Legal Question in Bankruptcy in Kentucky

Re: Understanding Chapter 7 Homestead Exemption

The homestead exemption in Kentucky is $5,000; $10,000 for a married couple.

According to the information you posted, the home is worth $43,500 with a $12,500

lien on it. That means you have $31,000 of equity. You can protect $21,000 of that

equity by asserting your homestead exemption.

Keep in mind, however, that valuation is a big issue in many bankruptcy proceedings.

It may be that the value of the home is less than you think, leaving less equity for

a trustee to recover. While you could lose your home, you could also find that there

is less equity than you think. You could also enter into an agreement with the trustee

to pay him or her the value of the equity over a period of time, thereby keeping the house.

There is also a $1,000 "wildcard" exemption that each of you have, which could be used to

exempt another $2,000 of equity.

The vehicle exemption in Kentucky is $2,500. Each of you can exempt one vehicle, so, given

the values you posted, there should be no problem with the vehicles.

Finally, you mentioned being in a car accident. Be aware that if you have filed a lawsuit

to recover damages from the accident, the trustee will take over the lawsuit and be entitled

to much of its value (you have some exemption rights there, too, though).