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Filing for bankruptcy can feel overwhelming, especially when you’re worried about losing your home, car, or personal belongings. The good news? Bankruptcy laws are designed to help people get a fresh start—not leave them with nothing. Whether you can keep your property depends on the type of bankruptcy you file and the exemptions available in Kentucky. Let’s break it down.
Understanding Bankruptcy Exemptions
Bankruptcy exemptions protect certain assets from being taken by creditors. In Kentucky, you can choose between state exemptions and federal exemptions, but you can’t mix and match. Some common exemptions include:
- Homestead Exemption – Protects some or all of the equity in your primary home.
- Motor Vehicle Exemption – Covers a portion of the value of your car.
- Personal Property Exemption – Includes household items, clothing, and even some retirement accounts.
Chapter 7 vs. Chapter 13: What’s the Difference?
The type of bankruptcy you file plays a big role in whether you can keep your property.
- Chapter 7 Bankruptcy (Liquidation) – If your property is exempt, you keep it. If it’s non-exempt, the bankruptcy trustee may sell it to pay creditors.
- Chapter 13 Bankruptcy (Repayment Plan) – You keep all your property, but you must repay debts through a court-approved plan.
Can I Keep My Home and Car?
For many people, their home and car are their biggest concerns. If you’re current on your mortgage or car loan and the exemption covers your equity, you can usually keep them. However, if you’re behind on payments, Chapter 13 may be a better option to help catch up and avoid foreclosure or repossession.
What Happens to My Personal Belongings?
Most everyday items like furniture, appliances, and clothing are protected under exemptions. Luxury items, collectibles, or expensive jewelry might not be fully exempt, meaning they could be sold in a Chapter 7 case.
Talk to a Bankruptcy Attorney About Your Options
Every case is different, and the best way to know what property you can keep is to speak with an experienced bankruptcy attorney. Dennery Law has helped countless individuals in Central Kentucky find relief from debt while protecting their assets. Call us at 877-273-1976 or visit our office location to get started today.