this repayment plan will depend on what property you want to keep and how steady your income is. It may also give you the opportunity to have some or most of your debts discharged.

Chapter 13 is generally chosen by individuals who are looking to take control of their debt. Chapter 13 allows the debtor to work with an attorney to establish a 3 to 5-year timeline and a restructuring of a payment plan in order to wipe away their debt based on their existing income. A means test is administered to see if an individual qualifies. However, according to the U.S. Senate, the means test is completely waived if the filing is on behalf of a family whose income is below the average for the state.

The Bankruptcy Process in Vermont

There is never an ideal time to declare bankruptcy. However, if you are unable to pay off what you owe within five years, filing for bankruptcy can help you to lessen the negative impact on your situation and help you get back on track.

In Vermont to begin the filing process, gather all of your financial records, including monthly expenses, debts, assets and annual income. This information is crucial to give the courts an accurate picture of your circumstances. Failure to provide all necessary information can result in your petition being denied.

Vermont Law Help provides a thorough overview of the bankruptcy process in Vermont. As you explore your options you’ll need to decide if filing for bankruptcy can ease your debt, and then decide which type of bankruptcy is most beneficial for you to file. You’ll need to take credit counseling classes and begin to line up the items you want for exemption. In addition, you’ll need to stop paying any qualifying debts.

Additional Facts

Vermont residents can protect up to $125,000 of equity in their home, and up to $2,500 in a motor vehicle. In addition, Vermont has a wildcard exemption of $400. But also Vermont allows you to apply up to $7,000 of any unused exemptions to personal property. Additionally you can exempt up to $5,000 for any tools or equipment necessary for your work or trade.

At least six months before you file for bankruptcy, eliminate unnecessary spending. Do not run up the balances on your credit accounts. You’ll also need to complete an approved credit counseling course, usually online or over the phone. Credit counseling is necessary to help you learn financial literacy and help you learn better financial habits. Once you complete the course, you’ll receive a certificate of completion to include in your filing. If you don’t have the certificate of completion from the credit counseling course that you took, the courts will reject your bankruptcy petition.

Work With an Experienced Vermont Lawyer

Hiring a local bankruptcy lawyer in Vermont during this process can help reduce the costly risks of self-representation in court. An experienced bankruptcy lawyer understands state and federal bankruptcy laws. He or she can help you understand which laws apply to your case, especially which debts that can be discharged or can’t be discharged. An experienced Vermont attorney can also offer you guidance to improve the outcome of your case.

Keep in mind that there are debt management alternatives and financial resources that may benefit you more than bankruptcy, such as debt consolidation. Though bankruptcy is an attractive solution, it is best as a last resort. Do you need immediate help? Then one of our experienced lawyers in Vermont can guide you through the entire bankruptcy process. We can even help you connect with an attorney across Vermont state lines.

Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced lawyer in your area!