If you are an individual filing for bankruptcy relief in Kentucky, you can utilize either the federal or the state bankruptcy exemptions. Typically, most individuals select the federal exemptions as these are generally perceived as more favorable. Exemptions in bankruptcy allow individuals to protect the value of their assets up to certain dollar amounts. The most popular exemptions include homestead, motor vehicle, household goods, and wildcard. Certain types of property are fully exempt like social security benefits or 401K and 403b retirement plans.
If you and your spouse file for bankruptcy, the both of you are entitled to claim exemptions in your respective property interests. For example, the current homestead exemption under the federal exemptions is $23,675 and if you and your spouse file and jointly own a residence, you will be able to protect $47,350 of equity in your home. You can claim a motor vehicle exemption up to $3,775 for one motor vehicle titled in your name. A jointly filing spouse can also claim that exemption in a motor vehicle they own. Household goods are exempt up to $12,625 in aggregate value as long as no single item exceeds $600. If you have a household item that exceeds the $600 amount, you can use wildcard exemption to protect that asset. Wildcard exemption is $1,250 and up to $11,850 of unused homestead exemption. There is also a jewelry exemption of $1,600 under the federal exemptions. Please note these exemption amounts are valid as of April 1, 2016 and are adjusted every three years. The majority of chapter 7 bankruptcy filings are no-asset cases. In a no-asset case, there is no available non-exempt property for a chapter 7 trustee to liquidate in order to make a distribution to creditors. If you have equity in an asset beyond the exemption value, you can make an offer to the trustee to purchase the equity in the asset in order to retain the property.