Bankruptcy Laws in Kentucky: Exemptions and Eligibility

Bankruptcy laws in Kentucky provide certain exemptions for persons filing Chapter 7 bankruptcy, otherwise known as liquidation bankruptcy. These exemptions laws, which include using either a federal exemptions list or the exemptions list from the state of Kentucky, allow debtors to retain certain property during the liquidation process of Chapter 7, essentially keeping these items of value away from the bankruptcy trustee, and ultimately, sale to pay back creditors.

Eligibility for Bankruptcy Exemptions in Kentucky

In order to be eligible for bankruptcy exemptions in the state of Kentucky, a debtor must first qualify to file for Chapter 7 bankruptcy, per the federal Chapter 7 means test. If eligible per the means test, a debtor will be able to claim exemptions under the Kentucky exemptions list, if he or she is a resident of the state of Kentucky for at least two (2) years, and if having lived in more than one location in the past two (2) years, be a resident of the state of Kentucky for at least ninety (90) days, but less than two (2) years with the ninety (90) days being the most in number and recent in the last one hundred and eighty (180) day period..

Exemptions in the state of Kentucky for Chapter 7 Filers

The following outlines the most relevant state of Kentucky exemptions for Chapter 7 filers. It is important to note that federal exemptions are also available for filers in the state of Kentucky.

• Homestead Exemption: The current Kentucky homestead exemption stands at $5,000 dollars

• Insurance Exemption: The exemptions list from the state of Kentucky allows the following items to be exempt from bankruptcy sale or forfeiture, including annuities contracts of up to $350 monthly, certain insurance benefits, group life insurance benefits proceeds, all health and disability related insurance benefits, all life insurance policies containing clauses refusing forfeiture to others, and others

• Family Exemptions: All alimony and child support income is exempted per Kentucky’s exemptions list.

• Motor Vehicle: The current motor vehicle exemption stands at $2,500 dollars in Kentucky

• Public Benefits: Virtually all public benefits and income from these benefits are exempted in Kentucky.

• Wages Exemptions: At least seventy-five (75) percent of all earned wages are exempted in Kentucky, with the courts discretion being used to allow more for low income filers

• Wildcard Exemptions: Kentucky has a wildcard exemption of $1,000 for any item or property.

Getting Legal Help with Kentucky Exemptions and Eligibility in Chapter 7

In reality, putting together a viable exemptions list is only a small part of the entire Chapter 7 process. Bankruptcy law is a complex process, which should involve the insight and representation of a bankruptcy lawyer in your state.