Updated January 29, 2019
You don’t need to worry that you’ll lose all of your assets when filing for bankruptcy. Vermont’s bankruptcy exemptions will allow you to protect the things you’ll need to maintain a household and job, such as equity in a home and car, and a retirement account.
Some states, including Vermont, allow residents to choose between the state and federal bankruptcy exemptions. You can’t protect property using both lists, but if you select Vermont’s state exemptions, you can use the federal nonbankruptcy exemptions, too.
To learn more about bankruptcy exemptions, the state exemption system, and the homestead exemption rules, read Bankruptcy Exemptions – What Can I Keep When I File for Bankruptcy?
Here are some of the more common exemptions in Vermont. When reviewing them, you’ll want to keep these things in mind:
27-101 – You can exempt equity in real property or a permanently-sited mobile home to $125,000, including outbuildings, rents, issues, and profits. A spouse of a deceased owner can claim this exemption under 27 V.S.A. § 105. Tenancies by the entirety are exempt without limit as to debts of one spouse. Spouses living together can’t double this exemption amount. D'Avignon v. Palmisano, 34 B.R. 796 (D. Vt. 1982). However, spouses living separately and filing a joint petition can claim a separate homestead exemption for each separate property. In re Roberge, 307 B.R. 442, 444 (Bankr. D. Vt. 2004) order amended and supplemented, 03-11135, 2004 WL 3522695 (Bankr. D. Vt. 2004).
12-2740 – Equity in a motor vehicle up to $2,500.
12-2740 - $400 of any property; plus $7,000 minus any amount claimed for clothing, goods, furnishings, appliances, books, musical instruments, animals, crops, motor vehicle, jewelry, tools of the trade, and growing crops.
12-2740 - 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, five tons of coal or ten 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; one cow, ten sheep, ten chickens, three swarms of bees, and feed to last one winter; one yoke of oxen or steers, two horses, two harnesses, two halters, two chains, one plow and one ox yoke; growing crops up to $5,000.
12-3170 - All wages if received during the previous two months.
11 U.S.C. § 522 - 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).
11 U.S.C. § 522(b)(3)(C)(n) - IRAS and Roth IRAs to maximum (amount changes).
3-476 - State employees.
12-2740 - Self-directed accounts including IRAs and Keoghs as long as contributions were made more than 1 year before filing; other pensions.
16-1946 - Teachers.
24-5066 - Municipal employees.
12-2740 - Veterans' benefits, Social Security, and crime victims' compensation needed for support.
21-681 - Workers' compensation.
21-1376 - Unemployment compensation.
33-124 - General assistance; aid to blind, aged, and disabled.
Tools of Trade
12-2740 - Tools and books needed in a trade or profession up to $5,000.
Alimony and Child Support
12-2740 - Alimony and child support needed for support.
8-3705 - Life insurance proceeds if policy prohibits use to pay creditors.
8-3706 - Life insurance proceeds if the insured is not the beneficiary.
8-3708 - Group life or health benefits.
8-3709 - Annuity contract benefits up to $350 per month.
8-4086 - Health benefits up to $200 per month.
8-4478 - Fraternal benefit society benefits.
12-2740 - Unmatured life insurance contract (but not a credit insurance policy); disability or illness benefits needed for support; life insurance proceeds for a person you depend upon.
Add any applicable federal nonbankruptcy exemptions.
Some people can keep all assets, but that isn’t always true. Here’s what will happen to nonexempt property:
You’ll learn more about Chapter 7 and 13 in Which Type of Bankruptcy is Right for Me?
This list includes the majority of bankruptcy exemptions available in Vermont, but not all. Specific exemptions could have qualification requirements, and amounts might have changed since this list was last updated. Check the Vermont Statutes Annotated or with a local bankruptcy lawyer.