Bankruptcy in Vermont (2026): Exemptions & Means Test

Bankruptcy is a federal process, but Vermont is one of the states that lets filers choose between two exemption systems, and it offers a notably high fixed homestead. Vermont has not opted out of the federal bankruptcy exemptions, so a Vermont filer may use either the Vermont state exemptions or the federal list in 11 U.S.C. 522(d), whichever protects more property, but cannot mix the two. The figures below are current as of mid-2026, and you should confirm the latest amounts before relying on them.

This page is general legal information, not legal advice. It is part of our Bankruptcy by State series.

Does Vermont use state or federal bankruptcy exemptions?

Vermont gives filers a choice. The state has not exercised the opt-out authority in 11 U.S.C. 522(b)(2), so a Vermont debtor may elect either the Vermont state exemptions or the federal exemptions in 11 U.S.C. 522(d). You cannot mix categories from the two systems; you choose one list and apply it to all of your property.

In practice the decision usually turns on home equity. Vermont's state homestead of $125,000 is far larger than the federal homestead, so homeowners with equity typically choose the state exemptions. Renters or filers with little home equity sometimes prefer the federal set, which includes a larger general wildcard. To claim Vermont exemptions, the residency and domicile rules in 11 U.S.C. 522(b)(3) generally require domicile in Vermont for the 730 days before filing; otherwise an earlier state's rules, or the federal exemptions, may apply. Federal nonbankruptcy protections like Social Security continue to apply either way.

Vermont's homestead exemption

Vermont's homestead is the state's headline protection. Under 27 V.S.A. 101, the homestead of a natural person, consisting of a dwelling house, outbuildings, and the land used in connection with them, is exempt from attachment and execution up to $125,000 in value. That is a relatively high fixed figure compared with many states, and it can protect a meaningful share of a Vermont home's equity.

The amount is fixed by statute, not indexed for inflation. The Legislature raised it from $75,000 to $125,000 in 2009 Act 55, Sec. 8, effective July 1, 2009, and it has stayed at that level since, so it does not drift upward each year the way an indexed homestead does. A 2023 technical-corrections act reworded the section but left the $125,000 figure unchanged. The exemption protects equity, meaning value after mortgages and liens, and does not defeat a consensual lien such as a mortgage. Married couples and co-owners should check how the homestead applies to their specific ownership, because the protection attaches to the homestead property rather than automatically doubling.

Vehicle, wildcard, and personal-property exemptions

Vermont's personal-property exemptions are set mainly in 12 V.S.A. 2740:

• Motor vehicle: up to $2,500 of aggregate equity in one or more motor vehicles.
• Wildcard: $400 in any property, plus up to $7,000 of any unused amount of the motor-vehicle, tools-of-trade, jewelry, and certain household exemptions, which can be applied to property that has no other category.
• Household furnishings: up to $2,500 in aggregate value in household furnishings, goods, appliances, books, wearing apparel, animals, crops, or musical instruments held primarily for personal, family, or household use.
• Basic appliances with no dollar cap: a separate subdivision exempts one cooking stove, appliances needed for heating, one refrigerator, one freezer, one water heater, and sewing machines outright.
• Tools of trade: professional or trade books and tools up to a set amount.
• Jewelry: a wedding ring without limit, plus other jewelry up to a set amount.
• Growing crops, livestock, and farm animals up to set amounts, and a range of benefits such as Social Security, unemployment, workers' compensation, and certain support payments.

Wages also receive protection. Under 12 V.S.A. 3170, most of a debtor's earnings are exempt from garnishment, with the protected share tied to a multiple of the federal minimum wage. The combination of a generous wildcard and a high homestead makes Vermont's state list attractive to many filers, though the federal list can still win for someone with little home equity.

The Chapter 7 means test in Vermont

The means test screens who can file Chapter 7. It first compares your household's current monthly income, annualized, against the median family income for a Vermont household of the same size. If your income is at or below the Vermont median, you generally clear this step. If it is above, you complete the longer calculation that deducts allowed living expenses to see whether you have disposable income that should fund a Chapter 13 plan.

The U.S. Trustee Program publishes the median figures. For cases filed on or after April 1, 2026, the Vermont median family income is:

Add $11,100 for each additional person beyond four. These figures apply only to cases filed on or after April 1, 2026, and the U.S. Trustee Program revises them about twice a year, so confirm the figures for your filing date.

Chapter 7 vs. Chapter 13 in Vermont

Chapter 7 is a liquidation in which a trustee may sell non-exempt property to pay creditors. Because Vermont's homestead is high and filers can instead choose the federal exemptions when those protect more, many Vermont filers keep everything they own. Most remaining unsecured debt, like credit cards and medical bills, is discharged within about four to six months.

Chapter 13 is a reorganization for people with regular income. You keep your property and repay part or all of your debt over three to five years. It is often used by homeowners who are behind on a mortgage, because the plan can cure the arrears over time and stop a foreclosure, and by filers whose income is above the median.

In both chapters, filing triggers the automatic stay under 11 U.S.C. 362, which immediately stops most collection activity, including foreclosure, wage garnishment, repossession, and collection calls.

Where you file bankruptcy in Vermont

Vermont is a single federal judicial district, so all cases are filed in the U.S. Bankruptcy Court for the District of Vermont. The court sits in Burlington, with proceedings also handled in Rutland. You file in the district where you have lived for the greater part of the last 180 days. Federal law requires approved credit counseling before you file and a debtor-education course before discharge.

What bankruptcy can and cannot do

Bankruptcy discharges most unsecured debts, but several categories generally survive: most student loans (absent a separate showing of undue hardship), recent income taxes, child support and alimony, and debts from fraud or willful injury. Secured debts like a mortgage or car loan continue if you keep the collateral and keep paying.

Because Vermont lets you choose between two exemption systems, and because the better choice depends on your home equity and the mix of your assets, the decision can meaningfully change what you keep. Many people consult a licensed Vermont bankruptcy attorney before filing.