Many people in Kentucky who are considering filing for bankruptcy wonder what will happen to personal assets such as furniture, automobiles and, most importantly, their residence. Fortunately, the laws of both Kentucky and the United States protect certain assets from the claims of creditors in a personal bankruptcy proceeding. Determining which exemptions may be available can be complex if a person has many assets in different forms, such as real estate, securities, stock in small businesses or collections of art and jewelry. No blog post can present all options, but this post will provide a summary of state and federal exemptions.
Kentucky statutes protects a residence up to $5,000, but the proceeds of any sale are exempt. Proceeds of insurance policies and annuity contracts can be exempt up to prescribed monthly maximums. Alimony and child support are exempt if the money is needed for living expenses. Pensions owned by specified public employees, such as teachers, state employees and police officers and firefighters are exempt. The first $2,500 of value of automobiles is exempt, and clothing and jewelry up to a value of $3,000 are also exempt. For self-employed workers, the tools of the trade may be exempt. Finally, 75% of a person's wages are exempt from creditor's claims.
Kentucky law allows a debtor to take advantage of certain federal exemptions. These exemptions include retirement benefits for civil service employees, railroad workers, Social Security benefits and various disability and death benefits may also be exempt from creditors' claims.
The proper use of exemptions can protect a significant amount of assets from the claims of creditors. Anyone who is wondering what will happen to their home, clothing and valuables in a bankruptcy proceeding may wish to consult a lawyer who practices bankruptcy law for advice and assistance in completing the bankruptcy petition and the list of exempt assets.
Source: Kentucky Bankruptcy Law, Kentucky Bankruptcy Exemptions, accessed on March 4, 2017