What Are the Kansas Bankruptcy Exemptions?

What are the Kansas bankruptcy exemptions and why are they important in a Chapter 7 bankruptcy? 

You may have heard Chapter 7 bankruptcy referred to as a liquidation bankruptcy. This is because the basic idea is that you turn over all of your property into something called the bankruptcy estate, to be sold by a bankruptcy trustee and the proceeds are then distributed equally among your unsecured creditors. Now chances are you’d prefer to avoid turning over all of your property to deal with your financial difficulties. The good news here is that the intention behind bankruptcy laws allows you some protection so that you truly can emerge from bankruptcy with a fresh start. The specific laws that can protect your personal property, up to varying dollar amounts depending on the property, are called exemption. Exemption laws exist so that you can maintain a basic standard of living even if you have to file bankruptcy. Using the exemptions available will allow you to keep some or even all of your property during your Chapter 7.  Every state has its own set of bankruptcy exemptions and there is also a set of federal exemptions available in the U.S. Bankruptcy Code. One of the important roles of the bankruptcy court is to determine whether the exemptions taken in your case are proper. 

Does Kansas allow the use of federal bankruptcy exemptions?

Kansas does not allow filers to choose between using state exemptions and the federal exemptions. If you have lived in Kansas for more than two years you must use Kansas state exemptions in your bankruptcy case. If you do not meet the two-year (730-day) residency requirement, then you need to use the 180-day rule to determine which state’s rules apply. With the 180-day rule, you should look to where you lived for the majority of the 180 days before two years prior to your filing date. In other words,  where you lived two and a half years ago. Once you have surpassed that two-year mark, however, you’re only able to use Kansas state exemptions. Married couples filing a joint bankruptcy together in Kansas can double most of the exemption amounts, so long as both spouses have an ownership interest in the property. Additionally, filers in Kansas can also use the protections offered by the federal nonbankruptcy exemptions along with their state exemptions.

Kansas Bankruptcy Exemptions

Real Property - the Kansas Homestead Exemption

If you own your home you’ll want to pay special attention to the Kansas homestead exemption. The homestead exemption protects equity in your home or principal residence or homestead. In Kansas, the homestead exemption is extremely generous, as you can protect the entire value of the home or mobile home on real estate up to one acre (in a town or a city) or up to 160 acres if it’s on farmland.  Kan. Stat. Ann. § 60-2301.

Personal Property Exemptions

Personal property bankruptcy exemptions might be different in every state. Some states might separate items specifically like Kansas does with jewelry, whereas other states may combine similar items, like household goods. Filers in Kansas can take the below exemptions up to the stated amounts, doubling it for married couples filing jointly. 

Motor vehicle: In Kansas, you can protect up to $20,000 of equity in a car that you use to get to and from work. If the car has been modified or is otherwise equipped to assist with a disability you can protect the full value of the vehicle without any limit. Kan. Stat. Ann. § 60-2304(c)

Furnishing, equipment, and supplies: You can protect any furnishings, food, fuel, and clothing that are already in your possession and are reasonably necessary to last one year. Kan. Stat. Ann. § 60-2304(a.) 

Keep in mind that the bankruptcy court will have the final word on whether something is reasonably necessary to last one year, but if you’re looking to keep a basic wardrobe and modest furniture everything should be covered. If you’re trying to justify keeping luxury items like designer clothing or very high-end furniture chances are the bankruptcy trustee will be able to liquidate these assets for the benefit of your creditors. It’s also important to note the caveat that mentions the items are already in your possession. It’s never a good idea to make big purchases right before filing bankruptcy to try to protect additional assets.

Jewelry: A Kansas filer can protect up to $1,000 worth of jewelry and articles of adornment. 

The below personal property items listed are protected in full without limit.

• Burial plot, crypt or cemetery lot. Kan. Stat. Ann. § 60-2304(d.) 

• Funeral plan prepayments. Kan. Stat. Ann. §§ 16-310; 60-2313(a)(10)

Miscellaneous Other Personal Property

Tools of trade: You can also protect tools of the trade, including books, furniture, tools, supplies, breeding stock, seed grain or growing plants stock used in your profession, up to $7,500. Kan. Stat. Ann. § 60-2304. 

Liquor or club license: you can protect a liquor or club license in full. Kan. Stat. Ann. §§ 41-326; 41-2629.

A business partnership is protected under Kan. Stat. Ann. § 56-325

Money Benefits

Beyond real and personal property there is also protection available under the Kansas bankruptcy exemptions for particular forms of money or benefits. For wages, you can protect up to the following amount: 75% of disposable earnings or 30 times the federal minimum wage, whichever is greater. Kan. Stat. Ann. § 60-2310.

Maintenance and Child support is exempt to the extent reasonably necessary for the support of the debtor and any dependent of the debtor. Kan. Stat. Ann. § 60-2312.

Additionally, the following insurance benefits or proceeds are protected with no limit:

• Life insurance proceeds if the debtor files bankruptcy more than one year after the insurance policy goes into effect. Kan. Stat. Ann. §§ 40-414; 60-2313(a)(7); 40-258.

• Fraternal Benefit Society benefits. Kan. Stat. Ann. §§ 40-711; 40-748; 60-2313(a)(8).

Other Kansas Exemptions

Beyond the above exemptions discussed there are also additional benefits available under Kansas law to protect your property from creditors. These protections exist both within bankruptcy and outside of one and include the federal nonbankruptcy exemptions. This includes the following public benefits with an unlimited value.

Public Benefits

• Earned income tax credit. Kan. Stat. Ann. § 60-2315.

• Public assistance. Kan. Stat. Ann. §§ 39-717; 60-2313(a)(2).

• Crime victims' compensation. Kan. Stat. Ann. §§ 60-2313(a)(7); 74-7313(d)

• Disability, illness, or unemployment compensation. Kan. Stat. Ann. §§ 60-2313(a)(1),(4); 60-2313(b); 44-718

• General assistance. Kan. Stat. Ann. §§ 39-717(c); 60-2313(b)

• Social Security. Kan. Stat. Ann. § 60-2312(b)

• Veterans' benefits. Kan. Stat. Ann. §§ 60-2312(b); 60-2313(2)

• Workers' compensation. Kan. Stat. Ann. §§ 60-2313(a)(3); 44-514

Pensions 

• ERISA-qualified benefits, IRAs and Roth IRAs and federal government pension needed for support & paid within three months before filing bankruptcy. Kan. Stat. Ann. § 60-2308.

• Payment under a stock bonus, pension, profit-sharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service needed for support, except for support obligations. Kan. Stat. Ann. §§ 60-2308, 2312, 2313(a)(1).

• Retirement accounts and benefits for police officers and firefighters; judges; state school employees; court reporters; public employees and elected officials; and state highway patrol. Kan. Stat. Ann. §§ 12-111a, 5005(e); 13-14, 102, 14a10; 14-10a10; 20-2618; 72-1786, 5526; 74-49, 4923, 4978, 4978g, 4989.

Filing Chapter 7 Bankruptcy? 

If you’re considering a Chapter 7 bankruptcy keep in mind that most bankruptcy attorneys offer free consultations. It can be helpful to speak with a bankruptcy lawyer to determine if Chapter 7 is the best fit for you or if you might be better off with a Chapter 13 bankruptcy based on which property you want to keep. Either way, you’re not locked into hiring the bankruptcy attorney you meet after you receive legal advice. If you don’t feel like it’s a good fit for you or you can’t afford the cost, it is always an option to move forward on your own. Your best chance of a successful bankruptcy on your own is when you’re looking at a straightforward Chapter 7 bankruptcy, although even then you still need to keep track of a lot of details. You can check out Upsolve’s screening tool to see if you’re a good fit to use our free web app to prepare your bankruptcy forms.