Vermont Homestead Laws

Keeping your home during bankruptcy is about more than just the equity you have in your real property. It’s about the time you’ve taken to make the house your own and the memories you and your family have made there. If you file bankruptcy in Vermont, there’s a good chance you’ll be able to keep your home. Vermont’s bankruptcy laws offer a very generous homestead exemption. As long as you have less than $125,000 of equity in your house, you should be able to keep it.

This article explains how the homestead exemption works in bankruptcy, examines the Vermont homestead exemption, and shows how it can protect you during the bankruptcy process. If you’re thinking about filing a Chapter 7 or a Chapter 13 bankruptcy case, consider speaking with a Vermont bankruptcy attorney. In addition to ensuring that you take advantage of all Vermont bankruptcy exemptions, they’ll help you every step of the way through your bankruptcy proceedings.

Types of Bankruptcy in Vermont

For private citizens, two main types of bankruptcy are available: Chapter 7 and Chapter 13. You must meet the eligibility requirements for the bankruptcy court to accept your petition. These requirements are the same regardless of which state you live in.

A Chapter 7 bankruptcy (liquidation bankruptcy) is ideal for people who want to eliminate their debt and start over. In this type of case, the trustee identifies any dischargeable debts. You won’t have to repay them once your bankruptcy case is complete.

To qualify for Chapter 7 bankruptcy, you must pass the “means test.” This is based on an earnings threshold set to your state’s median household income. The median incomes in Vermont for 2026 are as follows:

• One-person household: $72,461
• Two-person household: $96,963
• Three-person household: $114,075
• Four-person household: $137,583

If you don’t pass this test, you may still be eligible for Chapter 7. If you can show that you have little to no disposable income at the end of the month, the trustee may accept your Chapter 7 bankruptcy petition.

In a Chapter 13 case (reorganization bankruptcy), you agree to a three- to five-year repayment plan. Once the trustee approves your plan, you’ll make monthly payments to the trustee, who then pays your creditors. Once you finish making the payments on your Chapter 13 plan, the court will discharge any balance owed on your unsecured debts. You’ll resume regular payments on your other financial obligations.

To file for Chapter 13, you must pass two tests. First, you must show that you have sufficient regular income to commit to a reasonable repayment plan. Second, you must demonstrate that your secured and unsecured debts are below the maximum thresholds.

For 2026, the federal limits for Chapter 13 are as follows:

• Unsecured debt: $526,700
• Secured debt: $1,580,125

If you pass both tests, the court will accept your Chapter 13 bankruptcy petition.

When you submit your bankruptcy petition, you must also pay the requisite filing fee. If you can’t afford it, you can request a fee waiver or ask to pay the amount in four equal installments. The filing fees (as of 2026) are $338 for Chapter 7 and $313 for Chapter 13.

What Is a Homestead Exemption and How Does It Protect Homeowners?

In general, a bankruptcy exemption helps debtors protect their property during and after bankruptcy. If you have a lot of equity in your home, your bankruptcy trustee may sell the property and use the proceeds to pay your creditors.

One of the most valuable bankruptcy exemptions is the homestead exemption. This protects the equity you have in your primary residence. In many cases, the Vermont homestead exemption covers all of a debtor’s equity.

If your equity exceeds the exemption amount, a Vermont bankruptcy lawyer can try to negotiate with your mortgage lender to bring your home loan current. In most Chapter 13 bankruptcy cases, your home isn’t in danger of a forced sale because you’re actively trying to repay your debts instead of having them discharged.

Vermont Homestead Exemption

Vermont, like many other states, allows bankruptcy filers to claim the federal exemptions instead of the state exemption. However, the Vermont homestead exemption is much higher than the federal one.

As of 2026, the federal homestead exemption is $31,575. Married couples who file a joint bankruptcy can double the exemption amount if they choose the federal set of exemptions. In this case, a married couple can protect up to $63,150 of the equity in their home.

If you file a bankruptcy petition in Vermont, you can claim a homestead exemption of up to $125,000. While married couples can’t double the state homestead exemption, the $125,000 state limit is nearly twice that of the double exemption under the federal homestead exemption.

Qualifying Property Types

Vermont law lets you protect equity in your home through the homestead exemption, regardless of the type of dwelling you own. You can apply the Vermont homestead exemption to the following real property as long as it is your primary residence:

• Single-family home
• Condominium
• Mobile home
• Trailer
• Apartment/Flat

Whether you live in a condo in Burlington or a cabin on the side of one of the many mountains, you can protect up to $125,000 of your home equity. As long as you can prove to the bankruptcy court that the property is your primary residence, you should have no problem taking advantage of the state homestead exemption.

How To Claim the Homestead Exemption in the State of Vermont

You can claim the homestead exemption in a Chapter 13 or Chapter 7 case. When you file your bankruptcy petition, you must include certain schedules. These schedules list your debts and assets. The schedules are as follows:

• Schedule A/B: This is a list of your assets, including ownership details, fair market value of the property, description, and any outstanding loans on the property
• Schedule C: This is where you claim your exemptions and the exemption amounts
• Schedule D: Secured debts (i.e., motor vehicle loan, personal loans with collateral, mortgage, etc.)
• Schedule E: Priority Claims (i.e., child support, alimony, recent tax debts, student loans, etc.)
• Schedule F: Unsecured debts (credit card debts, medical bills, etc.)

It’s a good idea to pull your credit report before you submit your bankruptcy petition. Forgetting to include any secured or unsecured creditors on your schedules would be a problem.

When you submit your schedule of assets, you must include details about any liens against the property. Be honest and transparent about your financial information. The trustee can dismiss your bankruptcy case altogether if they believe you’re not acting in good faith.

If you make false statements in your bankruptcy petition, you can face serious legal issues or criminal charges. If you have questions about what information to include in your paperwork, seek legal advice before you file your petition.

Exceptions and Limitations to the Vermont Homestead Exemption

Aside from the $125,000 exemption limit, the state homestead exemption is fairly straightforward. As long as you qualify for bankruptcy, you can take advantage of the homestead exemption and other bankruptcy protections. If you aren’t sure if your house qualifies for bankruptcy protection, ask your Vermont bankruptcy attorney.

Other Bankruptcy Exemptions in Vermont

In addition to the homestead exemption, Vermont law offers several other bankruptcy exemptions. When you file your bankruptcy petition, you must claim your exemptions on Form Schedule C. Vermont offers the following bankruptcy exemptions:

• Motor vehicle: $2,500
• Personal property: $2,500 of household goods (i.e., sewing machines, musical instruments, etc.)
• Tools of the trade: $5,000
• Jewelry: Your wedding ring and $500 for other jewelry
• Wildcard exemption: $400 plus $7,000 of unused homestead exemption applied to your other personal property (e.g., motor vehicles, tools of the trade, jewelry, household goods, and crops)

You likely won’t be able to keep everything you want during a bankruptcy.

Assets That Are Exempt

Some assets are completely exempt in bankruptcy. You don’t have to claim a specific exemption for these items. However, when you and your Vermont bankruptcy attorney file your petition, make sure you identify these assets on your Schedule C.

Some of the types of property that are exempt in your Chapter 7 or Chapter 13 case include:

• Social Security benefits
• Veterans benefits
• Unemployment compensation
• Workers compensation benefits
• Public benefits
• Life insurance (unless you assigned your life insurance contract to a third party)

If the trustee attempts to seize or sell any of the above, make sure you let your Vermont bankruptcy lawyer know.

Disclaimer: State laws change frequently due to new legislation, higher court rulings, and other means. While FindLaw strives to provide the most current information, consult a Vermont bankruptcy lawyer to verify your state laws.

Contact a Vermont Bankruptcy Lawyer for Help Protecting Your Home

If you’re thinking about filing bankruptcy but aren’t sure about your eligibility, consider contacting a Vermont bankruptcy attorney. The longer you wait to file, the greater the chance that one of your creditors will file suit or take other collection action against you. While a lawyer can’t prevent the trustee from selling your non-exempt property, they can review your case, explain your options, and make sure you claim all available exemptions.