If you find yourself struggling to keep up with your bills or make the minimum payments on your debts, know that there is hope for a better future. For many people in Vermont, filing for Chapter 7 bankruptcy can provide the lifeline they need to move on from a difficult financial situation.
You don't have to feel depressed or embarrassed at the prospect of filing for bankruptcy. Many people end up in debt for reasons they can't control, such as being laid off from a job or suffering a serious medical condition that required expensive treatment. Bankruptcy provides a tool to resolve debts you can't afford and begin moving toward a financially sustainable life.
For 30 years, Vermont Chapter 7 bankruptcy lawyer David Lynch has helped people in situations like yours get their lives back on track after facing crushing debt. Although the idea of filing for bankruptcy can seem intimidating, you have rights and options available to you when your financial situation becomes unsustainable.
At Lynch Legal Services, PLLC, we take a down-to-earth approach and provide personalized attention to help you understand your rights and options. We can give you the confidence to pursue Chapter 7 bankruptcy when it represents the best option for you to resolve your debts and wipe the slate clean. You can begin working towards living a debt-free life.
Contact us today for a free and confidential case evaluation to discuss your financial situation with our Chapter 7 bankruptcy attorney in Vermont and to go over your legal rights and options.
In a Chapter 7 bankruptcy, a debtor's nonexempt assets are sold, or "liquidated," to generate funds to pay off debts. Any remaining eligible debts are discharged by the court, meaning the debtor no longer has a legal obligation, with a few exceptions, to pay those debts. For this reason, Chapter 7 bankruptcy is often referred to as "liquidation" bankruptcy.
Chapter 7 bankruptcy is the most common form of bankruptcy for individual debtors, most debtors do not have any assets liquidated. Should there be assets that could be liquidated in Chapter 7, we will consider the alternative, Chapter 13 bankruptcy.
A Chapter 7 debtor is required to surrender nonexempt assets to pay off debts, whereas in Chapter 13 bankruptcy a debtor keeps the property and simply makes payments of his or her disposable income over time. For this reason, Chapter 7 bankruptcies are usually limited to those cases where a debtor has few assets and no reasonable prospect of paying off all or a sizeable portion of their debt load.
The Chapter 7 bankruptcy process in Vermont begins with first taking an approved credit counseling course within 180 days before filing your bankruptcy petition. During this time, you should also be gathering your financial documents and information regarding your income, expenses, and assets. You will need this information to properly fill out your bankruptcy petition and associated paperwork.
Your bankruptcy petition will be filed with the federal bankruptcy court in Vermont. In addition to the petition, you must also submit a schedule of your assets and liabilities, a schedule of your current income and expenses, a schedule of unexpired contracts and leases, and a statement of your financial affairs.
You must also pay the required filing and administrative fees along with your petition. However, if paying the fee would represent a financial hardship, you can seek court approval to pay the fees in installments or to have the fee waived altogether.
Once your petition is filed and accepted by the court clerk, a trustee will be appointed to your case. You must provide the trustee with a copy of your most recently filed income tax return, and with a copy of all tax returns filed during the course of your case. When you employ us to help you with bankruptcy, we make sure the trustee gets all the documents they will want to review.
Within 21 to 50 days of filing your petition, the trustee will conduct a meeting of creditors. During this meeting, the trustee and any of your creditors who attend the meeting can ask you questions under oath regarding your financial affairs. Usually, creditors do not attend the meeting and the meetings are routine. The trustee will ask questions to confirm that you understand the nature and effect of a bankruptcy proceeding and to confirm your identity. The trustee also inquires about your assets and transactions concerning your property over the prior several years. If the trustee is satisfied with the information presented, he or she will inform the court whether or not there are assets and will recommend the court issue a discharge of your eligible debts.
Although Chapter 7 bankruptcy requires you to sell, or liquidate, non-exempt assets to generate funds to pay your creditors, the law allows you to keep certain assets. These are protected from creditors by the bankruptcy exemptions.
All states have a list of certain assets you may keep in a Chapter 7 bankruptcy. In Vermont, the list of exemptions (as of 2020) includes:
- Up to $125,000 in equity in your primary residence that you own
- Up to $2,500 in personal property such as clothes, furnishings, and appliances
- Up to $700 in bank deposits
- Up to $5,000 in growing crops
- Up to $500 in jewelry, plus wedding rings
- Recoveries in personal injury and wrongful death claims
- Certain household appliances
- Up to $2,500 of equity in a motor vehicle
- Tax-preferred or tax-exempt pensions and retirement accounts
- Public benefit payments
- Up to $5,000 in books and equipment used in your work
- Alimony and child support payments
- Up to $350 per month in annuity payments, along with life insurance benefits
- Up to $400, plus any unused dollar limit from another exemption, which can be used as a "wildcard" exemption
In Vermont, you also have the option to choose, instead of the Vermont exemptions, the bankruptcy exemptions under federal law, which include (as of 2020):
- Up to $25,150 of equity in a primary residence that you own
- Up to $4,000 in equity in a motor vehicle
- Up to $1,700 in jewelry
- Up to $13,400 in household goods, with an individual item value limit of $625
- Up to $2,525 in books and equipment and tools used in your work
- Up to $13,4000 in loan value, dividends, or interest in a life insurance policy
- Alimony and spousal support
- Public assistance benefits
- Up to $25,150 in recovery from a personal injury claim
- Recovery from wrongful death claims
- The compensation received as the victim of a crime
- All retirement accounts (except that IRAs are capped at $1,362,800 in value)
- Up to $1,325, plus any unused portion of your homestead exemption, to be used as a "wildcard" exemption.
The Chapter 7 means test (also referred to as the calculation of current monthly income) is designed to determine your eligibility for filing for Chapter 7 bankruptcy. If your income and expenses meet certain thresholds, you can pursue a Chapter 7 bankruptcy to wipe out your dischargeable debts.
The first step in the means test is to determine whether your average monthly and annual income exceeds the median monthly and annual income for a Vermont family the same size as yours. Current monthly income is calculated based on your actual income during the 180 days prior to the first day of the month in which you file your bankruptcy petition. For example, the median monthly income for a Vermont family of two people, as of May 2020, was $6,300, while the annual income was $75,602. For a family of four, the median monthly income was $8,635, while the annual income was $103,627. If your current monthly income falls below the median income for a Vermont family the same size as yours, you pass the means test and can file for Chapter 7 bankruptcy.
If your income exceeds the median income in Vermont, you must proceed to the next step of the means test, which requires you to subtract your regular expenses to determine whether you have sufficient disposable income (the income left over after paying your living expenses) to pay off your debts. If you have sufficient disposable income you may be obliged to seek relief under Chapter 13 bankruptcy.
Even if the means test is calculated on the day you choose to file bankruptcy, you may still be able to file for relief under Chapter 7. The court will consider your projected income to determine if the presumption of too much income determined by the calculation of current monthly income should be disregarded.
If you are having trouble paying your debts and bills, Chapter 7 bankruptcy may represent the chance you need to get a fresh start. Our Williston, Vermont [do you have to write this way for a reason?] Chapter 7 bankruptcy attorney can help you if you are considering bankruptcy by:
- Advising you about all available options for dealing with debt, including credit counseling, debt consolidation, loan modification, and bankruptcy
- Helping you to collect your financial information and records
- Preparing your bankruptcy petition and associated filings so that your petition is not dismissed on a technicality or due to errors
- Being available to speak with you at your convenience to answer your questions and keep you up-to-date on the status of your case
- Responding to requests for additional information from the bankruptcy trustee
- Representing you at the creditors' meeting and at all court hearings
Don't wait another day to start the process of getting your debt and finances under control. Get a free consultation with a northern Vermont Chapter 7 bankruptcy attorney from Lynch Legal Services, PLLC to discuss your situation. We'll go over your rights and options for resolving your debts. Let our firm give you a helping hand during this difficult time in your life.