Kentucky
Bankruptcy in Kentucky (2026): Exemptions & Means Test
Independently fact-checked against primary sources (last audited August 16, 2026). · Reviewed by the RecordingLaw editorial team. · Law checked current as of August 16, 2026. · 6 primary sources cited on this page. How we verify our legal content
Bankruptcy is governed by federal law, but the property you keep when you file depends on which exemption set you use. Kentucky is unusual: it is one of the minority of states that lets filers choose between the Kentucky exemptions and the federal bankruptcy exemptions in 11 U.S.C. 522(d). That choice matters because Kentucky's own homestead exemption is low, so many Kentucky filers are better off electing the federal list. This page explains Kentucky's opt-in status, its state exemptions, the federal alternative, the Chapter 7 means test with current income figures, and where Kentucky residents file. It is general legal information, not legal advice.
Information last verified on June 23, 2026. Exemption amounts and means-test income figures change periodically; confirm current amounts before relying on them.
Scope: This article explains how Kentucky's choice between state and federal exemptions and the federal means test apply to consumer bankruptcy. It is general legal information, not legal advice, and not a substitute for consulting a Kentucky bankruptcy attorney.
Does Kentucky Use State or Federal Bankruptcy Exemptions?
Kentucky lets filers choose. Under KRS 427.170, an individual debtor domiciled in Kentucky may elect the federal bankruptcy exemptions in 11 U.S.C. 522(d) instead of the Kentucky exemptions. You must pick one full set; you cannot mix and match.
The federal Bankruptcy Code lets each state decide whether its residents may use the federal exemption list. Most states opted out, but Kentucky did not. KRS 427.170 expressly authorizes a Kentucky debtor to "exempt from property of said debtor's bankruptcy estate the property specified under 11 U.S.C. sec. 522(d)." That gives Kentucky filers a strategic choice that residents of opt-out states do not have.
The rule is all-or-nothing. You either claim the entire Kentucky exemption set or the entire federal set; you cannot, for example, take the Kentucky homestead and the federal vehicle exemption. Married couples filing jointly must both use the same system. Because the state and federal lists protect different things in different amounts, the right choice depends on your assets, especially how much home equity you have.
Which state's law even applies is governed by a residency rule. The Bankruptcy Code generally requires that you have been domiciled in a state for the 730 days (two years) before filing for that state's exemptions to apply. People who moved recently may have to use a prior state's exemptions, so confirm your residency history with an attorney.
The Kentucky Homestead Exemption (and the Federal Alternative)
Kentucky's state homestead exemption is only $5,000 of equity in your residence, doubling to $10,000 for a married couple (KRS 427.060). Filers with more home equity often choose the federal homestead instead, which is $31,575 per person for cases filed April 1, 2025 through March 31, 2028 (11 U.S.C. 522(d)(1)).
Kentucky's state homestead exemption is among the lowest in the country. KRS 427.060 protects an individual debtor's interest, "not to exceed five thousand dollars ($5,000) in value," in real or personal property used as a permanent residence (or in a burial plot). A married couple who both own and file can each claim it, for $10,000 combined.
This is exactly where Kentucky's choice becomes valuable. The federal exemption list protects substantially more home equity: under 11 U.S.C. 522(d)(1), the homestead exemption is $31,575 per filer for cases filed between April 1, 2025 and March 31, 2028, which a married couple can double. A Kentucky filer with, say, $25,000 of home equity would lose protection under the $5,000 state cap but keep it under the federal list. The federal figures are indexed for inflation and adjusted every three years, so confirm the current amount for your filing date.
The state homestead does not stop foreclosure of a mortgage you signed or a sale for purchase-money debt on the home itself. As with every state, a voluntary mortgage remains enforceable.
Vehicle, Personal Property, Wages, and Other Exemptions
Kentucky's state list exempts $2,500 of vehicle equity, up to $3,000 in household furnishings, jewelry, clothing, and ornaments, and a separate $3,000 in farming tools, equipment, and livestock; wages are protected to 75% of disposable earnings (KRS 427.010). A filer using the state list in bankruptcy also gets a $1,000 general exemption applicable to any property (KRS 427.160). The federal alternative has its own vehicle, household-goods, and wildcard amounts.
Under the Kentucky exemptions, KRS 427.010 protects your interest in one motor vehicle and its necessary accessories up to $2,500 in the aggregate. The same statute exempts household furnishings, jewelry, personal clothing, and ornaments up to $3,000 in value, and separately exempts the tools, equipment, and livestock, including poultry, of a person engaged in farming up to its own $3,000 limit. The two caps are distinct, so a farmer does not get unlimited protection for farm equipment under the state list. There are additional category exemptions for items like professionally prescribed health aids.
If you instead elect the federal exemptions, you get a different mix, including a vehicle exemption, a household-goods exemption, and a sizable "wildcard" exemption under 11 U.S.C. 522(d)(5) that can be applied to any property, part of which comes from any unused portion of the federal homestead exemption. Kentucky's own list does include a wildcard, but a far smaller one: KRS 427.160 gives every debtor who has filed for bankruptcy a general exemption of up to $1,000 that may be applied toward any property, real or personal, tangible or intangible. That $1,000 is modest next to the federal wildcard once any unused federal homestead is rolled into it, which is another reason filers without much home equity sometimes still prefer the federal set.
Wages are protected through Kentucky's garnishment cap. Under KRS 427.010, the disposable earnings subject to garnishment in any workweek cannot exceed the lesser of 25% of disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum hourly wage. The practical effect is that the greater of 75% of disposable earnings or 30 times the federal minimum wage is shielded.
The Chapter 7 Means Test in Kentucky
For cases filed on or after April 1, 2026, the Kentucky median family income is $61,652 for 1 earner, $73,892 for 2, $85,212 for 3, and $109,443 for a family of 4. The U.S. Trustee Program updates these figures about twice a year (justice.gov/ust).
The means test determines eligibility for Chapter 7. It compares your household's current monthly income, annualized, to the median family income for a Kentucky household of your size. If your income is at or below the Kentucky median, you generally pass and may proceed under Chapter 7. If it is above the median, you complete a second calculation that deducts allowed living expenses to see whether you have meaningful disposable income left; if you do, Chapter 7 may be presumed abusive, pointing you toward Chapter 13.
The current Kentucky median family income figures from the U.S. Trustee Program, for cases filed on or after April 1, 2026, are:
| Household size | Kentucky median annual income |
|---|---|
| 1 earner | $61,652 |
| 2 people | $73,892 |
| 3 people | $85,212 |
| 4 people | $109,443 |
For households larger than four, the U.S. Trustee Program adds a set amount per additional person. The figures come from Census Bureau data and are revised about twice a year, generally in spring and fall, so confirm the current numbers for your filing date.
Chapter 7 vs. Chapter 13 and the Automatic Stay
Chapter 7 discharges most unsecured debts after a trustee liquidates any nonexempt property; Chapter 13 lets you keep your property through a three-to-five-year repayment plan. Both trigger the automatic stay, which immediately halts most collection, foreclosure, and garnishment.
Chapter 7 is a liquidation. A trustee may sell property not protected by an exemption and pay creditors from the proceeds, after which most remaining unsecured debts are discharged, usually within a few months. Choosing the exemption set that best fits your assets, state or federal, is central to keeping your property in Chapter 7.
Chapter 13 is a reorganization for people with regular income. You repay some or all of your debts through a court-approved plan lasting three to five years, which is useful for catching up on a mortgage, keeping nonexempt assets, or filing when you do not qualify for Chapter 7. You receive a discharge after completing the plan.
The instant you file either chapter, the automatic stay under 11 U.S.C. 362 takes effect, stopping most collection calls, lawsuits, wage garnishment, and foreclosure or repossession while the case proceeds. Some matters, such as certain domestic-support proceedings, are not stayed.
Where Kentucky Residents File
Kentucky residents file in one of two federal courts: the U.S. Bankruptcy Court for the Eastern District of Kentucky or the Western District of Kentucky, depending on their county.
Kentucky has two bankruptcy districts. The Eastern District (with the clerk's office in Lexington and other locations) covers the eastern and central counties; the Western District (clerk's office in Louisville, with additional offices) covers the western counties. You generally file in the district and division serving the county where you have lived for most of the 180 days before filing. Before filing, you must complete an approved credit-counseling course, and before discharge, a debtor-education course.
What Bankruptcy Can and Cannot Do
Bankruptcy discharges most unsecured debts such as credit cards and medical bills, but it generally does not erase most student loans, recent income taxes, child support, or alimony.
A discharge eliminates personal liability for most general unsecured debts, including credit cards, medical bills, and many personal loans. It does not wipe out most student loans (absent a separate undue-hardship showing), recent income taxes, domestic-support obligations like child support and alimony, most government fines, or debts arising from fraud. A mortgage or car loan can be discharged as a personal obligation, but the lender keeps its lien, so you must keep paying to keep the collateral.
Because Kentucky's choice between state and federal exemptions can change which property you keep, and because the homestead numbers differ so much, it is worth modeling both options with a licensed Kentucky bankruptcy attorney before filing. The figures here were verified in June 2026 and should be confirmed against the current statutes and U.S. Trustee Program tables.
This is general legal information, not legal advice. Exemption statutes and means-test income figures change; the amounts here were verified in June 2026. Confirm current figures and how they apply to you with a licensed Kentucky bankruptcy attorney.
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Frequently Asked Questions
Does Kentucky use state or federal bankruptcy exemptions?
Kentucky lets filers choose. KRS 427.170 authorizes a Kentucky debtor to elect the federal bankruptcy exemptions in 11 U.S.C. 522(d) instead of the Kentucky exemptions. You must use one complete set, not a mix, and joint filers must use the same set.
What is the homestead exemption in Kentucky?
Kentucky's state homestead exemption is only $5,000 of equity in your residence, doubling to $10,000 for a married couple (KRS 427.060). Because that is low, filers with more home equity often elect the federal homestead instead, which is $31,575 per person for cases filed April 1, 2025 through March 31, 2028 (11 U.S.C. 522(d)(1)).
What is the Kentucky median income for the means test?
For cases filed on or after April 1, 2026, the U.S. Trustee Program lists the Kentucky median family income as $61,652 for 1 earner, $73,892 for 2 people, $85,212 for 3 people, and $109,443 for a family of 4, with a set amount added per additional person. These figures update about twice a year, so confirm the current numbers for your filing date.
Should I use Kentucky or federal exemptions?
It depends on your assets, especially home equity. The Kentucky homestead is only $5,000, while the federal homestead is $31,575 per person, so filers with significant equity often choose federal. Filers with little equity sometimes still prefer the federal set for its wildcard exemption. Compare both with a Kentucky bankruptcy attorney before filing.
Will I lose my house or car if I file bankruptcy in Kentucky?
Not necessarily. Whether you keep your home depends on your equity and which exemption set you choose ($5,000 state homestead versus $31,575 per person federal). A car with modest equity can be protected under the $2,500 state vehicle exemption or the federal vehicle exemption, as long as any loan stays current. Outcomes vary, so consult an attorney.
Where do I file bankruptcy in Kentucky?
In one of two federal courts: the U.S. Bankruptcy Court for the Eastern District of Kentucky or the Western District of Kentucky, depending on your county. You generally file in the district and division serving the county where you have lived for most of the prior 180 days.
Overwhelmed by debt in Kentucky? Get a free bankruptcy consultation
Bankruptcy can stop foreclosure, wage garnishment, and creditor calls, and which debts you can clear and what property you keep depend on Kentucky's exemptions. Get a free, confidential consultation with a Kentucky bankruptcy attorney to understand your options. There is no obligation.
Updates
Clarified Kentucky's state exemption list: the $3,000 cap on farm tools, equipment, and livestock is separate from the $3,000 household-goods cap, and the state list does include a $1,000 general exemption under KRS 427.160 that applies to any property in bankruptcy.
Independently fact-checked against the cited primary sources; governing law re-checked for recent changes
Governing law re-checked for recent changes
Reviewed and approved by an editor
The Law Behind This Article
This article rests on the statutory provisions below, held in our own legal record and retrieved from the official source. Tap a section to read the operative text.
Kentucky Revised Statutes, Chapter 427: EXEMPTIONS
§ 427.170Federal bankruptcy code exemptions applicable in KentuckyIn force
Solely for the purpose of applying the provisions of 11 U.S.C. sec. 522(b)(2) in a federal bankruptcy proceeding and only to the extent otherwise allowed by applicable federal law, an individual debtor domiciled in this state is authorized to exempt from property of said debtor's bankruptcy estate the property specified under 11 U.S.C. sec. 522(d).
Official text (excerpt) · last checked 2026-09-06 · Read the full text in our law library · Verify at apps.legislature.ky.gov
Cited in 14 court opinions in our collectionLatest citing opinion in our collection: 2022
Opinions citing this section in our collection:
- MPM Financial Group, Inc. v. Morton (Kentucky Supreme Court 2009, 289 S.W.3d 193)“…urt on a grant of discretionary review to determine whether KRS 427.170, which incorporates by reference the fe…”
- Norman Radtke v. Ernest Eggers (Court of Appeals of Kentucky 2021)“…Financial, the court considered: (1) whether provisions of KRS 427.170, which incorporate by reference the fe…”
- Dominion Bank of the Cumberlands, Na v. James R. Nuckolls Judy M. Nuckolls (Court of Appeals for the Fourth Circuit 1985, 780 F.2d 408)“…(West Supp.1985); Kan.Stat.Ann. Sec. 60-2312 (Supp.1984); Ky.Rev.Stat.Ann. Sec. 427.170 (Baldwin Supp.1984); La.Rev.Stat.Ann.…”
Identified automatically from the court opinions citing this section — not a ranking of which case controls.
§ 427.060Homestead and burial plot exemptions -- ExceptionsIn force
In addition to any exemption of personal property, an individual debtor's aggregate interest, not to exceed five thousand dollars ($5,000) in value, in real or personal property that such debtor or a dependent of such debtor uses as a permanent residence in this state, or in a burial plot for such debtor or a dependent of such debtor is exempt from sale under execution, attachment or judgment, except to foreclose a mortgage given by the owner of a homestead or for purchase money due thereon. This exemption shall not apply if the debt or liability existed prior to the purchase of the property or the erection of the improvements thereon.
Official text (excerpt) · last checked 2026-07-29 · Read the full text in our law library · Verify at apps.legislature.ky.gov
Cited in 25 court opinions in our collectionLatest citing opinion in our collection: 2020
Opinions citing this section in our collection:
- Ball v. Smiddy (Court of Appeals of Kentucky (pre-1976) 1952, 249 S.W.2d 715)“…ch is exempt from sale under execution by the provisions of KRS 427.060. The circuit court held that the proper…”
- Newman v. Estate of Hobbic (Court of Appeals of Kentucky 2018, 539 S.W.3d 697)“…costs were awarded, failed to include the complete text of KRS 427.060, failed to include the "header" of KRS…”
- Lunsford v. Witt (Court of Appeals of Kentucky 1958, 309 S.W.2d 348)“…he trial judge erred in holding Sheridan was entitled under KRS 427.060 to a homestead of $1,000 in the 60 acre…”
Identified automatically from the court opinions citing this section — not a ranking of which case controls.
§ 427.010Exempt personal property, health savings funds, and disposable earnings of individual debtorsIn forcecited in 2 of our articles
(1) The following personal property of an individual debtor resident in this state is exempt from execution, attachment, garnishment, distress or fee-bill: All household furnishings, jewelry, personal clothing and ornaments not to exceed three thousand dollars ($3,000) in value; tools, equipment and livestock, including poultry, of a person engaged in farming, not exceeding three thousand dollars ($3,000) in value; one (1) motor vehicle and its necessary accessories, including one (1) spare tire, not exceeding in the aggregate two thousand five hundred dollars ($2,500) in value; professionally prescribed health aids for the debtor, or a dependent of the debtor; and funds deposited in a health savings account as described in Section 223 of the Internal Revenue Code of 1986.
Official text (excerpt) · last checked 2026-09-02 · Read the full text in our law library · Verify at apps.legislature.ky.gov
Cited in 27 court opinions in our collectionLatest citing opinion in our collection: 2015
In the courts (editorial summary, independently checked):Kentucky courts read KRS 427.010 narrowly. Shafizadeh v. Shafizadeh (2012) held subsection (2) caps how much of a paycheck may be garnished but does not shield wages once deposited in the debtor's bank account; Rice, Seiller, Cantor, Anderson & Bordy v. Fitzgerald (1992) held a dairy farmer's milk proceeds are not exempt earnings.
Opinions citing this section in our collection:
- Shafizadeh v. Shafizadeh (Court of Appeals of Kentucky 2012, 444 S.W.3d 437)✓A former wife garnished her ex-husband's bank account to collect an attorney-fee award; he argued the account held only his salary, but the court held KRS 427.010(2) caps what may be garnished from an employer and does not protect wages once deposited in the debtor's account.
- Brown v. Commonwealth (Court of Appeals of Kentucky 1999, 40 S.W.3d 873)“…statutory exemptions: one protecting his wages pursuant to KRS 427.010, and one protecting his wife’s wages pu…”
- Lichtenstein v. Barbanel (Kentucky Supreme Court 2010, 322 S.W.3d 27)“…er herein to those orders as such. 2 . KRS 427.010(2) and its federal companion, 15 U.S.C…”
Identified automatically from the court opinions citing this section — not a ranking of which case controls.
Also relied on in: Kentucky Debt Collection Laws: Garnishment Limits, the $1,000 Exemption Myth, and Debt Deadlines
United States Code Title 11
§ 522ExemptionsIn forcecited in 53 of our articles
In this section— “dependent” includes spouse, whether or not actually dependent; and “value” means fair market value as of the date of the filing of the petition or, with respect to property that becomes property of the estate after such date, as of the date such property becomes property of the estate. Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate the property listed in either paragraph (2) or, in the alternative, paragraph (3) of this subsection. In joint cases filed under section 302 of this title and individual cases filed under section 301 or 303 of this title by or against debtors who are husband and wife, and whose estates are ordered to be jointly administered under Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, one debtor may not elect to exempt property listed in paragraph (2) and the other debtor elect to exempt property listed in paragraph (3) of this subsection. If the parties cannot agree on the alternative to be elected, they shall be deemed to elect paragraph (2), where such election is permitted under the law of the jurisdiction where the case is filed.
Official text (excerpt) · last checked 2026-07-28 · Read the full text in our law library · Verify at uscode.house.gov
Cited in 7,574 court opinions in our collectionLatest citing opinion in our collection: 2026
In the courts (editorial summary, independently checked):Taylor v. Freeland & Kronz (1992) held that a trustee who does not object within the 30-day period cannot later challenge an exemption claimed under 522(l), even one with no statutory basis. Owen v. Owen (1991) held that 522(f) lien avoidance is not defeated by a state exemption written to exclude lien-encumbered property.
Opinions citing this section in our collection:
- Taylor v. Freeland & Kronz (Supreme Court of the United States 1992, 503 U.S. 638)✓A Chapter 7 debtor listed the entire proceeds of her TWA discrimination suit as exempt and the trustee let the 30-day objection window lapse; the Court held that under § 522(l) the property is exempt once no one objects, even absent a colorable statutory basis.
- Patterson v. Shumate (Supreme Court of the United States 1992, 504 U.S. 753)✓A debtor's $250,000 ERISA pension interest was excluded from his estate under § 541(c)(2); answering a surplusage argument, the Court read § 522(d)(10)(E) as exempting a broader set of plans, and expressly declined to decide whether § 522(b)(2)(A) also applied.
- Owen v. Owen (Supreme Court of the United States 1991, 500 U.S. 305)✓An ex-wife's judgment lien attached to a Florida condo before state law made it a homestead; the Court held § 522(f) measures impairment against the exemption the debtor would have had but for the lien, so Florida's carve-out for prior liens did not defeat avoidance.
Identified automatically from the court opinions citing this section — not a ranking of which case controls.
Also relied on in: Bankruptcy Laws by State (2026): Exemptions & Means Test, Bankruptcy in Alaska (2026): Exemptions & Means Test, Bankruptcy in Arkansas (2026): Exemptions & Means Test
§ 362Automatic stayIn forcecited in 53 of our articles
Except as provided in subsection (b) of this section, a petition filed under section 301, 302, or 303 of this title, or an application filed under section 5(a)(3) of the Securities Investor Protection Act of 1970, operates as a stay, applicable to all entities, of— the commencement or continuation, including the issuance or employment of process, of a judicial, administrative, or other action or proceeding against the debtor that was or could have been commenced before the commencement of the case under this title, or to recover a claim against the debtor that arose before the commencement of the case under this title; the enforcement, against the debtor or against property of the estate, of a judgment obtained before the commencement of the case under this title; any act to obtain possession of property of the estate or of property from the estate or to exercise control over property of the estate; any act to create, perfect, or enforce any lien against property of the estate; any act to create, perfect, or enforce against property of the debtor any lien to the extent that such lien secures a claim that arose before the commencement of the case under this title; any act to…
Official text (excerpt) · last checked 2026-07-28 · Read the full text in our law library · Verify at uscode.house.gov
Cited in 19,606 court opinions in our collectionLatest citing opinion in our collection: 2026
In the courts (editorial summary, independently checked):United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd. (1988) held that an undersecured creditor gets no interest as adequate protection under 362(d)(1) for delay caused by the stay. NLRB v. Bildisco & Bildisco (1984) applied 362(a) in requiring claims be pursued through bankruptcy administration, not suit.
Opinions citing this section in our collection:
- Clinton v. Jones (Supreme Court of the United States 1997, 520 U.S. 681)“…ublic interests. Brief for Petitioner 34-36. See, e. g., 11 U. S. C. § 362 (litigation against debtor stayed upon…”
- United Sav. Assn. of Tex. v. Timbers of Inwood Forest Associates, Ltd. (Supreme Court of the United States 1988, 484 U.S. 365)✓An undersecured lender on a Houston apartment project sought monthly payments as the price of continuing the § 362(a) automatic stay; the Court held that 'adequate protection' under § 362(d)(1) does not entitle it to interest for the delay in foreclosing on its collateral.
- Pennzoil Co. v. Texaco Inc. (Supreme Court of the United States 1987, 481 U.S. 1)“…if it were forced to file for bankruptcy under Chapter 11. 11 U. S. C. §362 . Texaco, or its successor in interest,…”
Identified automatically from the court opinions citing this section — not a ranking of which case controls.
Also relied on in: Bankruptcy in Arizona (2026): Exemptions & Means Test, Bankruptcy in Alabama (2026): Exemptions & Means Test, Bankruptcy in Georgia (2026): Exemptions & Means Test
Search our full record of US law — 2.1 million sections, every state + federal →
Sources and References
- KRS 427.170 (federal bankruptcy code exemptions applicable in Kentucky; authorizes electing 11 U.S.C. 522(d)), Kentucky Legislative Research Commission(legislature.ky.gov).gov
- KRS 427.060 (homestead and burial plot exemption: $5,000), Kentucky Legislative Research Commission(legislature.ky.gov).gov
- KRS 427.010 (exempt personal property: $2,500 motor vehicle, $3,000 household furnishings/jewelry/clothing, farming tools; 75% disposable earnings), Kentucky Legislative Research Commission(legislature.ky.gov).gov
- Census Bureau Median Family Income by Family Size, cases filed on or after April 1, 2026 (Kentucky: 1=$61,652; 2=$73,892; 3=$85,212; 4=$109,443), U.S. Trustee Program(justice.gov).gov
- 11 U.S.C. 522 (exemptions; federal exemption list under (d), including $31,575 homestead under (d)(1) and wildcard under (d)(5)), Cornell Legal Information Institute(law.cornell.edu)
- 11 U.S.C. 362 (the automatic stay), Cornell Legal Information Institute(law.cornell.edu)
- U.S. Bankruptcy Court for the Eastern District of Kentucky(kyeb.uscourts.gov).gov
- U.S. Bankruptcy Court for the Western District of Kentucky(kywb.uscourts.gov).gov
- KRS 427.160 (additional general exemption: $1,000 applicable to any property, solely for purposes of 11 U.S.C. 522(b)(3)(A)), Kentucky Legislative Research Commission(legislature.ky.gov)