by Adam Mack
NOTE: This post contains a discussion of an unsettled area of law and was accurate as of the time of posting. Please consult a Kansas bankruptcy attorney for the most up-to-date information.
The following are some rarely-used exemptions that are available to some Kansas bankruptcy filers.
National Guard Exemption
Found in K.S.A. §48-245, this exemption provides that “the uniforms, arms and equipment required by law or regulations” for service in the national guard are exempt property under a Kansas bankruptcy proceeding.
Liquor License Exemption
If you own a liquor license, it is technically not considered property and is therefore exempt according to K.S.A. §41-326 and §41-2629.
Found in K.S.A. §36-202, this exemption provides that any innkeeper or landlord has the right to retain certain property until he or she is paid in full, and that property is exempt in a bankruptcy. This most often applies when a person renting an apartment has paid a security deposit and then files bankruptcy. Though that security deposit technically belongs to the person filing bankruptcy, the trustee cannot seize any portion of it until the landlord has been paid in full per the terms of the contract (which usually happens when the person filing bankruptcy moves).
This exemption is an unsettled area of law, so please consult a Kansas bankruptcy attorney for the most up-to-date information regarding it. The statute that has caused the confusion is K.S.A. §60-2310, which states that a garnishment cannot seize more than 25% of a person’s take-home pay.
Generally speaking, if a creditor has a right or is legally barred from taking a certain action, then the bankruptcy trustee has that same right or is similarly barred. It’s common practice, as part of the bankruptcy process, for the trustee to claim as part of the bankruptcy estate any balance that is a person’s checking or other financial accounts at the time that the petition is filed. Some people have made the argument that this practice results in a de facto garnishment of more than 25% of take-home pay, since the amount in the bank could represent as much as 100% of a person’s net income for that paycheck. One Kansas bankruptcy court found this argument to be persuasive and ruled that 75% of a person’s take-home wages are exempt, but two others came to the opposite conclusion, and so there is precedent both ways. A good Kansas bankruptcy attorney will help you develop strategies for retaining as much of your earnings as possible, so I strongly recommend consulting one if you are considering filing.
These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!