January 15, 2018
If you don’t have enough income to cover your monthly bills, filing for bankruptcy in Kentucky might give you some relief. The first step for most people is understanding the differences between filing for Chapter 7 or Chapter 13 bankruptcy.
Once you know which type will work best for you—and it’s time to pull together the paperwork—this article will help you find the information you’ll need: official bankruptcy forms, Kentucky means test figures, credit counseling providers, and your local bankruptcy court. You’ll also learn how to protect your property in a Kentucky bankruptcy.
Official Bankruptcy Forms
The Kentucky bankruptcy court must review all aspects of your financial circumstances before it can forgive (discharge) your eligible debt. You’ll include information about your property, bills, income, expenses, and financial transactions by filling out official bankruptcy forms.
You can download the forms from the U.S. Courts form page. When they’re complete, you’ll file your paperwork in the Kentucky bankruptcy court with a filing fee or a request for a fee waiver and proof that you’ve taken the required credit counseling course (additional information below).
Kentucky Bankruptcy Information
Federal law governs all bankruptcy filings, but some information unique to Kentucky must be included.
Means Testing and Credit Counseling Information
You can find two types of state-specific information on the website of the U.S. Trustee: means testing figures and approved credit counseling providers.
- Means test data. Before you file a Chapter 7 bankruptcy, you’ll have to pass a “means test” that ensures that your income falls below certain guidelines. If your family income is more than the median income of Kentucky, you’ll fail the initial portion—but you might pass the test after you subtract certain set expenses. If it’s lower than the median, you pass. The income charts and expense figures are on the U.S. Trustee’s website (select “Means Testing Information”). Chapter 13 bankruptcy works differently. A calculation similar to the means test will help you determine your monthly Chapter 13 plan payment.
- Credit counseling providers. Most filers must complete a session with a credit counseling service before filing a bankruptcy case and a debt management course before receiving a discharge. The U.S. Trustee’s website publishes a list of approved providers under “Credit Counseling & Debtor Education.” Scroll down to find the Kentucky providers.
Kentucky Bankruptcy Court Locations and Websites
There are two federal districts in Kentucky and each has its own bankruptcy court. Each district is further divided into divisions, but not all divisions have offices that will accept bankruptcy filings. For guidance on where to file your case, contact an office using a number listed below or visit the Federal Court Locator page (choose “Bankruptcy” in the “Court Type” drop-down box).
On each court’s website, you’ll find the court’s local rules and instructions for filing your paperwork (under either “Bankruptcy Info” or “Pro Se Resources”). Click on one of the links below to go directly to the court’s website.
Kentucky Bankruptcy Exemptions
You might (or might not) be able to exempt (protect) all of your property, so it’s a good idea to understand how to maximize your exemptions when you file for bankruptcy.
- Exempt property. You can exempt assets that appear on the list of Kentucky exemptions (below) or the list of federal bankruptcy exemptions. As a Kentucky resident, you can choose which list to use, but you must limit your exemptions to just the one list.
- Nonexempt property. If your property doesn’t appear on the exemption list, the Chapter 7 trustee can sell it to pay your creditors. In a Chapter 13 bankruptcy, the process is different. You can keep your nonexempt property, but you’ll have to pay for it in the Chapter 13 repayment plan.
- Doubling exemptions. If you file a joint bankruptcy with your spouse in Kentucky, you can double the exemption if both of you own the property. If only one spouse owns it, you cannot double the exemption amount.
Below are some commonly used Kentucky bankruptcy exemptions. Statute citations are to the Kentucky Revised Statutes Annotated.
- Alimony and awards.Alimony and support to the extent reasonably necessary for you and your dependents’ support; crime victim’s reparation funds; wrongful death award from the death of a person upon whom you were dependent; up to $7,500 of value in a personal injury award resulting from injury to yourself or your dependent in an amount reasonably necessary for the support of you and your dependents; awards for loss of future earnings in an amount reasonably necessary for the support of you and your dependents (Ky. Rev. Stat. Ann § 427.150).
- Homestead. Up to $5,000 of equity in any real or personal property in Kentucky that you use as a permanent residence. You may use your homestead exemption to protect a burial plot for yourself or your dependent. (Ky. Rev. Stat. Ann § 427.060 & 090.)
- Insurance. Proceeds or benefits paid or to be paid by a cooperative life or casualty insurance company (Ky. Rev. Stat. Ann § 427.110); life insurance proceeds if clause prohibits proceeds from being used to pay beneficiary's creditors (Ky. Rev. Stat. Ann. § 304.14-350); life insurance proceeds or cash value if the beneficiary is someone other than insured (Ky. Rev. Stat. Ann. § 304.14-300); group life insurance proceeds (Ky. Rev. Stat. Ann. § 304.14-320).
- Personal property. $3,000 in household goods and wearing apparel; $3,000 in farming tools, equipment, and livestock; $2,500 of equity in one motor vehicle with accessories, including one spare tire; professionally prescribed health aids for debtor and dependents (Ky. Rev. Stat. Ann § 427.010(1)).
- Pensions and retirement accounts. ERISA-qualified retirement accounts (Ky. Rev. Stat. Ann § 427.150); police and firefighters’ pensions (Ky. Rev. Stat. Ann. § 67A.620; 427.125; 427.150(2)(e)); state and county employees’ pensions (Ky. Rev. Stat. Ann. §§ 61.690; 427.150(2)(e); 67A.350); teachers’ pensions (Ky. Rev. Stat. Ann. §§ 161.700; 427.150(2)(e)).
- Public benefits. Public assistance (Ky. Rev. Stat. Ann. § 205.220); unemployment compensation (Ky. Rev. Stat. Ann. § 341.470); workers' compensation (Ky. Rev. Stat. Ann. § 342.180).
- Tools of the trade. $300 in tools used in your trade or profession; $2,500 of value in one motor vehicle and accessories, including one spare tire, if you are a mechanic or other skilled tradesperson who repairs or services mechanical, electrical, or other equipment (Ky. Rev. Stat. Ann § 427.030); up to $1,000 of value in a professional library, office equipment, instruments, or furnishings necessary to the practice of an attorney, minister, physician, veterinarian, or dentist and up to $2,500 of value in one motor vehicle and one spare tire (Ky. Rev. Stat. Ann § 427.040).
- Wildcard. Up to $1,000 of value in any real or personal property. (Ky. Rev. Stat. Ann § 427.160)
Kentucky will amend these exemption amounts regularly, and additional exemptions exist. Visit the website for the Kentucky Legislature to ensure that you are using all exemptions available and that you have the most recent figures.
This resource can help a filer find some of the information needed to prepare a bankruptcy filing; however, it does not explain all aspects of bankruptcy. Each filer is responsible for understanding the law and bankruptcy procedures. A do-it-yourself book like How to File Chapter 7 Bankruptcy by Attorney Cara O’Neill and Albin Renauer J.D. can provide additional information.