Vermont Bankruptcy Exemptions
Transfer and setoff rights under Vermont bankruptcy exemption rights
Transfers of property covered by the Vermont bankruptcy exemption list are risky for all parties concerned during the months before filing. Courts pay special attention to all sales, transfers, conveyances and gifts made to insiders. An insider is anyone who is related to a debtor through family or business ties. This requirement may work either for or against debtors, depending upon circumstance of the transfer. Debtors may recover property transferred, by avoiding the transaction, or alternatively, claim a setoff (right of reimbursement) and retain exempt status of compensation returned.
Avoiding liens securing Vermont exempt property
According to the terms of Section 550 of the Code, any transfer made to an insider during the 90 days before a petition was filed is subject to avoidance upon strict standards. When a transfer is avoided, the trustee exerts the right to recover property for the benefit of the estate of the debtor. The person receiving the transfer may claim good faith as a defense. Alternatively, if the avoidance is valid, the transferee may pay a setoff, for value, lieu of returning property to the estate of the debtor. Transfers occurring more than 90 days but less than one year from filing are subject to a lesser standard of review.