What are the Chapter 7 exemptions in Kentucky?
December 6th, 2018 by Bunch & Brock
If you are considering filing for Chapter 7 bankruptcy, you should know more about property exemptions that may apply to your case. Exemptions protect certain types of property from bankruptcy liquidation (sale), which is standard practice in Chapter 7. Non-exempt (unprotected) property can be sold to repay some of your creditors prior to Chapter 7 debt discharge, when the remaining outstanding debt is wiped away.
Federal vs. State Exemptions
Each state has very different bankruptcy laws, and Kentucky is one of 20 states that allow bankruptcy filers to choose between state and federal exemptions. This is an important benefit for Kentucky residents, since federal laws are often more generous overall than state statutes. Most Chapter 7 and Chapter 13 bankruptcy filers in Kentucky will be using federal exemptions as federal exemptions are more generous than the states.
So what are the Chapter 7 exemptions in Kentucky? Below, you’ll find an overview of current federal property exemptions used by Kentucky Chapter 7 bankruptcy filers. The exemption amounts shown are applicable to a single bankruptcy filer. If you are married and filing jointly, the amounts will automatically double.
Chapter 7 Bankruptcy Exemptions Permissible in Kentucky
First, of primary interest is the Homestead Exemption. Under federal law, you can exclude up to $23,675 in equity in a principal residence (meaning the place you live, whether it is a house or mobile home). This benefit allows you to keep your home if the equity is less than the allowed exemption (or twice this amount for a married couple).
Other federal (Kentucky) Chapter 7 bankruptcy exemptions include:
Transportation Exemption — up to $3,775 for one vehicle.
Jewelry Exemption – Up to $1,600.
Other Personal Property – A total of $12,625 in exemptions for general household items, including furniture, electronics, clothing, musical instruments, livestock, crops, and similar goods. There is a maximum exemption amount of $600 per item.
Tools of the Trade – Up to $2,375 for tools, books, and other implements used for gainful professional pursuits.
Financial Assets – Up to $12,625 in accrued dividends, life insurance or loan cash values.
Legal Recovery Awards – This includes up to $23,675 for personal injury awards (excepting compensation received for pain and suffering or monetary losses). You can keep all legal restitution received as a victim of wrongful death, a criminal act, or a case involving loss of future earnings.
Retirement Accounts – Tax-free retirement savings accounts are fully exempt, and IRAs and Roth IRAs are exempt up to $1,283,025.
Wildcard Exemption — $1,250, plus $11,850 in unused homestead exemption can be utilized in any way you wish (such as to add to a vehicle exemption).
In addition to the above, federal bankruptcy statutes protect:
- All prescribed health aids, such as a wheelchair or walker
- Necessary alimony and/or child support
- Life insurance pay-outs necessary for your support
- Social security, unemployment, illness or veteran’s benefits, and other forms of necessary public assistance.
Seek Legal Advice
Exemptions are important, but there is much more to know before you pursue a successful Chapter 7 bankruptcy filing. If you are considering filing for Chapter 7 or Chapter 13 bankruptcy protection in Kentucky, please reach out to Bunch & Brock first. Our experienced lawyers provide valuable advice and legal representation.