Non-wage Garnishment Exemption of Property Damage Payment in Kentucky
If you are a Kentucky resident who has caused property damage that results in a financial loss to another person or business, you are typically liable for paying for the damage you caused. The person or business may file a lawsuit against you and obtain a judgment for the damage. A judgment in Kentucky allows the judgment holder to pursue aggressive collection action against you, including wage and non-wage garnishment. However, Kentucky law permits several exemptions to protect you from non-wage garnishment.
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Alimony and Child Support
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If you receive alimony from a former spouse or child support payments from your child's other payment, Kentucky provides a partial exemption for these types of income. The court will determine the portion of alimony or child support necessary to support you — a judgment holder cannot garnish this portion of your payments received. However, amounts you receive for child support or alimony above what the court determines necessary for your support may be subject to garnishment.
Pensions
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Kentucky law protects most pension benefits from garnishment. Pensions from state employment are not available to the judgment holder for garnishment. If you receive a pension as a retired firefighter, teacher, police officer or other municipal employee, this income is also protected. However, although Kentucky typically protects pensions from garnishment, it does not provide the same exemption for other types of retirement income, such as distributions from 401k or IRA plans.
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Disability and Public Assistance
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A judgment holder cannot garnish Social Security disability payments to satisfy a judgment for property damage. Kentucky law also provides exemptions for several types of public assistance, such as unemployment insurance benefits, compensation for crime victims, aid to families with dependent children and worker's compensation payments. Public assistance to the elderly and blind are also exempt from garnishment.
Insurance Proceeds
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If you receive proceeds under an insurance contract that states proceeds cannot be used to pay creditors, these amounts are exempt from garnishment under Kentucky law. Proceeds from health, disability and group life insurance policies are protected from garnishment. Also, a judgment holder cannot garnish the proceeds of any life insurance policy to which you are a beneficiary if you are a married woman.
Bank Garnishments
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Kentucky law permits the garnishment of funds in your bank account to satisfy a judgment debt. However, if the funds in your bank account come from an exempt non-wage source, such as Social Security disability or worker's compensation, you may file an exemption with the court to prevent the bank from tuning over these funds to the court for payment against your judgment debt.
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