How to Qualify for Chapter 7 in Kentucky: Means Test and Income Limits

To qualify for Chapter 7 in Kentucky, your household income generally has to fall below the state’s median for your family size, or you have to pass a second-stage calculation showing you don’t have enough disposable income to repay creditors. For cases filed between November 1, 2025, and March 31, 2026, a single Kentucky filer earning less than $60,071 a year clears the income threshold without further analysis.¹ Beyond income, you’ll need to meet residency rules, finish a credit counseling course before you file, and clear any waiting period from a prior bankruptcy discharge.

Kentucky’s Median Income Thresholds

The means test is the primary qualification hurdle, and it applies when your debts are mostly consumer debts rather than business obligations.² It takes your average monthly income over the past six months, annualizes it, and compares the result to Kentucky’s median for a household your size. Under the median, you qualify. Over it, you move on to a second calculation.

For cases filed between November 1, 2025, and March 31, 2026, Kentucky’s annual median income figures are:

One person: $60,071
Two people: $71,998
Three people: $83,027
Four people: $106,637
Each additional person beyond four: add $11,100

These numbers update roughly every six months, so verify the figure in effect on your actual filing date through the U.S. Trustee Program.¹

How Your Income Is Counted

“Current monthly income” for the means test is defined narrowly. It’s the average of all income you received during the six full calendar months before you file, taxable or not.³ File in February 2026 and the lookback runs from August 2025 through January 2026.

What counts is broad: wages, self-employment earnings, unemployment compensation, rental income, interest, dividends, and regular contributions from anyone who helps pay household expenses. A non-filing spouse’s contributions to household bills count too.

A few sources are excluded. Social Security benefits are the biggest one. Certain veterans’ disability payments, combat-related injury compensation, and payments to victims of war crimes or terrorism are also left out.³

Timing can change the result. A bonus, a seasonal spike, or a one-time payment inside the six-month window inflates your average even if your earnings have since dropped. Waiting a month or two so the high-income month falls out of the lookback is sometimes what pushes a filer under the median.

What Happens If Your Income Is Over the Median

Being over the median doesn’t automatically disqualify you. It just moves you into the second phase of the means test, where you subtract allowed expenses from your monthly income to see what disposable income remains.

The allowed deductions come from two places. The first is the IRS National and Local Standards, which set fixed allowances for food, clothing, housing, utilities, transportation, and out-of-pocket healthcare based on household size and county.⁴ You don’t have to prove you actually spend the full standard on food or clothing. For housing and transportation, you generally get the lesser of the local standard or what you actually pay.

The second bucket covers specific actual expenses: payments on secured debts like mortgages and car loans, child care, health insurance premiums, mandatory payroll deductions, and income taxes. For secured debts, the official means test form adds up all contractually due payments over the 60 months after filing and divides by 60 to get a monthly average.⁵

Your remaining disposable income gets multiplied by 60 to project a five-year repayment figure. If that total is less than $10,275, no presumption of abuse arises and you qualify. If it’s $17,150 or more, the court presumes abuse and you’ll likely need to file Chapter 13 instead. Between those two numbers, the result gets compared to 25% of your nonpriority unsecured debts.⁶ The math in that middle zone depends on your specific debt load, and this is where a Kentucky bankruptcy attorney earns the fee.

Even filers who pass the mechanical test can face a dismissal motion under the “totality of the circumstances” provision, which targets filers who technically qualify but clearly have the resources to repay a meaningful share of their debts.² If the mechanical test triggers a presumption of abuse, you can try to rebut it by documenting “special circumstances” such as a serious medical condition or a call to active military duty, though the bar is high.

Residency, Counseling, and Prior-Discharge Rules

Filing in Kentucky

You can file in Kentucky if your home, residence, main business, or primary assets have been in the state for the 180 days before filing, or for a longer portion of that 180-day window than they were anywhere else.⁷ Recent movers should count carefully. Filing in the wrong district delays the case.

Credit Counseling Before You File

You must complete a credit counseling briefing from an approved nonprofit agency within the 180 days before you file your petition.⁸ Skip it and the court will dismiss your case. In rare emergencies you can request a 30-day temporary waiver by explaining the efforts you made to get the counseling, why you couldn’t complete it in time, and what forced you to file immediately. You still have to finish the course within those 30 days.

Debtor Education After You File

A second course on personal financial management is required after filing and before the court will grant your discharge.⁹ It has to come from an approved provider and is separate from the pre-filing counseling.¹⁰ Forgetting this course is one of the most common reasons a filer never receives a discharge.

Waiting Periods After a Prior Discharge

If you’ve been through bankruptcy before, there’s a wait. After a Chapter 7 discharge, you must wait eight years from the date the prior case was filed before filing another Chapter 7. After a Chapter 13 discharge, the wait is six years from the prior filing date, with an exception if you paid at least 70% of unsecured claims under that earlier plan.¹¹

Debts Chapter 7 Won’t Erase

Chapter 7 wipes out most unsecured debt (credit cards, medical bills, personal loans), but several categories survive. If most of your debt falls into those categories, filing may not give you much relief.

Child support and alimony: all domestic support obligations survive bankruptcy entirely.¹²
Most tax debts, including recent income taxes, taxes where no return was filed, and taxes involving fraud.
Student loans, dischargeable only if you prove “undue hardship,” a standard that remains difficult to meet despite recent softening in some courts.¹²
Debts obtained through fraud or a materially false written financial statement.
Consumer debts over $900 to a single creditor for luxury goods within 90 days of filing, which are presumed non-dischargeable, as are cash advances over $1,250 within 70 days of filing.¹²

A quick tally of dischargeable versus non-dischargeable balances is a practical first step before deciding whether Chapter 7 is worth filing.

Property You Get to Keep

Chapter 7 is a liquidation bankruptcy, so a court-appointed trustee can sell non-exempt property to pay creditors. In practice, most consumer cases are “no-asset” cases: the filer keeps everything because exemptions cover it all. Which exemptions apply to you is what determines whether filing puts any property at risk.

Kentucky lets you choose between the state exemption system and the federal bankruptcy exemptions. You can’t mix the two. Pick one and apply it to everything you own. For many Kentucky filers, the federal exemptions protect more property because the federal homestead exemption is substantially more generous than Kentucky’s.

Key Kentucky state exemptions include:

Homestead: up to $5,000 in equity in your primary residence (KRS 427.060).
Motor vehicle: up to $4,000 in one vehicle (KRS 427.010).
Farming tools and livestock: up to $3,000 (KRS 427.010).¹³
Personal injury awards: up to $7,500, not including pain and suffering or compensation for actual financial loss.¹⁴
Health savings accounts: fully exempt.¹³
Retirement accounts: generally exempt, but contributions made within 120 days before filing are not protected.¹⁴

If you choose the federal system, the federal wildcard exemption protects $1,675 in any property of your choosing, plus up to $15,800 of any unused portion of the homestead exemption, for cases filed between April 1, 2025, and March 31, 2028.¹⁵ For a renter with no home equity, the wildcard alone can shield more than $17,000 in personal property. This is a strategic choice worth running past a Kentucky bankruptcy attorney before filing.

What It Costs to File

The federal court filing fee for a Chapter 7 case is $338. If paying all at once isn’t possible, you can apply to pay in installments. Filers whose household income is under 150% of the federal poverty guidelines may qualify for a full fee waiver. Attorney fees for a straightforward Kentucky Chapter 7 case generally run around $1,000 to $2,000, with more complex cases costing more. You can file without an attorney (pro se), but the means test paperwork and the choice between state and federal exemptions are places where mistakes carry real consequences.

1
U.S. Trustee Program. Census Bureau Median Family Income By Family Size (November 2025)
2
Office of the Law Revision Counsel. 11 U.S. Code 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
3
Office of the Law Revision Counsel. 11 USC 101 – Definitions
4
Internal Revenue Service. Collection Financial Standards
5
United States Courts. Official Form 122A-2 Chapter 7 Means Test Calculation
6
Office of the Law Revision Counsel. 11 USC 707 – Dismissal of a Case or Conversion to a Case Under Chapter 11 or 13
7
Office of the Law Revision Counsel. 28 U.S. Code 1408 – Venue of Cases Under Title 11
8
United States Bankruptcy Court. Notice to All Debtors About Prepetition Credit Counseling Requirement
9
Office of the Law Revision Counsel. 11 U.S. Code 727 – Discharge
10
United States Courts. Credit Counseling and Debtor Education Courses
11
United States Bankruptcy Court. Prior Bankruptcy – How Soon Can I Get Another Discharge
12
Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
13
Kentucky Legislative Research Commission. KRS 427.010 – Exempt Personal Property, Health Savings Funds, and Disposable Earnings of Individual Debtors
14
Kentucky Legislative Research Commission. KRS 427.150 – Property Totally or Partially Exempt
15
Office of the Law Revision Counsel. 11 U.S. Code 522 – Exemptions