Vermont Bankruptcy Laws
In 2005 the United States government installed new bankruptcy acts for how bankruptcy is to be regulated in each state. The 2005 Bankruptcy Act set new stipulations on who is eligible for Chapter Seven bankruptcy. The Act also increased the monthly payments for Chapter Thirteen bankruptcy.

The United States also requires that every individual who applies for bankruptcy complete a financial advisement course at least six months prior to applying for bankruptcy. Another course is also required following the bankruptcy's completion. However this course is designed to assist individuals in how to keep their debts to a minimum and how to not need to file for bankruptcy in the future.

A Means Test
Because Vermont offers different kinds of bankruptcy for consumers, a means test is required before a petition can be processed. The means test will evaluate an individual's average income, his or her expenses, and living conditions to those of all other Vermont residents.

If the individual's income average is above the state mean then he or she is most often eligible for Chapter Thirteen bankruptcy. If the individual's income average is below the state mean then he or she is most often eligible for Chapter Seven bankruptcy.

Deciphering between whether or not an individual qualifies for which chapter of bankruptcy can depend on monthly payments. If an individual can pay no more than one hundred dollars a month towards his or her debts, he or she is eligible for Chapter Seven bankruptcy.

If an individual can pay up to one hundred sixty-six dollars a month towards his or her debts, he or she is eligible for Chapter Thirteen bankruptcy. All individuals who fall between these two ranges are usually eligible for Chapter Seven bankruptcy. After a bankruptcy petition has been granted, all notices of foreclosure and creditor statements will be frozen.

Chapter Thirteen Bankruptcy
Chapter Thirteen bankruptcy is a system that allows petitioners to eliminate their debts by using their own personal income. The Vermont bankruptcy court will evaluate an individual's income, living conditions, debt, and expenses and will create a personal repayment plan. The plan will have outlined how much is necessary to be paid each month so that the debt can be eliminated in a maximum of five years.

Chapter Seven Bankruptcy
Chapter Seven bankruptcy allows individuals to eliminate their debt through the liquidation of non-exempt property. A court-assigned trustee will liquidate the designated property and pay off the creditors on the individual's behalf. This entire process will often take no more than six months. Under this chapter of bankruptcy some portions of property are marked as exempt by the state of Vermont.

A chart, as issued through the state, divides what assets are exempt from liquidation. The divisions are created by property value and the kind of property. In Vermont these include homestead assets, pension, insurance, tools of the trade, and unpaid wages. These categories can include alimony, public benefits, motor vehicles, homes under seventy-five thousand dollars, and many other personal items for everyday living.