Bankruptcy allows an individual or business to get rid of some or all of its debt. Generally, bankruptcy should only be considered when the debt is completely unmanageable, impossible to pay off, and there are no other options. However, in some cases, the benefits of bankruptcy can significantly outweigh the costs. Bankruptcy is governed by federal law and handled in federal courts, so the procedural and substantive rules involved in Vermont are often the same as anywhere else in the U.S. However, individual bankruptcy courts have slightly different rules for items such as exemptions, so it would be a good idea to consult with a local St. Albans, Vermont bankruptcy lawyer beforehand.

Chapter 7 Bankruptcy in St. Albans, Vermont

In St. Albans, Vermont, there are 2 commonly-used forms of consumer bankruptcy: Chapter 7 and Chapter 13. Chapter 7 requires that a certain percentage of the debtor's property be liquidated to pay off at least a small part of their debt. However, many types of property are exempt, and do not need to be liquidated, such as cars, homes, insurance policies, and retirement accounts.

Once eligible assets are sold, and the proceeds turned over to the creditors, most remaining debt is excused. However, some types of debt cannot be discharged in bankruptcy, including student loans, taxes, child support, personal injury awards, and fines. If most of your debt in St. Albans, Vermont is not dischargeable, you might want to consider other options besides bankruptcy.

Chapter 13 Bankruptcy in St. Albans, Vermont

In St. Albans, Vermont, chapter 13 is very different from Chapter 7, and may or may not be the best option for you, depending on your situation. Chapter 13 Bankruptcy involves a court setting up a modified payment plan, which allows the debtor to pay off most or all of his debts over a longer period of time, through monthly payments that should, assuming that the debtor is willing to make a few sacrifices, be manageable.

Which Type of Consumer Bankruptcy Should I File in St. Albans, Vermont

The answer to this question depends heavily on your individual situation. If you have enough steady income to manage a payment plan, and a lot of non-exempt property that you are unwilling to part with, Chapter 13 might be a good option. If you don't have much steady income, and most of your property is exempt, Chapter 7 might be better.

Whatever your situation, you should speak with a local St. Albans, Vermont bankruptcy attorney. Your lawyer will be able to advise you of your options and their likely consequences, which will help you make a more educated decision.