KENTUCKY BANKRUPTCY LAW

Kentucky Bankruptcy: Attorneys, Statistics, Exemptions and Courts.

Kentucky Bankruptcy Statistics: In Kentucky, in 2009, 25,221 bankruptcies were filed. Business bankruptcies accounted for 602 or 2.39% and personal bankruptcies accounted for 24,619 or 97.61% of the total filings.

Kentucky State Bankruptcy Exemptions

Homestead

The home (“homestead”) exemption is limited to $5,000. Additionally, any sale proceeds of the residence are exempt when filing for bankruptcy. Kentucky defines “homestead” to include real or personal property used as a residence.

Personal Property

The following expenses or items are exempt in their entirety in Kentucky:

1. Lost earnings payments required for support
2. Paid medical expenses and reparations under motor vehicle reparation law
3. Prepaid tuition payment fund account
4. Health aids
5. Wrongful death recoveries-for support of debtor and debtor’s dependents

The following expenses or items are exempt up to a specified limit in Kentucky:

1. Burial plot limited to $5,000 in lieu of taking the homestead exemption
2. Personal injury recoveries limited to $7,500 (not including damages for pain, suffering, or pecuniary loss)
3. Motor vehicle limited to $2,500
4. Clothing, jewelry, and furnishings limited to $3,000

Pension

The following individuals’ and their survivors’ pension benefits are exempt when filing for bankruptcy in Kentucky:

1. Firefighters
2. State employees
3. Police officers
4. Teachers
5. Urban county government employees

The following pension types are exempt or partially exempt when filing for bankruptcy in Kentucky:

1. IRAs, SEPs, ERISA qualified benefits and Keoghs deposited more than 120 days prior to filing for bankruptcy

Insurance

The following insurance types are entirely or partially exempt when filing for bankruptcy in Kentucky:

1. Annuity contract proceeds limited to $350 a month
2. Cooperative life or casualty insurance benefits
3. Group life insurance proceeds
4. Fraternal society benefits
5. Health or disability
6. Life insurance policy if beneficiary is a married woman
7. Life insurance proceeds (if a clause is included that prohibits using proceeds to pay the beneficiary’s creditors)
8. Life insurance proceeds or cash value if beneficiary is not the insured

Public Benefits

The following public benefits are exempt when filing for bankruptcy in Kentucky:

1. Crime victims’ compensation
2. Assistance to blind, aged, or disabled persons
3. Unemployment compensation
4. Workers’ compensation

Tools of the trade

This is a separate exemption. The following items have been considered tools of the trade in the state of Kentucky:

1. Non-farming equipment limited to $300
2. Farming equipment limited to $3,000 (including livestock and feed)
3. Library, office equipment, instruments and furnishings of other professionals (including minister, attorney, physician, surgeon, chiropractor, veterinarian, or dentist) limited to $1,000
4. Motor vehicle of auto mechanic, mechanical or electrical equipment technician, minister, attorney, physician, surgeon, chiropractor, veterinarian or dentist limited to $2,500

Wages

In Kentucky, the greater of 75% or more of disposable weekly earnings, or thirty times the federal hourly minimum wage.

Miscellaneous

The following miscellaneous benefits are exempt when filing for bankruptcy in Kentucky:

1. Property of a business partnership

Wildcard: Any kind of property limited to $1,000.

Federal Exemptions: Yes, debtors are allowed to take federal exemptions when filing for bankruptcy in Kentucky.

Kentucky Bankruptcy Court:

United States Bankruptcy Court, Eastern District of Kentucky

United States Bankruptcy Court, Western District of Kentucky