You can now keep much more property!
Listed below are the Kentucky Bankruptcy Exemptions which comply with the common federal exemptions. Indiana has similar but smaller Indiana state law exemptions. Persons in Indiana often lose their tax refunds if they don’t plan their bankruptcy.
Most of our bankruptcy clients keep all their property when they file a Chapter 7 bankruptcy, unless they want to surrender the property and not owe a secured lender. You are allowed to keep a certain amount of property in a Chapter 7 bankruptcy to start. You do not lose property that is exempt. There is rarely a need to lose property in bankruptcy because you know what property you own. You can plan with your lawyer to exempt all of the property and keep it. For example lets say: the foreclosure value of the home is $200,000 and the mortgage is $140,000 and it is jointly owned. His home exemption is $23,000, hers is $23,000 the cost of selling the home is $4,000 the trustee fee is $10,000 (Trustees are paid on a sliding scale and for 200,000 they would get 10%). Under this the amount paid to unsecured creditors would be $0. 200,000-140,000 – 46,000 – 4,000 -10,000 = 0 Since there is no benefit to creditors, a Trustee would be acting improperly in selling the home. He is supposed to work for the creditors not just to make himself profits.
The Bankruptcy Manual fully discusses exemptions and how to keep your property in Bankruptcy. Download your free copy. If you can work with your attorney or lawyer to file a Chapter 7 Bankruptcy in Kentucky, you are normally far better off. In order to save money, time, and problems get a copy of our Bankruptcy Manual and educate yourself on the latest Kentucky Bankruptcy Exemptions.
Kentucky uses the Federal Exemptions. They increase by Cost of Living increases every year in April. Indiana has much smaller exemptions.
|Real Property Exemption is now over 20,000 per debtor($20,600). But you must live in the property or it is reduced by 1/2.||Tools Equipment and Livestock Exemption is now over ($2175)|
|Household goods Exemption is now over per debtor ($11,525)||Personal Injury Case Exemption is now over($21,625)|
|Automobiles Exemption is now over per debtor ($3,450)||Property Any Kind Exemption is now over($1150 + 1/2 of any unused homestead up to $10,300)|
|Professional Library ($1,000) (attorneys lawyers doctors)||Retirement Accounts Unlimited Amount Exemption|
|Unmatured Life Insurance cash value ($10,750)|
|Professional Vehicle ($2,500) (attorneys lawyers doctors)||Professional Library and Professional Tools($300)|
Most people that lose property filing for Chapter 7 or Chapter 13 Bankruptcy lose it because:
- They didn’t make the monthly car or home payments or
- The bank forgot to file the mortgage or car lien
It is very rare for someone to “lose” property to the court just because they filed for bankruptcy. When you file for bankruptcy you review how the mortgage and car titles were recorded. In a Chapter 7 or Chapter 13 you are allowed to discharge all of your debts and start life over with a “reasonable amount of equity in property.” Each state can have a different amount of “reasonable property” that you are allowed to keep when you file for bankruptcy. Kentucky and most states use the Federal exemptions. A husband and wife have individual exemptions so the amount is doubled for a couple if they own property jointly. For instance, a couple with a $200,000 dollar home may have a $160,000 dollar mortgage and still keep their home in Kentucky in Chapter 7 or Chapter 13 bankruptcy. Each person has a $21,000 exemption to keep their personal home under the Federal exemptions. Kentucky and the Federal exemptions have a $3,250 exemption for autos. But remember that Indiana allows far less for property. Kentucky and the Federal exemptions constantly increase with bi-annual cost of living raises. Indiana changes whenever they get around to modifying the state law. When your attorney reviews your Chapter 7 or 13 bankruptcy he will review how property is exempted and will inform you if there is a problem. The Federal and Kentucky retirement exemption is at least one million dollars see bankruptcy code section 522(n) if the account has an anti alienation clause it is probably not even property of the estate § 541(b)(5) .
Debtors can make the mistake of transferring property to a friend or relative prior to filing for less than a fair value. This can become a fraudulent or preferential transfer. The Trustee is allowed to undo a transfer in order to get such transfers back to pay creditors. The Debtor is not able to exempt property after he voluntarily transfers it. What happens is that he loses it entirely and it is looked at as a fraudulent transfer.
Keeping a home in a Chapter 7 or Chapter 13 bankruptcy is simple. You simply keep the payments current and insured. The lender only wants the account up to date. The court only wants property if there is too much equity. A Chapter 13 will allow you up to 5 years to catch payments up. Sometimes you can refinance to a lower rate while you are in a Chapter 13. A Chapter 7 will not force the mortgage company to accept catching payments up over time and instead requires you to work something out, if you can. With some high rate mortgages or where you owe more than what a property is worth it may be best to surrender the property over time. A good strategy may be to defend the lawsuit and file bankruptcy cases at the right time to delay the foreclosure process as long as possible giving you a longer period of time to stay in the property with free rent. If the property has a second mortgage with no equity you may be able to destroy the second mortgage by stripping the second mortgage. A Chapter 13 can allow you to keep more property than a Chapter 7. The Chapter 13 only needs to repay to unsecured creditors as much as a Chapter 7 would have. For a complete chart of Kentucky Federal Exemptions see the subpage and chart.