Kentucky Bankruptcy Exemptions

You can protect property in a Kentucky bankruptcy using either Kentucky's bankruptcy exemption law or the federal exemptions.

Updated February 8, 2019

Filing for bankruptcy in Kentucky doesn’t mean that you’ll lose everything. Using Kentucky’s bankruptcy exemptions, you can keep the property you’ll need to maintain a home and employment, such as furnishings, clothing, and a retirement account.

But you have another choice—you can use the federal bankruptcy exemptions. Since the federal system is more liberal, many people will come out ahead with this option.

Learn more about filing a Kentucky bankruptcy.

Kentucky Exemptions v. Federal Bankruptcy Exemptions

Some states allow residents to choose between the state and federal bankruptcy exemptions, and Kentucky is one of them. But you can’t protect property by using exemptions from both lists—you must pick the system that will work best for you. If you elect to use Kentucky’s state exemptions, the federal nonbankruptcy exemptions will be available to you, too.

Common Kentucky Bankruptcy Exemptions

Here are some exemptions that are used commonly in Kentucky. When reviewing them, you’ll want to consider the following:

  • Joint filing. Unless otherwise noted, when spouses file together in Kentucky, each spouse can claim the full amount of the exemption (informally called “doubling”) as long as each spouse has an ownership interest in the property.
  • List and verify your exemptions. You must claim an exemption by listing it in the official bankruptcy forms. You might qualify for exemptions not included in this article, or be required to meet qualification requirements. Consulting with a local bankruptcy attorney is the best way to ensure that you’re protecting your assets.
  • Legal citations. You’ll find each of the statutes in the Kentucky Revised Statutes or the federal law.

Kentucky Homestead Exemption

427.060 – Equity in real or personal property used as a family residence up to $5,000. Alternatively, you can use this exemption to protect a burial plot.

Kentucky Motor Vehicle Exemption

427.010 – Equity in a motor vehicle up to $2,500.

Kentucky Wildcard Exemption

427.160 - Any property—real estate or personal property—up to a value of $1,000.

Other Kentucky Exemptions

Personal Property

427.010 - Health aids; clothing, furniture, jewelry, and articles of adornment up to $3,000 total.

427.150 - Lost earnings payments needed for support; wrongful death recoveries for person you depended upon for support; personal injury recoveries up to $7,500, but not including pain, suffering, or pecuniary loss.

304.39-260 - Medical expenses paid and reparation benefits received under the motor vehicle reparation law.

Pensions

11 U.S.C. § 522 - Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans). IRAS and Roth IRAs to the maximum amount. (This amount is set by federal law. See Federal Bankruptcy Exemptions for updates on this dollar amount.)

427.150 - ERISA - all qualified benefits that were deposited more than 120 days before filing for bankruptcy.

67A.620, 427.125, 427.150(2)(e) - Firefighters and police officers.

427.150(2)(e), 67A.350 - State and county employees.

161.700; 427.150(2)(e) - Teachers.

Public Benefits

205.220 - Public assistance.

427.150 - Crime victims' compensation.

341.470 - Unemployment compensation.

342.180 - Workers' compensation.

Insurance

304.14-330 - Annuity contract proceeds up to $350 per month.

304.29-181; 427.110 - Fraternal benefit society benefits.

304.14-320 - Group life and health insurance proceeds.

304.14-310 - Health or disability insurance proceeds.

304.14-300 - 304.14-350 - Life insurance proceeds.

Tools of the Trade

427.010 - Farmer's tools, equipment, and livestock up to $3,000.

427.030 - Nonfarmer's tools up to $300; motor vehicle of mechanic, mechanical or electrical equipment servicer, minister, attorney, physician, surgeon, dentist, veterinarian, or chiropractor up to $2,500.

427.040 - Library, office equipment, instruments, and furnishings of a minister, attorney, physician, surgeon, dentist, veterinarian, or chiropractor up to $1,000.

Other

427.150 - Alimony, maintenance, or child support needed for support.

Add any applicable federal nonbankruptcy exemptions.

Nonexempt Property—Property You Can’t Protect With a Kentucky Exemption

Some people can keep all assets, but that isn’t always true. Here’s what will happen to nonexempt property:

  • In a Chapter 7 bankruptcy, the bankruptcy trustee appointed to administer your case will sell nonexempt property and distribute the proceeds to creditors. Find out more about the bankruptcy process and the Chapter 7 documents you'll need at each stage.
  • In Chapter 13 bankruptcy, it works differently. You can keep everything you own, but you’ll pay creditors the value of the nonexempt property, your disposable income, or your nondischargeable debt (support obligations, most taxes, and the like), whichever is more, through your Chapter 13 repayment plan.

You’ll learn more about Chapter 7 and 13 in Which Type of Bankruptcy is Right for Me?

Confirming Kentucky Exemptions

This list includes the majority of bankruptcy exemptions available in Kentucky, but not all. Specific exemptions could have qualification requirements, and amounts might have changed since this list was last updated. Check the Kentucky Revised Statutes or with a local bankruptcy lawyer.

To learn more about bankruptcy exemptions, the state exemption system, and the homestead exemption rules, read Bankruptcy Exemptions – What Can I Keep When I File for Bankruptcy?

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