Bankruptcy does not mean the loss of all your assets. In fact, state and federal bankruptcy laws provide exemptions so you have the property you need to make a fresh financial start.
If you are considering bankruptcy, review the available Kentucky exemptions. If you and your spouse plan to file together, you can double these amounts.
Homestead exemptions
You can retain home equity of up to $5,000 in your primary residence. You can also use the homestead exemption to cover a family burial plot.
Personal and business property
Kentucky bankruptcy exemptions allow you to protect:
- Medical devices or aids prescribed by a doctor
- Livestock, farm equipment and tools up to $3,000
- Motor vehicle equity up to $2,500 and an additional $2,500 for a vehicle used for employment
- Up to $1,000 to protect any personal property or real estate
- A professional library worth up to $1,000
- Tools of your trade worth up to $300
Wages, investments and benefits
If you file for bankruptcy, you can keep court-ordered child support and alimony and unlimited wrongful death damages. The state also exempts personal injury damages up to $7,500.
Your 401(k) and other qualifying retirement accounts are exempt from bankruptcy. Kentucky also protects teacher, government employee, firefighter and police pensions, workers’ compensation, and unemployment and public assistance benefits.
When the Kentucky exemptions do not meet your needs, the state allows you to instead choose the federal exemptions. For example, if you have significant home equity, the current federal exemptions allow you to protect up to $25,150.
