Alongside all your other bankruptcy paperwork, you must fill out and file Schedule C. Here, you must essentially list which property and assets qualify for exemptions, with which you intend to keep during and after your bankruptcy proceedings. The most popular and critical one that debtors claim is the homestead exemption. Without further introduction, please continue reading to learn more about the homestead exemption and how an experienced Louisville, Kentucky consumer bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you utilize it in your case.
What should I know about the Kentucky homestead exemption?
Simply put, with the Kentucky homestead exemption, you, as the debtor of a consumer bankruptcy case, may protect up to $5,000 of equity in any real or personal property you use as a permanent residence in the state. And so, this may be your house, mobile home, or condominium. Of note, this exemption may even extend to your burial plot or the earned proceeds from the sale of your homestead. Here, it is worth mentioning that if you file jointly with your spouse, up to $10,000 may be safeguarded.
As an example, say that you are filing individually and your Kentucky house has a fair market value of $100,000. Then, say your mortgage balance is $95,000. This means you have $5,000 in home equity. Well, thanks to the homestead exemption, you may protect the full value of your home.
Under what circumstances can I use this bankruptcy exemption?
You must understand that you may only be eligible to list a homestead exemption on Schedule C if you meet certain state criteria. First of all, you must demonstrate that you have lived in the state of Kentucky for at least 730 days prior to your initial bankruptcy petition. This is significantly longer than the requirement for simply filing, which is living in the state for at least 180 days. Then, you must prove that you have purchased and owned the Kentucky homestead for at least 1,215 days before filing.
With all that considered, if you do not meet the requirements for the state’s homestead exemption, you may have to claim the federal one. Specifically, as of April 1, 2025, the federal homestead exemption protects up to $31,575 in home equity, or $63,150 if you file jointly with your spouse. In the end, you may find that this exemption option is preferable if your home has a relatively low equitable value.
It is worth mentioning, though, that if you have no choice but to petition for the federal homestead exemption, you must claim federal exemptions for the rest of your property and assets. In other words, you cannot mix and match state and federal exemptions for your one bankruptcy case. Nonetheless, other federal exemptions are as follows:
- Up to $1,675, and $15,800 of remaining homestead exemption, for the wildcard exemption.
- Up to $5,025 for your motor vehicle exemption.
- Up to $3,175 for the tools of the trade exemption.
- Up to $31,575 for the personal injury recovery exemption.
We understand that you must be eager to start this process. So, without further delay, please schedule your initial consultation with a skilled Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center today.
