How To File Bankruptcy for Free in Vermont

Collect Your Vermont Bankruptcy Documents

Whether you file your own bankruptcy or hire an attorney to represent you, you’ll need to locate some documents. Some of these will be required by the court or your bankruptcy trustee, and others have information that’s helpful as you fill out the bankruptcy forms that make up your bankruptcy petition. 

No matter how you file, you must have copies of your tax returns for the last two years, a recent bank statement, and 60 days’ worth of paycheck stubs. Other helpful documents include:

• Older bank statements (the past 6-12 months will help you determine your expenses),

• Creditor bills and statements, and

• Correspondence from collection agencies or third-party debt collectors.

It’s also helpful to have a current credit report. You can request a free credit report from each of the three major credit bureaus once a year. You’ll need to list all of your creditors in your bankruptcy forms and the amounts you owe them. Your credit report contains this information.  If you decide to file your Chapter 7 case using Upsolve’s free filing tool, it will pull your report for you.

Take a Credit Counseling Course

It’s important to understand your options for dealing with debt before deciding that bankruptcy is the right choice. As such, the U.S. Bankruptcy Code requires you to take a credit counseling course within six months before you file your bankruptcy petition. You must take a credit counseling course from a provider that’s approved by Vermont.  Most providers offer courses online. Once you finish the course, you’ll receive a certificate of completion. You need to include this with your bankruptcy paperwork when you file your case.

Unfortunately, credit counseling courses cost money, but the cost is usually under $50. You can apply for a fee waiver if you can’t afford the course fee.

Complete the Bankruptcy Forms

Preparing your Chapter 7 bankruptcy forms is likely the most tedious task you’ll have to do if you file for bankruptcy without an attorney. If you hire a bankruptcy attorney, they’ll use a printed or verbal questionnaire to get the information to complete your paperwork online. If you use Upsolve’s filing tool, you’ll complete an online questionnaire, and the Upsolve software will populate the forms for you based on your answers. 

If you prepare your forms on your own, the good news is that most of the forms are federal, so they’re the same no matter what state you file in. You can access the forms as free fillable PDFs online.

Get Your Filing Fee

Next, you’ll need to determine if and how you’ll pay your Chapter 7 filing fee of $338. You might be eligible for a fee waiver if you earn below the 150% of the federal poverty guidelines listed on the Vermont Fee Waiver Eligibility table below.

If you don’t qualify for a fee waiver, you need to pay the full filing fee on your own. It’s best if you can pay the full fee when you file your case. But if you need to file right away to avoid wage garnishment, foreclosure, or a vehicle repossession through the automatic stay, you can make a court-approved down payment and set up an installment payment plan. If it’s not necessary to file quickly to avoid collections, it’s good to wait until you have the full $338 on hand to file your petition. Doing so will help ensure that your case doesn’t get dismissed for non-payment.

Print Your Bankruptcy Forms

If you’ll be filing your bankruptcy petition in person or by mail, you must print your forms. Even if you file electronically, it’s good to have a paper copy. Printing your bankruptcy forms doesn’t have to be complicated. You just need to be sure that you:

• Use regular, white letter-size paper,

• Print only in black ink, and

• Print all pages single-sided.

Double-check that you don’t miss anything if you print each section individually. Forgetting a form or worksheet could delay your case or lead the court to reject it. Also, be sure that you sign everything in the required signature spots.

Upsolve users will receive their packet as a single download, complete with dividers flagging each signature page.

File Your Forms With the Vermont Bankruptcy Court

If you have a bankruptcy attorney, they’ll file your Chapter 7 petition using the Electronic Court Filing System (ECF) for federal courts. Non-lawyers don’t have this option. However, you can file your bankruptcy case:

• In person at the Burlington court location. Unfortunately, due to the COVID-19 Pandemic, the Rutland court location isn’t currently staffed by a clerk.

• By mail to P.O. Box 1663, Burlington, VT 05402-1663.

• Via email to efiling@vtb.uscourts.gov (see details at the bottom of page 1 of the court’s local rules).

While someone can drop off your paperwork for you, if you don’t live in or near Burlington, your best option may be to file by mail or online. So be sure to check for additional court-specific COVID-19 changes before filing your petition. 

Mail Documents to Your Trustee

You must send your bankruptcy trustee your two most recent tax returns and a bank statement that covers the day that you filed bankruptcy as soon as possible once you file your case in court. Your monthly bank statement needs to include the exact date you filed your petition. For example, if you filed on April 4, you’ll need the monthly bank statement that includes April 4. 

By law, you must send these documents to your bankruptcy trustee at least seven days before the 341 meeting. (More on this soon.) Frequently, your trustee will send you a letter detailing the documents they want. Sometimes they want to see more than what we mentioned here, such as recent paycheck stubs, bank statements, vehicle titles, and mortgage documents. Be sure to comply with their requests to the best of your ability. If you don’t, you risk having your bankruptcy delayed or dismissed.

Take a Debtor Education Course

The goal of filing a Chapter 7 petition is to have your unsecured debts discharged. Having debts like credit card debt, some student loans, and car loans discharged means you no longer have a legal obligation to pay them and your creditors can’t take collection actions against you. However, you must take a state-approved debtor education course within 60 days of the creditors’ meeting and file your certificate of completion with the court to receive this discharge. If you don’t take the debtor education course or you fail to file your certificate of completion with the court, you could have your bankruptcy case closed without the discharge you need.

Attend Your 341 Meeting

Within about four to six weeks after filing for bankruptcy, the trustee assigned to your case will hold a meeting of creditors, also known as a 341 meeting. During this meeting, the trustee will put you under oath and ask you to verify the information you provided on your bankruptcy forms and documentation. They may also ask you additional questions to clarify aspects of your case. Your creditors can also attend this meeting, although they rarely show up. 

Many bankruptcy filers get anxious about their 341 meeting, but it’s nothing to be worried about. Just be sure to answer the questions truthfully. 

Due to COVID-19 measures, all 341 meetings are currently being held via video or phone conference. However, these meetings could change back to in person at any time, so read your court and trustee notices carefully. As long as there are no lingering issues after this meeting, you should receive your discharge within a couple of months.

Dealing with Your Car

Now it’s time to decide what should happen with your car. If you own your vehicle free and clear, you need to know its fair market value to see if you can keep it. You may be able to use a bankruptcy exemption to protect it from being sold to pay your creditors. Under the Vermont code, you can exempt up to $2,500 of equity in a car, van, motorcycle, truck, SUV, or other motor vehicle. 

If you’re leasing, and your payments are current, you can keep the car and keep paying until your lease is through. Or you can reject the lease which ultimately means the lease company will come get it. However, you aren’t responsible for paying the remainder of the lease.

If you’re currently financing the vehicle, you need to decide between one of three options:

• Surrender: This is when you give your car back to the loan company and then owe nothing further on the loan. If you know you won’t be able to keep up with monthly payments and don’t have a larger sum of money to redeem it, surrendering is usually the best option. 

• Redeem: To redeem the car, you pay what’s due on the car loan (in one lump sum) or its fair market value — whichever is less — and keep the car. If you have some cash to redeem your vehicle and know that you need it for school, work, or kids, this might be a good option for you.

• Reaffirm: This is only a viable option if you’re current on your car payments. With a reaffirmation agreement, you agree to continue making payments as detailed in your loan documents, and your loan continues to run as if nothing has happened. However, if you fall behind on your payments, your car is subject to repossession as if you’d never filed for bankruptcy.  

Even if you surrender your car, you may quickly qualify for a new vehicle loan thanks to the boost you’ll get with your credit score after bankruptcy.