If you’re thinking of filing for Chapter 7 bankruptcy, you probably already know that the standard process is to liquidate (sell) your property. Property exemptions allow you to protect some of your property from being liquidated to repay your creditors.
In Kentucky, you have the option of choosing between federal and state exemptions when you file for Chapter 7 bankruptcy. The federal exemptions are generally more favorable to you than the state exemptions, so in the list below you’ll find a list of the federal exemptions that can apply to your Chapter 7.
Chapter 7 bankruptcy is a complex process that involves more than exemptions. If you’re considering filing for a Chapter 7 or Chapter 13 in Kentucky, talk to Bunch & Brock today. We’ll let you know what Kentucky’s exemptions for Chapter 7 bankruptcy are, what your options are and can represent you in court if necessary.
Kentucky’s Chapter 7 Bankruptcy Exemptions
- Financial Assets
Up to $12,625. This includes things like life insurance cash values, dividends, and other financial resources.
- Health Aids
This includes any prescribed health aids, meaning things like wheelchairs, walkers, etc.
- Homestead Exemption
Up to $23,675. This includes equity in a principal residence—generally a house or mobile home. If your equity is less than the exemption, you will be allowed to keep the home. The amount is doubled in the case of a married couple.
- Jewelry Exemption
Up to $1,600.
- Legal Recovery Awards
Up to $23,675. In the case of personal injury awards, the amount is limited to $23,675. This does not include things like pain and suffering, wrongful death cases, criminal acts, or cases that involve a loss of future earnings. (In those cases, you get to keep everything.)
- Life Insurance
If you are receiving life insurance payouts, you may exempt any payouts necessary for your support.
- Necessary Alimony/Child Support
Just as with life insurance, this covers amounts that are necessary for your support.
- Necessary Public Assistance
Once again, this covers an amount that is necessary for your support. It includes things like social security, unemployment benefits, veteran’s benefits, etc.
- Other Personal Property
Up to $12,625. Includes general household items, including furniture, electronics, clothing, instruments, and livestock. The maximum exemption per item is $600.
- Retirement Accounts
Tax-free retirement savings accounts are completely exempt. IRAs and Roth IRAs are exempt up to $1,283,025.
- Tools of the Trade
Up to $2,375. Includes things like tools, books, and anything else used for gainful employment.
- Transportation Exemption
Up to $3,775. Only one vehicle can be exempted. (The wildcard exemption gives you some possibility to work around this limit.)
- Wildcard Exemptions
Up to $1,250, plus up to $11,850 in unused homestead exemption. This can be used for whatever you like, including adding to a transportation exemption.
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.
