When you file for bankruptcy, you can keep certain assets such as your primary home. Kentucky allows you to choose between state and federal property exemptions in a bankruptcy filing.
These are the common exempt types of property recognized by the state.
Kentucky will let you keep home equity in a primary residence. However, the state caps this exemption at $5,000. Alternatively, you can keep a burial plot you own.
You can also keep up to $2,500 in a car and accessories for the vehicle, as well as an additional $2,500 of value in a vehicle you use for work. If you farm, you can keep livestock, farm equipment and tools worth up to $3,000. The court protects tools for your job valued at up to $300. Clothing and furniture with a value of up to $3,000 is also exempt. The bank will not seize medical devices and home health equipment to repay your creditors.
Income, pensions and investments
You can retain court-ordered alimony and child support payments and court awards for loss of future wages. State law protects personal injury settlements of up to $7,500. Wrongful death awards, unemployment, workers’ compensation benefits, public assistance and crime victim reparation are exempt from bankruptcy.
In Kentucky, pensions for teachers, municipal employees, firefighters and police officers are exempt from bankruptcy filings. You can also keep qualifying retirement accounts, such as 401(k) and IRA funds.
Compare these numbers with the federal exemptions to determine the best course of action.