Bankruptcy in Kentucky
If you're from Kentucky, maybe you already know this: The Six Million Dollar Man, Actor Lee Majors, was raised in Middlesboro, Kentucky. And those, who brought Captain Kirk, Mrs. Brady, and Captain Jack Sparrow to life, have all called Kentucky home at one time or another. Many good people, including Abraham Lincoln, are associated with the beautiful bluegrass state. Did you know that Abraham Lincoln filed bankruptcy?
Financial struggles do abound in Kentucky. It's estimated that 23% of all Kentucky children live below the poverty line. Times are tough everywhere, but especially in Kentucky.
If you have been hit with unemployment, underemployment, low paying jobs, health problems, business failure, or unmanageable debt, this article is for you. Ask yourself if it's time to consider bankruptcy.
We'll show you how Kentucky bankruptcy law differs from the laws other states; discuss whether you should file Chapter 7 or Chapter 13 bankruptcy; show you how to find and select a bankruptcy lawyer; and prepare you to work with a bankruptcy attorney.
How Kentucky Bankruptcy Law Differs from the Laws of Other States
In Kentucky, you have the choice between using federal exemptions and state exemptions to protect your property during the bankruptcy process. Exemptions describe the property you're allowed to keep.
Because we're explaining how Kentucky bankruptcy law differs from the laws of other states, we'll go ahead and list the main exemptions; however, for most folks, the federal exemptions will be the better fit, as they are more generous.
Under the Kentucky exemptions you can keep:
- $5,000 of equity in a home.
- $2,500 of equity in a motor vehicle.
- $3,000 of personal property (clothing, jewelry, household furnishings, etc.)
There are additional exemptions for retirement plans, educational funds, insurances, wages, alimony, child support, and the like. Plus, if you're married and filing bankruptcy jointly, double all of these state exemptions.
Your bankruptcy lawyer will show you how to best protect your assets; most folks don't lose any assets when going through bankruptcy.
Your Choices in Filing Bankruptcy in Kentucky: Chapter 7 or Chapter 13
Your bankruptcy attorney will help you to decide whether it's most appropriate for you to file bankruptcy under Chapter 7 or Chapter 13 of the federal bankruptcy laws.
- If you qualify for Chapter 7, it's relatively fast and easy and many unsecured debts are wiped out.
- To automatically qualify for Chapter 7, your income must be below the Kentucky median income. (However, if it's not, check with a qualified bankruptcy attorney, there are exceptions that allow higher income earners to qualify. Ask if any exceptions apply to your individual situation.)
- For a single person, the median income is $38,356 and for a family of four the median income is $62,583. Add $7,500 of income for each additional dependent.
- If you don't qualify for Chapter 7 or have significant debts that won't be wiped out, consider Chapter 13. Some debts are wiped out; others are renegotiated so you make payments under contract terms that are more favorable to you then those of the original contract.
How to Find and Select a Bankruptcy Attorney
You may have loved ones who have filed bankruptcy. If so, you may want to ask them for a referral if they liked the attorney.
If not search "Find a Kentucky Bankruptcy Attorney" on the Internet or ask your local bar association or professional advisors for a referral. Make sure the attorney is experienced and focuses his or her legal practice on bankruptcy law.
Once you find a few bankruptcy attorneys, chat with them to determine whom you feel most comfortable with. Then, make your selection.
How to Prepare to Work with a Bankruptcy Attorney
First, write down your questions and concerns about filing bankruptcy and be sure to ask during your next conversation.
Your attorney needs to have all of your financial information to make good decisions and give you appropriate advice. So, second, gather your papers and make a complete list of your assets, debts, expenses, and payments made. Like Honest Abe, your fellow Kentuckian, disclose everything accurately.