Seems like the crash of the financial markets and the sudden freeze on available credit has affected most every consumer around the world – even the residents of the State of Vermont no matter how historically skeptical of encroaching globalism or household debts spiraling beyond swift repayment our citizens may be – and, with the average American household struggling to satisfy (or, much too often, opting to ignore) a reported five figure total of unsecured consumer debts held on more than seven separate accounts, bankruptcy protection has achieved an unprecedented level of interest among Vermont consumers as well as borrowers across the entire United States. The fact is, these days, even the most conservative investors still feel the bite of a recessionary slowdown, and while our State has historically been loathe to demand governmental interference in the private affairs of domestic budgeting, when the banks come calling all debtors will still have to answer the bell. Credit card accounts and the accompanying financial burdens have been an inescapable element of the lives of Vermont households for some time now, but the recent economic maelstrom troubling markets across the globe has at last forced borrowers within our state to confront their accumulated financial problems and explore any potential method of resolution to piling bills and compounding interest. The entire notion of Chapter 7 debt elimination (erasing the results of borrowing agreements freely entered) may seem embarrassing and vaguely criminal and just altogether wrong by the traditional way of thinking as the honorable citizens of Vermont imagine themselves, but, as the very socio-economic system propelling our State slowly crumbles and the financial underpinnings that support our country risks total collapse, Vermont debtors cannot afford to rely upon principles forged generations past midst a very different New England that could never have imagined titanic corporations offering teens thousands of dollars for a swipe of the pen.
To the ill prepared Vermont consumer, bankruptcy protection may seem to be the only reasonable defense against aggressive creditors and the ever looming threat of financial collapse, but the shortcomings of the bankruptcy code as currently written following the 2005 adoption of the Bankruptcy Abuse Prevention and Consumer Protection Act could come as an unwelcome surprise to any borrower strolling into governmental dominion from the cold. Preserving the sanctity of the filer’s estate should, of course, be one of the paramount worries of any Vermont family thinking about Chapter 7 debt elimination bankruptcy, and the particular correlation between one of two potential exemption schedules dealing with the property and income of borrowers must be one of the main determining factors that tips the scales toward the liquidation of unsecured consumer debts through bankruptcy (or, if the theoretical petitioner finds the looming contingency of household seizure too threatening to risk court perusal, tip them away). Unfortunately, the majority of Vermont residents angling for protection ignores close examination of the fundamental tenets of both the State and federal bankruptcy code under the presumption that the average household couldn’t possibly have enough items of demonstrable value to need fear surrendering their supposed assets. Admittedly, prior to the legislation of 2005 and the seemingly slight change of a single word (“resale” to “replacement”) within the United States Bankruptcy Code, the average household was exceedingly unlikely to possess anything that the courts would bother to reclaim for auction. However, under the letter of the law this very moment, virtually any Vermont family may be found to possess valuables that could be taken away upon the ephemeral quirk of whichever trustee was chosen by the Vermont judiciary to adjudge the legitimacy of an individual case. No matter the size of the borrowers’ credit account balances nor how desperately the Vermont residents may need to resolve budgetary problems or quell the attempts of mercenary collection agencies, a financial portfolio wiped clean of all of those unsecured debts applicable under the contemporary bankruptcy code (which avoids familial obligations, back taxes, and student loan along with any possessions attached to collateral that could be reclaimed or foreclosed upon) shan’t always be worth the subsequent dangers to hearth and home.
Even a successful Chapter 7 bankruptcy declaration resulting in the full and formal discharge of tens of thousands of dollars of credit card bills of medical debts may not still make up for the loss of necessary household items, irreplaceable family heirlooms, or even – for the most tragically ignorant Vermont borrowers who declare Chapter 7 bankruptcy protection and turn in the relevant paperwork without spending any time at all examining the consequences – the family’s primary residence. Bankruptcy protection was originally developed to defend the estates of Vermont residents or other Americans against lenders seeking to strip the helpless borrower of every single thing that they’d built up over the course of a lifetime, and citizens of Vermont that recklessly jump head long into the torrents of legalese and frankly contradictory statutes of modern bankruptcy without a painstaking exploration of all of the bankruptcy related data at their disposal (and, if at all possible, the careful word of a highly trained bankruptcy attorney) deserve the forthcoming devastation of their household. Still and all, legal residents of our State should think themselves especially fortunate – much as any consumer whose escalating bills have forced this course of action – that the legislature of Vermont has provided some guarantee of specific types of property which borrowers shall never have to sacrifice during Chapter 7 bankruptcy declaration. The entire register of exemptions specific to Vermont borrowers would dwarf the space allotted for this article even without mention of the wholly separate federal exemption scheme. One must choose between the two depending upon the household’s particular financial narrative but, with the national exemptions so limited in comparison with our State government’s allowances, practically every Vermont borrower would be insane or transcendently foolish to select anything besides the local safety net erected by Vermont representatives to gently catch our most precious belongings.
To underline an earlier point, Vermont borrowers seriously envisioning the benefits of Chapter 7 bankruptcy protection should do everything short of holding up a gas station in order to afford the assistance of attorneys more than knowledgeable about every last word written into both the United States Bankruptcy Code and the alternative regulations engineered by the Vermont legislature. With various exemptions to the forfeiture of assets ordinarily demanded as the (financial and, midst a political climate determined to penalize the bankruptcy claimants, spiritual) cost of debt liquidation including so many divergent and often archaic aspects, Vermont borrowers are strenuously counseled to look for themselves around the government web sites or ask the representatives of the State and federal government for a complete list. Nevertheless, a brief summation of some of the more popular and colorful portions of the local exemptions may be of interest to the curious Vermont consumer. Real estate owners, of course, would be most anxious to check out the details regarding the Vermont homestead exemption. Unlike the measly twenty thousand dollars of equity (appraisal figure minus the mortgage balance) protected through the federal bankruptcy code, Vermont borrowers choosing the local exemption package could maintain title to their family shelter (even if it’s a mobile home or trailer so long as there’s a permanent concrete foundation and the domicile’s designated as a primary residence) provided the value of the house is not estimated to be more than seventy five thousand dollars: which, in this age of rapidly descending real estate prices, should not be an issue for nearly any Vermont borrower unable to pay their credit balances and desiring the advantages of Chapter 7 debt elimination bankruptcy. Should the Vermont home owners have recently put their primary residence on the market, these profits would be officially let alone if the borrowers’ property would have otherwise been deemed exempt, and, should even greater tragedy befall the family, proceeds from fire insurance claims would be equally free from interference by the Vermont court authorities.
Looking further down the list of Vermont’s specialized exemptions, there’s a separate line intended to protect automobiles that are worth less than twenty five hundred dollars’ blue book value after deducting the vehicle loan. Married residents filing for Chapter 7 bankruptcy protection needn’t fret over the health of their wedding rings, and they may keep ownership of additional jewelry whose replacement costs are provably less than five hundred dollars. Clothing, appliances, musical instruments, books, furniture, kitchenware, bedding, and all of the essential items filling Vermont homes are exempted to the total combined amount of twenty five hundred dollars. The tools of trade – any greater specification shall depend upon the career or vocation of the wage earners concerned – and professional library of the Vermont borrower petitioning for bankruptcy protection are allowed a value of five thousand dollars combined. Animals and crops would be included under the catch all home furnishing exemptions, but growing crops have their own stipulation within the Vermont code which also places a dollar limit of five thousand dollars upon the total. Further, each Vermont borrower declaring Chapter 7 protection could maintain possession of (though, presumably, not within the city boundaries) one cow, one team of either oxen or horses or cattle (along with harnesses and halters and plow), two goats, ten sheep, ten chickens, three swarms of bees plus hives and honey, and enough feed to satisfy the animals through a New England winter. In the same vein, as the politicians representing Vermont hardly wanted to be responsible for the hypothermia of their electorate, each household successfully filing Chapter 7 debt elimination bankruptcy in our State will not be forced to forfeit rights to one water heater, a single stove for preparation of food, any appliances designed to provide warmth, ten cords of firewood, and either five tons of coal or five hundred gallons of heating oil (borrowers that happen to have bottled five hundred gallons of gas may keep that as well).
Monetary compensation owed to Vermont residents because of personal injury, criminal activities, loss of future earnings, or the wrongful death of a loved one shouldn’t be a problem. All public and some private retirement plans for employees of the State of Vermont or any recognized municipality will be protected along with disability and veterans benefits and most forms of governmental assistance including unemployment insurance, social security, and workman’s comp. The same goes for the funds resulting from group life insurance awards (or the value of a policy not yet matured), annuity contracts (up to three hundred and fifty dollars a month), health insurance claims (up to two hundred dollars a month), bank deposits (seven hundred dollars), and, should the borrowers have not been able to take advantage of every exemption on the books, up to seven thousand dollars worth of various allowances may be used to protect some other funds or property with actual amounts depending upon a variety of factors best deduced by professionals. At this point, sadly, the authors must admit that coherent navigation of the Vermont bankruptcy statutes does not fall into the capabilities of this sort of article. Easy enough to presume that medical aids won’t be seized by the Vermont courts nor the flow of alimony and child support payments diverted to the repayment of creditors, but analyzing the precise specificities of bankruptcy exemptions as regards annuities or stock dividends sadly requires the expertise of a specialist trained to elucidate such tasks. Many Vermont borrowers figure from the outset that their family accountant could handle the brunt of their calculations and strategies regarding Chapter 7 debt elimination programs. Bankruptcy protection, after all, only applies to financial matters that should theoretically be straight forward so long as the borrowers filled out the petition and credit matrix and other paperwork with due diligence and accuracy beyond question. However, no matter how well documented the Vermont household’s bills and earnings and receipts may appear to even those CPAs who’ve devoted their lives to the discipline, bankruptcy law actually requires a skill set and base of knowledge well above the mathematics originally employed.
Utilizing the Vermont bankruptcy exemption scheme, for example, consumers filing for Chapter 7 protection are formally permitted to retain the equivalent of three quarters of their disposable income each week – if these funds end up to be less than thirty times the minimum hourly wage, the percentage could increase – but the borrowers’ disposable income is not so easily ascertained. Under the restrictions imposed by the Bankruptcy Abuse Prevention and Consumer Protection Act, residents of Vermont wouldn’t even be approved for the debt erasure plan if they made more than the median gross annual earnings of households within their State (forty two thousand for one member, fifty three thousand for two members, sixty one thousand for three members, sixty nine thousand for four members) in the year before the bankruptcy paperwork was submitted. Since the trustee appointed by the Vermont courts is no longer permitted to even evaluate the extent of total consumer debts owed nor take into account any extenuating circumstances, the Vermont residents that find to their utter shock that they are apparently considered too well off to enter the Chapter 7 program have no other recourse but to enter the Chapter 13 debt re-organization plan which, though the automatic stay protection does immediately halt foreclosure proceedings, purely juggles the credit accounts and tempers lender reclamations through legal action. There’s a separate test putatively meant to help out borrowers truly deserving of Chapter 7 protection by calculating the amount of money that severely indebted households could pay each month to their assembled creditors, but, once again, so much of the eventual determination shall depend upon the borrowers’ disposable income as estimated from an analysis of the filing family’s secured and unsecured debt payments, utility bills, gross monthly earnings, and ordinary cost of living expenses. With the budgetary figures utterly dependant by letter of the United States Bankruptcy Code upon Internal Revenue Service guesswork (rounded, to be sure, far down from the aggrieved family’s realistic monthly outlay), an unfortunately elevated number of bankruptcy petitions filed by Vermont residents honestly begging for thoroughly merited bankruptcy protection are tossed away because the IRS disposable income guidelines are, well, disposable.
This all should hopefully illuminate the vital importance of bankruptcy attorneys’ assistance when preparing the first round of Chapter 7 or Chapter 13 documents. As expensive as the services of bankruptcy lawyers with an excellent track record in successful liquidation of consumer debts (with minimal damage to the possessions) may initially seem to Vermont borrowers already more than a little hesitant about surrendering the control of potentially the outcome of their entire estate to the mercy of bored and over worked trustees randomly selected by the Vermont judiciary to decide a household’s fate within the few minutes given during the lone discussion (the so called 341 Meeting) held between debtors and creditors and legal authority. Attempting to safeguard family finances midst an economy drunk upon charge card purchasing too easily granted and multinational expansion for expansion’s sake (and, more importantly, trembling through the resultant hangover), a new breed of debt management companies have afforded their clients vast reductions in their card account balances that’s absent the risk of disappearing household treasures or credit score wreckage. Debt settlement negotiation firms, most especially, may seem like a godsend to debtors who’ve earned too much to ensure the certainty of Chapter 7 bankruptcy admittance and the liquidation of all unsecured burdens but have yet too little money on hand to arrange for proficient legal representation. Most enticingly for Vermont borrowers reasonably bitter about the limitations of governmental debt assistance following BAPCPA, the debt settlement strategy exploits the lingering reputation of bankruptcy relief to the advantage of ordinary consumers.
By convincing creditors that their clients may consider filing for bankruptcy protection—and therefore rub out all applicable debts, leaving creditors high and dry—these settlement companies manage to convince credit card companies and collection agencies to lower the overall account balances by percentages that approach sixty and seventy percent (which, despite the ramped up schedule, may still effectively lower the total amount of payments due each month). The settlement business model is still new enough that most Vermont residents won’t be able to easily find a representative within driving distance of their neighborhood, but, nonetheless, whether the Vermont heads of household have first discovered the drawbacks of modern bankruptcy protection or knew all along that their particular financial situation wouldn’t easily qualify for Chapter 7 programs, borrowers should at least take a glance at one of the websites set up by those debt settlement negotiation firms. So long as the settlement company has demonstrated certification from a national board and managed to attain a sterling reputation around both Vermont and the nation at large, indulging the free or extremely low priced (especially in comparison with bankruptcy attorneys) consultation sessions offered by the better settlement negotiation professionals to understand more about how the program works and – even more importantly, since not all of the creditors shall agree to negotiation and not all of the debtors shall prove worthy of the settlement company’s efforts – if it would work for resolving their own family’s vaunting credit balances now that Chapter 7 bankruptcy protection cannot be completely trusted.
The decision to reach out for help with your debt is not one that's easy to make. You were raised to "do the right thing", but now it’s nearly unbearable. You struggle along while your creditors are turning up the heat. And now you’re at the point where the late fees, penalties and interest expense make it impossible to keep your head above water.
Ask yourself this. If you could eliminate your debt without permanently damaging your credit, why wouldn't you?
