Vermont Bankruptcy Lawyer

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Overwhelming medical bills are the cause of many bankruptcies, and with rising medical costs and increases in the number of uninsured people, this number is sure to rise. Other common causes of bankruptcy include financial crises such as job loss, an act of God leading to substantial home or property damage, and divorce or separation.

Bankruptcy is defined as a legally declared inability or impairment of ability of an individual or organization to pay its creditors. Creditors may file a bankruptcy petition against a debtor in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor.

Bankruptcy may be a way for citizens of the United States to wipe their debts clean or reduce their debt to a manageable level. Yet filing for bankruptcy has become more difficult in recent years, thanks in part to the Bankruptcy Abuse Prevention and Consumer Protection Act, which was signed into law and made effective in 2005. Hiring The new laws are complicated, and unless you have an extremely straightforward, simple case, it might be in your best interest to hire an experienced bankruptcy attorney. Having a professional on your side throughout the process can make it easier and less stressful.

There are two major types of bankruptcy, Chapter 7 – also known as the liquidation plan – and Chapter 13. Under federal law, you will be required to take a "means test" in order to determine your eligibility. If your income falls below the median income for families in Vermont, you will automatically be eligible for Chapter 7 bankruptcy. You may still be eligible if your income falls above the Vermont median, but your income over the past six months will be taken into account, as well as your mortgage and car payment, back taxes and child support, and other expenses. If, after these amounts are deducted, you are able to pay at least $100 to unsecured creditors per month for the next three to five years, you will not be eligible for Chapter 7 bankruptcy.

Under Chapter 7, your case will be assigned a trustee who will liquidate nonexempt assets and distribute the funds to your creditors. Even if you have no assets for sale, your debts will still be permanently discharged.

Chapter 13 is commonly known as the wage earner plan, and is for people who can afford to pay some debt, but need a bit of a head start. Those who have assets such as a home or car, which are not covered under exemption statutes but which they would like to keep, may find Chapter 13 beneficial. Those people whose incomes are too high to allow them to qualify for Chapter 7 may be forced to declare Chapter 13 bankruptcy. You will not have your debts discharged under Chapter 13, but may have your total payments reduced. This type of plan will enable you to repay your creditors, including back payments, while you still maintain assets such as a car and home.

If housing foreclosure and unbearable credit card debt is a daily stress, Chapter 13 could be your solution. This allows you for a repayment plan over 3-5 years all while letting you catch up on your mortgage and keep your home.

You cannot file Chapter 7 for six years after your original filing date. There are no time constraints for filing Chapter 13.

Set up a consultation with a bankruptcy attorney in your area today in order to figure out which type of bankruptcy is the right fit for you. Your bankruptcy attorney will an experienced yet compassionate aid in your fight for financial freedom.

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