When you file your initial Chapter 7 bankruptcy paperwork with the Kentucky Bankruptcy Court, you must include Schedule C. This form allows you to list the assets you claim as exempt; otherwise, the eligible assets in your current possession that you intend to keep protected from creditor intervention. You must not miss out on this offered opportunity, so please read on to discover which of your assets are exempt and non-exempt and how a seasoned Louisville, Kentucky Chapter 7 bankruptcy lawyer at Schwartz Bankruptcy Law Center can help you get the maximum amount of protection possible.

Which of my assets are exempt and non-exempt in my bankruptcy case?

Put in its simplest terms, exempt assets may be considered necessary assets for you to possess and maintain in your modern life. In other words, essential assets for living and working. The whole purpose of bankruptcy is essentially to offer you a fresh start, financially speaking. So it is arguably counterintuitive if, at the end of your Chapter 7 bankruptcy proceedings, you are left without critical assets that you will have to repurchase and that will subsequently put you back in debt.

Without further ado, the United States Bankruptcy Code deems the following as exempt assets:

  • Your primary home, up to a specific value.
  • Your motor vehicle, up to a specific value.
  • Your reasonably necessary household appliances and furniture.
  • Your reasonably necessary clothing and jewelry up to a specific value.
  • Your tools for your trade or profession, up to a specific value.
  • Your spousal support and child support payments.
  • Your retirement accounts, pensions, and life insurance policy.
  • Your public benefits and damages award from a personal injury case.

On the flip side, non-exempt assets may be deemed unreasonable and unnecessary by the court. Therefore, your appointed bankruptcy trustee may exercise their right to liquidate these assets and distribute the profits amongst your outstanding creditors.

Below are some examples of non-exempt assets:

  • Your second home or vacation home.
  • Your second motor vehicle.
  • Your investment accounts besides retirement plans.
  • Your cash on hand and funds accumulated in checking and savings accounts.
  • Your collections of artwork, stamps, coins, valuable sports memorabilia, etc.

How do I know whether to use federal or state exemptions?

You must understand that Kentucky, along with many other states, has adopted its own exemptions laws in place of federal exemption laws. This is to say that you may have the choice of claiming federal exemptions or state exemptions, but you cannot mix and match both. The option you take may be dependent on the specific assets you possess and their estimated values, along with how much personal value you attribute to them.

For example, if you own your primary home, you may feel more inclined to select the federal homestead exemption that protects up to $27,900 in home equity rather than the Kentucky homestead exemption that only covers up to $5,000.

However, if you are a renter, this may not be that important to you. Rather, you may be more interested in the fact that the Kentucky exemption for monetary assets is competitive with the federal exemption. This is especially if you have monthly spousal support and child support payments, monthly government benefits proceeds, or significant recovery from a civil lawsuit that you wish to maintain.

To conclude, if you require additional consulting, look no further than a competent Louisville, Kentucky consumer bankruptcy lawyer from Schwartz Bankruptcy Law Center. Schedule your initial consultation with us today.