Filing Bankruptcy In Kentucky

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Filing bankruptcy in Kentucky follows the same general rules as every other state in the union.  Economic restrictions and limits are likely to be different.  However, debtors can file Chapter 7, if they want a fresh start.  For the debtors that want to retain their assets, Chapter 13 should be explored.  Both types of bankruptcy have their distinct advantages and disadvantages.  With Chapter 7, the debtor may lose assets like the house or car.  However, he/she will also have most of the financial obligations expunged, so they can have a fresh start.  The debtors filing Chapter 13, will still have to pay an agreed amount to the court for 3-5 years, and they will still have to keep up with the current payments.  However, they also get to keep their possessions. 

Personal Bankruptcy in Kentucky

Under U.S. Code Title 11 of the Bankruptcy Code, residents of Kentucky can file Chapter7 and Chapter 13 bankruptcy.

  • Chapter 7 Bankruptcy - Chapter 7 bankruptcy is also called the fresh start bankruptcy.  The court appointed trustee will seize all applicable assets that can be liquidated and distributed among the creditors.  Nevertheless, the debtor will be allowed to keep many personal items and benefits.  The median income for single wage earners is approximately $36,628, a family of two is $45,474, and a household of three is $55,391.
  • Chapter 13 Bankruptcy - Chapter 13 bankruptcy is the best choice for wage earners that want to still retain their assets.  The court will discuss with creditors what will be acceptable to resolve the debt.  Based on the court’s decision, restructured payments will be set up to be paid monthly to the trustee.  He/she will then distribute the funds among creditors.  Nevertheless, the debtor will have to pay both that and any current bills.  As with other states, the debtor cannot have more than $1,010.650 in secured debts and $336,900 of unsecured debts.

Filing Bankruptcy during Foreclosure

Filing bankruptcy during foreclosure may be too late.  The lien holder can ask the judge to release the property from bankruptcy, so they can sell it and recoup some of their losses.  In most cases, it will only slow down the inevitable.  So, before it gets to that point, it is time to take action.  Contact a lawyer when the payments are getting behind and the next month cannot solve the financial crunch.  The lawyer can provide insight into any possible legal solutions for retaining personal property.

Kentucky Bankruptcy Exemptions

In the state of Kentucky, debts can claim specific assets as exempt from bankruptcy court.  The following is a list that includes, but is not limited to:

Type of Asset(s)

Details on Applicable Exemption(s)


Real or personal property up to $5000, sales are exempt


Annuity proceeds up to $350, corporate life or casualty insurance, fraternal and society benefits, health and disability benefits, group life,  life insurance for married woman beneficiary, life insurance prohibited for paying bankruptcy debt, life proceeds or cash value-if the beneficiary is someone else


Alimony, child support, and business partnership assets


Firefighters, police officers,  IRAs, state, county, and teachers

Personal Property

Instead of homestead, a burial plot worth up to $5000, clothing and jewellery up to $3000, health aids, lost earnings compensation, medical expenses and reparation payments,  personal injury compensation to $7500, vehicle worth up to $2500, wrongful death compensation

Public Benefits

Unemployment and workmen’s comp, disability and aid to the blind

Tools of the Trade

Equipment, instruments and furnishings to $1000, motor vehicle up to $2500 for certain professions, farm poultry and equipment to $3000, tools for someone other than a farmer up to $300


Kentucky Bankruptcy Filing Options

  • Use a Bankruptcy Lawyer - Before filing for bankruptcy, it is important to seek the services of a legal professional.  Debtors should know all of their options.  During the proceedings, it will be important to have legal representation, to answer any questions, and make sure all of the proper paperwork has been filed.  To go to court without a lawyer is risky.
  • Use a Filing Service - Using a filing service may save money, but they are only able to fill out and file the necessary paperwork.  If they forget a paper, or make an error, they will not be in court to answer any questions.  Therefore, the judge may determine fraud and throw out the case, before charging the debtor.  It is simply taking too many chances with a touchy future.
  • File “Pro Se” - Debtors who choose to represent themselves may choose to file pro se.  However, this is almost foolhardy.  With all of the legal details, and all of the necessary paperwork needed, debtors cannot possibly know everything regarding bankruptcy.

Courts and Kentucky Bankruptcy Trustee Information

Kentucky District Court

Gene Snyder United States
Courthouse, Suite 106
601 West Broadway
Louisville, KY 40202-2227