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Kentucky Bankruptcy Exemptions

When most people think of someone filing for bankruptcy, they think of someone without a thing left to his or her name. But as someone considering filing for bankruptcy now, you likely know that's not true — there's plenty left to your name, you just can no longer meet all of your financial obligations. You likely are wondering what among your possessions you'll be able to keep — assets valued for both livelihood, financial and sentimental reasons, like your home, keepsake jewelry, cars and pension.

Both Kentucky and federal law allows for certain items to be exempt from being liquidated in a Chapter 7 bankruptcy or being considered among your assets when your repayment plan is determined in a Chapter 13 bankruptcy. The exemptions allow you to keep some of your assets when you file for bankruptcy. An attorney can help you identify what items can be exempt, including some you may have never thought of.

Covington Exemptions in Bankruptcy

Steiden Law Offices have experience with exemptions in Kentucky. Our knowledgeable attorneys can help you make it out of this trying time with as much of your life intact as possible. That means claiming as many exemptions as you can, a process of evaluation and inventory our lawyers can help you maximize. The more you have after bankruptcy, the better you'll be able to climb back on the saddle. Let the bankruptcy lawyers at Steiden Law Office help you identify your exemptions. Call (855) 741-3328 or send an online message to set up a risk-free consultation.

Eric Steiden has represented clients though bankruptcy in Northern Kentucky since 1994. With offices in Covington and Florence, we are ready and able to represent clients in Kenton County and Boone County, including the communities of Erlanger, Edgewood, Elsmere, Union and throughout Northern Kentucky. E also have offices in Cincinnati.

State and Federal Laws List Exemptions

The purpose of bankruptcy is give people in unfortunate circumstances, often by no fault of their own, a fresh start in life. It's a great goal, but the process can be extremely stressful. You might be worried about losing everything: Your home, your car, your keepsakes, your retirement accounts, your future benefits, and anything else.

In a Chapter 7 bankruptcy, your assets are evaluated and liquidated to pay off your creditors. In a Chapter 13 filing, your assets are evaluated as part of an effort to develop a payment plan to pay your debt. However, Kentucky law and federal law contain lists of items that can be exempt from bankruptcy consideration, so that the items cannot be liquidated in a Chapter 7 filing, and, under a Chapter 13 bankruptcy, they are not calculated into your assets when your estate is being evaluated for the payment plan.

Choosing One List

Kentucky law has a list of exemptions, and so does the federal government. You may pick one list to use, but may only choose items off of that list. The lists are different — for just one example, the Kentucky list exempts the pensions of state employees, while the federal list exempts a higher value for homestead real property.  You'll want to choose the one best for you depending on your very specific circumstances. An experienced bankruptcy attorney will be able to help you evaluate your assets and determine which list is going to allow you to keep the most of your belongings.

Some Limits on Valuation

Many of the options for exemption include an exemption for items that are up to a certain value. For instance, motor vehicles are exempt under Kentucky law for a value up to $2,500. If you own a car worth $2,500 or less, you would be able to keep your car. However, in the likely event your car is worth more than that, the trustee might sell your car, give you $2,500 and use the rest to pay creditors. That's not much, but it's better than nothing.

Advantages of Filing While Married

If you are married, and you and your spouse are filing jointly, both of you may individually claim the maximum amount of exemption from either list. For example, if you are claiming Kentucky exemptions, the exemption for homestead property is only $5,000. But your spouse in a joint filing will also be able to claim $5,000, for a total homestead exemption of $10,000.

Exemptions Under Kentucky Law

You may choose exemptions off of lists under Kentucky state law or federal law, but not both. Kentucky claims exemptions for the following items, mostly under Kentucky Revised Statutes, Chapter 427. If there is no value limit listed, then there is no limit:

• Real or personal property used as a family residence, or a burial plot, for a value up to $5,000.
• One motor vehicle, for a value up to $2,500.
• Furniture, jewelry, clothing and articles of adornment, for a value up to $3,000.
• Wages, up to the greater of 30 times federal minimum wage per week or 75 percent of your disposable income.
• Health aids that are prescribed by a medical professional.
• Farmer's tools and equipment, livestock and poultry, for a value up to $3,000.
• Tools not for farm use, for a value up to $300.
• Motor vehicle for a mechanic, mechanical or electric equipment servicer, minister, attorney, physician, surgeon, dentist, veterinarian or chiropractor, for a value up to $2,500.
• Library, office equipment, instruments and furnishings for a minister, attorney, physician, surgeon, dentist, veterinarian or chiropractor, for a value up to $1,000.
• Certain insurance benefits, such as:
• Annuity contract proceeds, for a value up to $350 per month.
• Fraternal benefit society, casualty insurance or cooperative life benefits.
• Group life insurance proceeds.
• Heath or disability benefits.
• Life insurance proceeds in which the policy specifically prohibits use to pay creditors.
• Alimony or child support.
• Pensions for certain public employees, including teachers, firefighters, police officers and state employees.
• Public assistance, including:
• Crime victims' compensation.
• Unemployment compensation.
• Workers' compensation.
• Personal injury recovery, for a value up to $7,500.
• Up to $1,000 worth of any property not exempted under the law.

If you choose the Kentucky list, you cannot use the federal list. However, there are exemptions called federal nonbankruptcy exemptions that are available. These include:

• Civil service employee retirement benefits.
• Foreign service employee retirement benefits.
• Survivor's benefits from military service.
• Death and disability benefits for government employees, longshoremen and harbor workers.
• Indian lands or homestead sales or lease proceeds.
• Railroad workers' unemployment benefits.

Exemptions Under Federal Law

Kentucky residents filing for bankruptcy may also choose the federal list of exemptions. This list includes:

• Real property, mobile homes, or co-ops used as a residence or burial plots, for a value up to $21,625. If you don't use the full exemption, you can use up to $10,825 for any other property.
• A motor vehicle, for a value up to $3,450.
• Appliances, furnishing, clothing, books, household goods, musical instruments, animals and crops for a total value of up to $11,525 at maximum value of $550 per item.
• Jewelry, for a value up to $1,450.
• Wages, up to the greater of 30 times federal minimum wage per week or 75 percent of your disposable income.
• Health aids prescribed by a medical professional.
• Insurance benefits, including:
• Unmatured life insurance policy other than credit insurance.
• Life insurance policy with loan value, for a value up to $11,525.
• Disability benefits.
• Life insurance payments for a person depended upon, to the extent necessary for support.
• Alimony or child support.
• Public assistance, including:
• Social Security benefits.
• Veterans' benefits.
• Unemployment benefits.
• Personal injury recovery excluding pain and suffering and pecuniary damages, for a value up to $21,625.
• Recovery for a wrongful death judgment for any person you depended upon.
• Up to $1,150 worth of any property not exempted under the law.

Either list allows you to exempt tax retirement accounts like 401(k)s, 403(b)s, and SIMPLE IRAs, and either allows you to exempt IRAs or Roth IRA, for a value up to $1,171,650.

Steiden Law Offices | Florence Bankruptcy Attorneys

Bankruptcy is a difficult process, and you're likely to experience some loss. But at Steiden Law Offices, our experienced bankruptcy lawyers will well help you get out with everything you can.We’ve helped many clients in Northern Kentucky deal with debt and financial woes they thought were insurmountable and get back on their feet. Call (855) 741-3328 or send an online message to set up a risk-free consultation.