Kentucky Bankruptcy Laws

Kentucky allows debtors to choose between state and federal bankruptcy exemptions. Federal exemptions are generally far more favorable, especially for homestead protection. Debtors cannot mix and match — must choose one complete system.

Protects up to $5,000 of equity in the debtor's primary residence — one of the lowest homestead exemptions in the nation. Federal alternative: $27,900 individual / $55,800 joint (2025).

Household furnishings and clothing: $3,000. Tools, equipment, and livestock (farming): $3,000. Motor vehicle (1 vehicle + accessories): $2,500. Wildcard: $1,000 in any property (KRS 427.160).

ERISA-qualified plans (401(k), 403(b), pensions, profit-sharing): unlimited exemption. IRAs and Roth IRAs: exempt, but contributions made within 120 days before filing are NOT exempt. Federal IRA cap (2025): $1,711,975.

The greater of 75% of disposable weekly earnings or 30 times the federal minimum hourly wage per week is exempt. Maximum garnishment: 25% of disposable earnings or the amount exceeding 30x minimum wage, whichever is less.