Filing Chapter 7 Bankruptcy in Kentucky (2026)
Reviewed by DocDraft Legal Team · Kentucky · Last updated August 18, 2026
Chapter 7 bankruptcy is federal law, but the property you keep depends on Kentucky. Kentucky is a choice state: under KRS 427.170 you may elect either the federal 11 U.S.C. 522(d) exemptions or the Kentucky exemption set, but you cannot combine them. Because Kentucky's state homestead is only $5,000 under KRS 427.060, many Kentucky filers with home equity choose the federal set instead, which offers a larger homestead. This page explains that election, the Kentucky vehicle, wildcard, and wage figures, the means-test median income, and the two federal bankruptcy courts where Kentuckians file. Chapter 7 discharges most unsecured debt but not most student loans, recent taxes, or child and spousal support.
Does Kentucky use state or federal bankruptcy exemptions?
Kentucky is a choice state. Under KRS 427.170, a debtor domiciled in Kentucky may elect either the federal 11 U.S.C. 522(d) exemptions or the Kentucky exemption set. You pick one set in full and cannot mix Kentucky and federal exemptions. Because Kentucky's homestead is low, many homeowners choose the federal list.
Can I keep my house if I file Chapter 7 in Kentucky?
Often yes, but the Kentucky homestead under KRS 427.060 protects only $5,000 of home equity. If you have more equity, the federal exemption set that Kentucky allows under KRS 427.170 gives a larger homestead, so many Kentucky homeowners elect federal exemptions instead to keep the house.
Can I keep my car if I file Chapter 7 in Kentucky?
Usually yes if your equity is modest. Kentucky exempts $2,500 of motor vehicle equity under KRS 427.010(1). If you instead elect the federal set that Kentucky permits, a separate federal vehicle exemption applies. Under either choice, equity at or below the figure keeps the car; higher equity may be partly reachable.
What is the income limit to file Chapter 7 in Kentucky?
For cases filed on or after July 15, 2026, the U.S. Trustee median income figures for Kentucky are $61,652 for one earner, $73,892 for two, $85,212 for three, and $109,443 for four, adding $11,100 per additional person. At or below your household figure, you pass the first part of the means test.
Kentucky's Federal-or-State Choice and the Low $5,000 KRS 427.060 Homestead
Kentucky is a bankruptcy choice state, not an opt-out state. Under KRS 427.170, a debtor domiciled in Kentucky may elect either the federal 11 U.S.C. 522(d) exemption set or the Kentucky exemption set, but must take one system in full and cannot combine them. The load-bearing detail is that Kentucky's own homestead exemption under KRS 427.060 protects only $5,000 of equity in the debtor's residence, which is among the lowest state homesteads in the country. Because of that, Kentucky homeowners with meaningful equity frequently elect the federal 522(d) set, whose homestead is larger, while filers with little or no home equity often prefer the Kentucky set for other protections. The Kentucky set also exempts $2,500 in a motor vehicle under KRS 427.010(1), $3,000 in household furnishings under KRS 427.010, and a $1,000 wildcard in any property under KRS 427.160. Kentuckians file in one of two federal bankruptcy courts: the U.S. Bankruptcy Court for the Eastern District of Kentucky or the Western District of Kentucky, based on where they have lived for most of the prior 180 days.
Relevant Laws
Kentucky Homestead Exemption (KRS 427.060)
Sets the Kentucky homestead exemption at $5,000 of equity in the debtor's residence, one of the lowest state homesteads in the nation. Because of this low cap, many Kentucky homeowners with equity elect the federal 522(d) set instead to keep their house in Chapter 7.
Kentucky Federal Exemption Choice (KRS 427.170)
The statute that lets a Kentucky bankruptcy debtor elect the federal 11 U.S.C. 522(d) exemptions instead of the Kentucky set. This makes Kentucky a choice state rather than an opt-out state, though a debtor must take one set in full and cannot combine them.
Kentucky Personal Property and Wildcard Exemptions (KRS 427.010, 427.160)
KRS 427.010 exempts $2,500 in a motor vehicle, $3,000 in household furnishings, tools of trade, and disposable earnings to the federal garnishment limit. KRS 427.160 adds a $1,000 wildcard that a debtor may apply to any property.
Federal Bankruptcy Code Exemptions and Means Test (11 U.S.C. 522, 707)
The federal law behind Chapter 7. Section 522(b)(2) lets a state opt out of the federal 522(d) exemptions, which Kentucky has not done, and section 707(b) sets the means test measured against state median income.
Regional Variances
Kentucky Chapter 7 Exemption Table
Homestead
Kentucky set (KRS 427.060): $5,000 of equity in the debtor's residence, among the lowest state homesteads in the country. Federal alternative (11 U.S.C. 522(d)(1)): a larger homestead, which is why many Kentucky homeowners with equity elect the federal set. You use one set, not both.
Motor vehicle
Kentucky set (KRS 427.010(1)): $2,500 of equity in a motor vehicle. Federal alternative (11 U.S.C. 522(d)(2)): a separate federal vehicle exemption. Equity above the applicable figure may be reachable by the trustee.
Wildcard
Kentucky set (KRS 427.160): $1,000 in any property of the debtor's choice. Federal alternative (11 U.S.C. 522(d)(5)): a federal wildcard plus any unused federal homestead. You may claim the wildcard from only the one set you elect.
Personal property
Kentucky set (KRS 427.010): $3,000 in household furnishings, jewelry, and personal effects, plus tools of trade and professional equipment within statutory limits. If you elect the federal set, 11 U.S.C. 522(d)(3) and (d)(6) cover household goods and tools of the trade separately.
Wages
Kentucky set (KRS 427.010): disposable earnings are protected to the federal garnishment limit, generally the amount above 30 times the federal minimum wage or 75 percent of weekly disposable earnings, whichever is greater. This wage protection follows earnings that have not yet been paid out.
Retirement and tools
Kentucky set (KRS 427.150): pensions and retirement plans are exempt, and KRS 427.010 exempts tools of trade within statutory limits. ERISA-qualified plans are separately excluded from the bankruptcy estate under federal law, so most 401(k) and pension savings are protected under either exemption set.
Suggested Compliance Checklist
Confirm the current Kentucky means-test median income
Before you file days after startingCheck your household size against the U.S. Trustee Kentucky median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $61,652 for one, $73,892 for two, $85,212 for three, and $109,443 for four, adding $11,100 per additional person.
Complete the pre-filing credit counseling course
Within 180 days before filing days after startingTake an approved credit counseling course from a provider authorized for your Kentucky district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed.
Choose the Kentucky or federal exemption set and value your assets
Before preparing your schedules days after startingDecide between the Kentucky exemptions and the federal 11 U.S.C. 522(d) set that KRS 427.170 permits. Because the Kentucky homestead under KRS 427.060 is only $5,000, homeowners with equity often prefer the federal set. Value your home, vehicle, and personal property so you can match assets to the better set.
Prepare and file your petition and schedules
Filing day days after startingFile your petition, schedules, and exemption claims in the correct court: the U.S. Bankruptcy Court for the Eastern or Western District of Kentucky, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment.
Attend the 341 meeting and finish the debtor education course
Before discharge days after startingAttend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help you weigh the exemption sets and handle contested exemptions.
| Task | Description | Document | Days after starting |
|---|---|---|---|
| Confirm the current Kentucky means-test median income | Check your household size against the U.S. Trustee Kentucky median income figures in effect on your filing date, since these update periodically. For cases filed on or after July 15, 2026 the figures are $61,652 for one, $73,892 for two, $85,212 for three, and $109,443 for four, adding $11,100 per additional person. | - | Before you file |
| Complete the pre-filing credit counseling course | Take an approved credit counseling course from a provider authorized for your Kentucky district and keep the certificate. You must file it with your petition. Skipping this can get your case dismissed before your debts are addressed. | - | Within 180 days before filing |
| Choose the Kentucky or federal exemption set and value your assets | Decide between the Kentucky exemptions and the federal 11 U.S.C. 522(d) set that KRS 427.170 permits. Because the Kentucky homestead under KRS 427.060 is only $5,000, homeowners with equity often prefer the federal set. Value your home, vehicle, and personal property so you can match assets to the better set. | - | Before preparing your schedules |
| Prepare and file your petition and schedules | File your petition, schedules, and exemption claims in the correct court: the U.S. Bankruptcy Court for the Eastern or Western District of Kentucky, based on where you have lived for most of the prior 180 days. Filing triggers the automatic stay that pauses collection and garnishment. | - | Filing day |
| Attend the 341 meeting and finish the debtor education course | Attend the 341 meeting of creditors and answer the trustee's questions under oath, then complete the required post-filing financial management course and file the certificate. Both are required before the court will grant your discharge. An attorney can help you weigh the exemption sets and handle contested exemptions. | - | Before discharge |
Frequently Asked Questions
You file in the federal bankruptcy court for your area: the U.S. Bankruptcy Court for the Eastern District of Kentucky or the Western District of Kentucky. The Eastern District covers Lexington, Covington, and eastern counties; the Western District covers Louisville, Bowling Green, and western counties. You file where you have lived for most of the prior 180 days.
The Kentucky homestead exemption under KRS 427.060 protects only $5,000 of equity in your residence, one of the lowest in the country. If your home equity exceeds $5,000, the federal 11 U.S.C. 522(d) set that Kentucky allows under KRS 427.170 provides a larger homestead, which is why many Kentucky homeowners elect the federal exemptions.
If you use the Kentucky exemption set, KRS 427.160 provides a $1,000 wildcard that you may apply to any property of your choice. It can protect cash, a bank balance, or equity that exceeds another Kentucky exemption. If you instead elect the federal 522(d) set, a separate federal wildcard applies; you cannot use both.
No. Chapter 7 discharges most unsecured debt like credit cards and medical bills, but it does not erase most student loans, recent income taxes, child support, or spousal support, and it will not discharge debts from fraud. Secured debts like a car loan remain unless you surrender the collateral or reaffirm the loan.
Largely yes. Under KRS 427.010, disposable earnings are protected up to the federal garnishment limit, and retirement plans and pensions are exempt under KRS 427.150. ERISA-qualified retirement plans are also excluded from the bankruptcy estate under federal law, so most 401(k) and pension savings stay with you regardless of which exemption set you choose.
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