Kentucky law permits garnishment, which is the process of recovering an unpaid debt by taking a portion of your earnings. Garnishment is typically associated with wages earned by your employer or earnings obtained through self-employment. Creditors may also seek garnishment from other types of income; however, Kentucky law provides several exemptions from garnishment of non-wage income.
Insurance Proceeds
In Kentucky, creditors cannot garnish income derived from several types of insurance payments. If you are a married woman, any life insurance payments you receive as a beneficiary are protected from garnishment. Proceeds from group life insurance, disability and health insurance policies are also exempt from garnishment. Also, a creditor cannot take proceeds from any insurance policy that prohibits the use of payments to satisfy debt owed to a creditor.
Public Assistance
Workers' compensation benefits are not subject to garnishment under Kentucky law except to satisfy child support debts. Other types of assistance are also protected from garnishment in Kentucky, such as unemployment benefits; compensation paid to crime victims; public assistance for the elderly, blind or disabled; and assistance paid to families with dependent children.
Pensions
Kentucky provides garnishment exemptions for government pensions, such as those paid to state workers, except for cases involving unpaid child support. Pensions paid to municipal employees such as teachers, firefighters and law enforcement officers are also protected from garnishment. However, Kentucky law does not exempt other types of retirement benefits, such as 401k or IRA distributions.
Child and Spousal Support
Child support and alimony income are protected on a limited basis in Kentucky. The exemption is limited to the amount you need for support as determined by the court authorizing the garnishment.
Considerations
Although Kentucky provides several exemptions to protect you from non-wage garnishment, it does not provide protection against garnishment of your bank account funds. Bank garnishment is the primary type of non-wage garnishment executed by creditors in Kentucky. The creditor sends an order to your bank to freeze your account and turn over the funds in the account to pay against your judgment debt. Unlike other states, which provide monetary exemptions for bank account balances, Kentucky allows creditors to take every penny in your bank account.
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