Social Security and Child Support: Credit vs. Reimbursement

The Kentucky Court of Appeals opinion in N.J.S. v. C.D.G., No. 2013-CA-001110-MR, March 21, 2014, involved the non-custodial parent's request for a child support credit under KRS 403.211(15) and reimbursement for past child support payment because of the child's award of Social Security dependent retirement benefits with a back payment of some $23,000. The Court of Appeals strictly construed the language of KRS 403.211(15), which speaks only of "money received by a child as a result of parental disability," and did not extend that provision to money received by the child as a result of parental retirement.

Be that as it may, the most interesting part the case was not addressed by the Court of Appeals. Granting a child support credit because of a child's receipt of Social Security benefits, whether by reason of retirement or disability, is one thing, but granting a reimbursement from the child's Social Security benefits is something else indeed. The idea runs face-first into the long standing federal exemption for Social Security benefits and the fiduciary duties imposed by federal regulations for alternate payees appointed to receive a minor child's benefits. See: Brief: Federal Exemptions for Veteran’s and Social Security Benefit.

Debtor's lament - accounts frozen by garnishment

When an ordinary creditor garnishes a debtor's bank account, the bank responds by freezing the debtor's access to the funds until the garnishment process is complete. I suppose the bank will continue to accept deposits into the account, but withdrawals and automatic bill payments stop. The debtor's outstanding checks begin to bounce as they are presented to the bank for payment. This happens even if all of the debtor's cash in a deposit account are exempt from execution by law and are immune from seizure. Twentieth Century garnishment procedures require the debtor to affirmatively act to claim and prove the exemption and persuade a judge to release the garnishment, restraint, freeze or whatever they call it in your local jurisdiction. The process can easily take 30 days or more. From a debtor's point of view, it's like adding injury to insult. It is an very iffy proposition that every debtor has the wits and resources to take the steps necessary to protect his or her legal rights.

In the last few years the U.S. Treasury Department has developed regulations to mitigate this debtor problem, at least with respect to federal benefit payments that are immune from seizure by ordinary creditors.  Veteran benefit payments and Social Security benefits are prime examples. These federal benefits, among others, are practically impervious to the claims of ordinary creditors. The U.S. Congress and the U.S. Supreme Court have said so, repeatedly. But, prior to the age of digital banking, who knew where money came from? 

With most federal benefit payments being made by direct deposit these days, the source of the deposits are digitally encoded and the financial institution 'knows' if funds in an account are exempt. The recently finalized Treasury regulations ( 31 C. F. R. 212) require banks and other financial institutions to make two months of exempt payments available to the debtor during the garnishment process while freezing any surplus funds.

This does not change the scope of the debtor's exemption. If the debtor has more than two months worth of exempt benefit payment on deposit, the debtor must still follow ordinary garnishment procedures to claim the full exemption. In the meantime, the debtor is not frozen out of exempt cash needed for day-to-day living expenses.

Will this new system work to perfection and without error? Probably not.

But, a word of caution to debtors. It is best to leave exempt federal benefit direct deposits in the same account into which they were originally deposited. If any direct deposited benefit funds are transferred by the debtor to a different account, as for example from a checking account to a savings account, the bank's ability to easily identify the exempt funds may be forfeited. Again, this does not change the availability of the exemption, but it may result in more of the debtor's funds being frozen as application is made to the court and the debtor proves the exemption.

Garnishment Exemptions Available to Kentucky Residents

Certain property is exempt from seizure by general creditors. There are several categories of exemptions available to Kentucky debtors. Different exemptions apply to non-bankruptcy debtors and debtors in the process of seeking bankruptcy protection. Certain exemptions are provided by Kentucky law and others are provided by federal law. Different exemptions apply to tax debts and non-tax debts. Most Kentucky non-bankruptcy non-tax debt exemptions otherwise available do not provide protection for claims of child support obligations.  Many federal exemptions do not apply to debts to the federal government.

The following is a rough outline of available exemptions under Kentucky and federal law. As with all things legal, the devil is in the details and the opportunity for serious complications is nearly endless.

Kentucky Non-Bankruptcy Exemptions

This is a fairly comprehensive list of Kentucky statutory non-bankruptcy exemptions. A few, like exemptions for state bonuses paid to World War I veterans, have been omitted. Additional specific federal exemptions are listed below.

• Alimony support or separate maintenance
• An award under a crime victim's reparation law;
• Payment received for wrongful death of an individual the debtor was a dependent to the extent reasonably necessary for support of debtor and debtor's dependents;
• Up to $7,500 paid for personal injury, with qualifications;
• Compensation for loss of future earnings to the extent reasonably necessary for support and maintenance;
• Payments received from an exempt pension;
• Individual retirement accounts, and other types of retirement plans, with some exceptions;
• Household furnishings, jewelry and personal clothing not to exceed $3,000 in value;
• Tools, equipment and livestock of a person engaged in farming, not exceeding $3,000;
• One motor vehicle and its necessary accessories, not exceeding in the aggregate $2,500;
• Professionally prescribed health aids for the debtor, or a dependent of the debtor;
• The tools, not exceeding $300 in value, of any individual debtor necessary in his trade;
• The professional library and office equipment of a minister, attorney, physician, surgeon, chiropractor, veterinarian, or dentist, necessary in the practice of such profession, and not exceeding $1,000 in value;
• Homestead or burial plot not to exceed $5,000 in value, total;
• Certain life insurance benefits;
• Certain police or firefighter’s pension fund benefits;
• Worker’s compensation benefits;
• Certain retirement annuity benefits for public school and university teachers and employees;
• Participation in Kentucky Educational Savings Plan Trust;
• Wages of work-release prisoners, with exceptions;

KRS 427.045 - Exemptions not applicable to claims for child support, provides:

“The exemptions provided in KRS 342.180 and KRS 427.010 to 427.040 shall not apply for executions, attachments, or garnishments, issued for the collection of maintenance of minor children.”

Federal Non-Bankruptcy Exemptions

Most of the following exemptions are not available as against child support or tax collections. Many are nevertheless subject to administrative offset for the collection of non-tax debts to the United States.

• Social Security Benefits - Old Age, Survivors and Disability Benefits
• Supplemental Security Income (SSI) Benefits
• Veterans’ Benefits
• Civil Service and Federal Retirement and Disability Benefits
• CIA Retirement benefits
• Crop insurance
• Military Annuities and Survivors’ Benefits
• Student Assistance - Federal Work Study program benefits
• Railroad Retirement Benefits
• Merchant Seamen Wages
• Longshoremen’s and Harbor Workers’ Death and Disability Benefits
• Foreign Service Retirement and Disability Benefits

Exempt Funds after Deposit into Bank Account

Question: Can a general creditor successfully garnish exempt payments once the money has been deposited into a debtor’s bank account?

Answer: Maybe yes and maybe no. It depends.

In Matthews v. Lewis, Ky., 617 S.W.2d 43 (1981), the Kentucky Supreme Court answered the question for one type of exempt payment, A bank account containing worker’s compensation payments continue to be exempt from execution, attachment and garnishment. The court wrote:

“We hold that unless they provide clearly to the contrary, Kentucky's exemption statutes, including but not limited to KRS 342.180, extend protection to deposits in bank checking accounts so long as those deposits can be identified as or traced to payments of exempt funds.”

Although the Matthews case should provide debtors considerable encouragement with similar statutory exemptions, each statutory exemption is subject to the proviso the statute may, “clearly provide to the contrary.”

For example, Kentucky’s Transitional Assistance Program (KTAP) provides in KRS 205.220(3):

"Public assistance shall not be assignable and shall be exempt from levy or execution. Furthermore, no assignment, pledge or encumbrance of any right to benefits due or payable under this chapter shall be valid. Public assistance benefits, as long as they are not mingled with other funds of the recipient, shall be exempt from any remedy for the collection of all debts, liens and encumbrances. No waiver of any exemption provided for in this subsection shall be valid.” [emphasis added]

Matthews v. Lewis, did not impose the no-mingling of funds requirement generally. This specific statute added the requirement.

Additionally, there is a potential for complications depending upon the type of account into which the exempt funds are deposited. There is a distinction between money that is immediately available to the debtor for current living expenses and money that has been transformed into an ‘investment.’ There are many different types of accounts offered by banks and financial institutions that are clearly long term investment accounts. The continued exempt status of funds in these accounts would be disqualified. This, as lawyers like to say, is an “interesting question.”

Wage Exemptions Are Not Exemptions

The federal Consumer Credit Protection Act (CCPA) limits the amount of a debtor’s wages that can be garnished. Kentucky has enacted statutory law virtually identical to the CCPA wage garnishment limits in KRS 427.010(2). Although this has been lumped in KRS Chapter 427 with other genuine exemption provisions, for codification purposes, this accident of proximity does not really mean much.

This statutory limit on wage garnishments is not an exemption and it does not protect wages after they have been paid to the employee. If the wages actually paid to an employee are deposited into a bank account, they are subject to a bank garnishment, in Kentucky. See: Brown v. Commonwealth of Kentucky, 40 S.W.3d 873  (Ky. App. 1999)

See also: Notes on Kentucky's exemption laws.

IRS Tax Levy Garnishment Exemptions

IRS tax levy garnishment exemptions are refreshingly simple. 26 U.S.C. § 6334 - Property Exempt From Levy, provides in part,

"(a) Enumeration

"There shall be exempt from levy —
"(1) . . .
"(2) . . .
"(3) . . .
"(4) Unemployment benefits . . .
"(5) . . .
"(6) Certain annuity and pension payments . . . payments under the Railroad Retirement Act, . . . the Railroad Unemployment Insurance Act, special pension payments received by a person . . .[on the military] Medal of Honor roll . . ., and annuities . . . [for retired military].
"(7) Workmen’s compensation Any amount payable to an individual as workmen’s compensation . . .
"(8) Judgments for support of minor children .
"If the taxpayer is required by judgment of a court of competent jurisdiction, entered prior to the date of levy, to contribute to the support of his minor children, so much of his salary, wages, or other income as is necessary to comply with such judgment.
"(9) [See note below]
"(10) Certain service-connected disability payments . . .
"(11) Certain public assistance payments
"Any amount payable to an individual as a recipient of public assistance under—

"(A) [SSI for the aged, blind, and disabled], or
"(B) State . . . public welfare programs for which eligibility is determined by a needs or income test.

("12) Assistance under Job Training Partnership Act . . . . "

Note:  26 U.S.C. § 6334(a)(9) must be read in conjunction with 26 U.S.C. § 6334(d) the amount exempt from an I.R.S. wage garnishment is the sum of one standard deduction plus each allowed personal exemption, with that annualized amount being pro-rated to the applicable wage pay period. Also,  26 U.S.C. § 6334(d)(2)(B) provides that a verified written statement must be submitted to establish the number of personal exemptions. Otherwise, in the absence of such a verified written statement, the exemption "shall be applied as if the taxpayer were a married individual filing a separate return with only 1 personal exemption."

26 U.S.C. §§ 6334(a)(8) & (9) are the only parts of this section that would apply to a debtor's wages. The payments set out as exempt in paragraphs (4), (6), (7), (10), (11) and (12) clearly cannot be garnished by the I.R.S. directly, but the funds may become vulnerable to a bank garnishment once the benefits have been deposited into an account.

Matthews v. Lewis, Ky., 617 S.W.2d 43 (1981) may provide some traction for a debtor arguing the statutory exemption follows the funds, at least to the extent that they can be traced and identified.  In Matthews workers’ compensation benefits deposited into a checking account had been garnisheed. The Kentucky Supreme Court was asked to decide whether a Kentucky exemption statute (KRS 342.180) precluded the garnishment. The Court ruled that statutory language specifically identifying worker's compensation payments as exempt from execution was intended to preclude garnishment. The opinion observed that:

"Our society's contemporary social programs exhibit a philosophy of relief for the distressed, the impoverished, and the victims of personal and financial catastrophes among us. The Workers' Compensation Act is simply one aspect of those social programs. Kentucky's exemption statutes are simply another necessary instrument in the overall scheme of social welfare programs. They are the teeth in the protection given certain deserving victims from their creditors . . . We hold that unless they provide clearly to the contrary, Kentucky's exemption statutes, including but not limited to KRS 342.180, extend protection to deposits in bank checking accounts so long as those deposits can be identified as or traced to payments of exempt funds."

The Complexity of Kentucky Garnishment Procedure In a Nutshell

Kentucky's garnishment procedures, principally contained in KRS §425.501, et seq.,  KRCP Rule 69.02 and various local rules of court, attempt to accommodate a wide variety of factual circumstances, most of which never present in actual practice.

• There are different rules for wage and non-wage garnishments;
• There are different rules for wage garnishments of support payments, taxes, student loans and other types of debt;
• The same rules apply to garnishment of debts owed to the judgment debtor and personal property owned by the judgment debtor currently in the possession of a third party;
• Debts owed to the judgment debtor might or might not be for a specified fixed amount. For example, there are types of bank accounts that are tied to various markets that may fluctuate from day to day;
• Debts owed to the judgment debtor might or might not be due on demand. A third party may owe money to a judgment debtor, but it is not due and payable right now;
• Third parties may have superior claims to to property sought to be garnished;
• A vast array of federal or state non-bankruptcy exemptions may apply to the property potentially subject to garnishment. Some of these exemption require the judgment debtor to affirmatively claim the exemption and some do not;
• A garnishee defendant may be uncooperative and not respond to a garnishment order or may not serve notice of the garnishment order upon the judgment debtor, as required;
• Garnishment orders may be one-shot deals or they may be continuing;
• Multiple garnishments from different judgment creditors may descend at virtually the same time;
• Enforcement of foreign judgments may present unique problems;
• Seeking to garnish against an out-of-state garnishee defendant via Kentucky's long-arm statutes can be fun; 
• With costs, post judgment interest and the costs of the garnishment added in, it may be difficult to know when the judgment creditor's judgment is satisfied and the garnishment lien is released; 
• The garnishment may be barred by the time limit on judgments imposed by KRS 413.090;
• The property sought to be garnished may be jointly owned, and;
• . . . .more that I haven't considered yet.

Time Allowed to Claim a Kentucky Garnishment Exemption

How much time does Kentucky civil procedure allow a judgment debtor to object to a garnishment or to claim an exemption? It is a question without an easy answer.

Typically, it seems, many Kentucky garnishments proceed quite summarily, and without ever landing upon any judge's desk. A judgment creditor files a form AOC-145 (Affidavit for Writ of Non-Wage Garnishment), the court clerk issues a form AOC-150.1 (Order of Non-wage Garnishment), the garnishee defendant is served, the judgment debtor is notified and nothing happens until the garnishee delivers the money to the creditor's attorney. End of story.

I have read that form AOC-150.1 (Order of Non-wage Garnishment) expressly states the judgment debtor has ten days within which to present objections or exemptions, but there is nothing in KRS 425.501(4) or the Kentucky Rules of Civil Procedure, CR 69.02, to give that ten day limit an authoritative foundation. In an unpublished opinion, MGM Collection Agency, Inc. v. Barger , 1999-CA-001848-DG, the Kentucky Court of Appeals stated that there was no time limit for claiming an exemption in a garnishment action. I believe this to be a bit of judicial hyperbolic dicta. There has to be some limit, even if that limit is ambiguous or unspecified.

The decisive factors in MGM Collection Agency, Inc. v. Barger seem to have been that; (1) A non-party joint account owner promptly presented a meritorious objection to the bank garnishment (i.e. it wasn't the judgment debtor's money) before any sum was delivered by the bank to the judgment creditor, and; (2) Although we know when the bank itself was served with the garnishment order, there is nothing in the Appellate Court's opinion showing when the judgment debtor first received notice of the garnishment.

In short, the judgment creditor's whole appeal hinged upon the thinnest technicality.

The fog surrounding this issue is so dense, it is difficult to clearly and succinctly describe its contours. With the written law being so indefinite,  it should be sufficient to assume the timeliness of a judgment debtor's objection to a garnishment or a claim of exemption is a matter within the trial court's discretion, based upon a multiplicity of relevant factors, including any claim of excusable neglect.

But, that's just me talking.

Inventing a Kentucky Wage Garnishment Hardship Exemption

I have found at least one state that provides for a discretionary exemption in a wage garnishment based upon the debtor's claim of economic hardship. I have located nothing in Kentucky law that is expressly similar.

Oklahoma Statutes §31-1.1.provides, in part:

"Earnings from personal services - Exemption from process - Order.

"A. Following the issuance of [a] . . . garnishment . . . the debtor may file with the court an application requesting a hearing to exempt from such process by reason of undue hardship that portion of any earnings from personal services necessary for the maintenance of a family or other dependents supported wholly or partially by the labor of the debtor. A debtor with no family or other dependents may not claim an exemption under this section. . .

"B. In determining the existence of an undue hardship, the court should consider the income and expenses of the family and other dependents, and the standard of living created by the income and expenses. The court should also consider the standard of living in relationship to the minimal subsistence needs of the debtor’s family and other dependents, with comparison to the minimal subsistence standards in the community, in regard to basic shelter, food, clothing, personal necessities and transportation. The court should then determine if the lack of the funds sought to be exempt would be an undue hardship by creating less than a minimal level of subsistence. If deprivation of these earnings would create an undue hardship on the debtor and the family or other dependents the debtor supports, the court may:

"1. Order all or a portion of the personal earnings exempt . . . . 

[emphasis added]

Kentucky's exemption statutes do embody the concept of reasonably necessary support as being an essential factor for claiming particular types of exemptions. For example:

KRS § 427.150(1);

"To the extent reasonably necessary for the support of an individual and his dependents . . .  rights to receive money or property for alimony, support, or separate maintenance." [emphasis added]  

KRS § 427.150(2)(b);

"A payment on account of the wrongful death . . .  to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;"  [emphasis added]

KRS § 427.150(2)(d);

"A payment in compensation of loss of future earnings . . .  to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;"  [emphasis added]  

The Kentucky statutory limit on wage garnishment in KRS § 427.010(2), which is not a true "exemption" according to the Kentucky Court of Appeals in Brown v. Commonwealth, 40 S.W.3d 873 (1999), provides, in relevant part:

". . . . the maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed the lesser of . . . . " [emphasis added]

The language of KRS § 427.010(2) suggests the determination of an individual debtor's wages subject to garnishment is not a mechanical calculation, and there is a space from within which the debtor can reasonably argue the financial circumstances of his or her specific case justify the court to limit a wage garnishment to less than the maximum allowed by statute, down to and including zero, within the court's sound exercise of discretion.

Claiming a Kentucky Exemption: Bank Accounts

Question: Why do creditors garnish bank accounts?

Answer: Sutton's Law. Because that's where the money is.

An assortment of State and Federal statutes provide a variety of debtor exemptions for retirement benefits, worker's compensation benefits, alimony payments and more. Generally, this means that creditors cannot go directly after the source of these funds and garnish them before they are paid. However, once these benefits are paid to the debtor and the funds are deposited in the debtor's bank account, it is a different issue. Are these exempt benefits subject to a bank garnishment?

In Matthews v. Lewis, 617 S. W. 2nd 43 (1981), the Kentucky Supreme Court addressed the following issue:

"The question presented by this case is whether assets received from a statutorily exempted source and placed by the recipient into his or her bank checking account lose their exempt status."

 After a detailed discussion of Kentucky precedent and cases from several other jurisdictions, the Kentucky Supreme Court held:

" . . . . unless they provide clearly to the contrary, Kentucky's exemption statutes, including but not limited to KRS 342.180, extend protection to deposits in bank checking accounts so long as those deposits can be identified as or traced to payments of exempt funds."

 So, basically . . . no. Subject to the debtor's burden of proving the bank account funds originate from an exempt source, they may not be garnished to satisfy an ordinary debt. Debts for taxes and child support are a different story.

The court stated, "The right to a subsistence way of life is considered fundamental," and quoted from Kruger v. Wells Fargo Bank, 11 Cal.3d 352, 113 Cal.Rptr. 449, 521 P.2d 441 (1974).

"The legislative objective in providing unemployment compensation and disability benefits — to furnish the unemployed worker and his family with a stream of income to defray the cost of their subsistence — would probably fail if creditors could seize that income and apply it to past debts. Consequently the Legislature provided that unemployment and disability benefits cannot be subjected to attachment or execution."

The court continued with,

"Our society's contemporary social programs exhibit a philosophy of relief for the distressed, the impoverished, and the victims of personal and financial catastrophes among us. The Workers' Compensation Act is simply one aspect of those social programs. Kentucky's exemption statutes are simply another necessary instrument in the overall scheme of social welfare programs. They are the teeth in the prosecution given certain deserving victims from their creditors."

The laws applicable in Kentucky provide many protections for debtors in distress, but debtors must be aware of these legal rights and they must also take effective action to assert these rights when they are threatened.

Notes on Kentucky exemption law

Kentucky exemption law

See: Kentucky exemption statutes

KRS §427.005 - Definitions.

As used in this chapter:

• (1) The term "earnings" means compensation paid or payable for personal services, whether denominated as wages, salary, commission, bonus, or otherwise, and includes periodic payments pursuant to a pension or retirement program.


• (2) The term "disposable earnings" means that part of the earnings of any individual remaining after the deduction from those earnings of any amounts required by law to be withheld.


• (3) The term "garnishment" means any legal or equitable procedure through which the earnings of any individual are required to be withheld for payment of any debt.


• (4) The terms "household furnishings, jewelry, personal clothing, and ornaments" mean clothing, furniture, appliances, linens, china, crockery, kitchenware, and personal effects of an individual and the individual's dependents, but do not include:
  
  
  
  • (a) Works of art;
  • (b) Electronic entertainment equipment (except to the extent of one (1) television and one (1) radio);
  • (c) Antiques; and
  • (d) Jewelry other than wedding rings.

--oOo--

The language contained in KRS §427.005(1) through (3) is exactly the same as the language of 15 U.S.C. §1672 (Pub. L. 90-321, title III, Sec. 302, May 29, 1968, 82 Stat. 163.), which was enacted in Title III of the Federal Consumer Credit Protection Act of 1968, effectively preempting, in part, State laws relating to wage garnishment.

The Congressional findings and declaration of purpose, 15 U.S.C. §1671, reads as follows:

• (a) Disadvantages of garnishment
  
  The Congress finds:
  
  
  
  • (1) The unrestricted garnishment of compensation due for personal services encourages the making of predatory extensions of credit. Such extensions of credit divert money into excessive credit payments and thereby hinder the production and flow of goods in interstate commerce.
  • (2) The application of garnishment as a creditors' remedy frequently results in loss of employment by the debtor, and the resulting disruption of employment, production, and consumption constitutes a substantial burden on interstate commerce.
  • (3) The great disparities among the laws of the several States relating to garnishment have, in effect, destroyed the uniformity of the bankruptcy laws and frustrated the purposes thereof in many areas of the country.
• (b) Necessity for regulation
  
  On the basis of the findings stated in subsection (a) of this section, the Congress determines that the provisions of this subchapter are necessary and proper for the purpose of carrying into execution the powers of the Congress to regulate commerce and to establish uniform bankruptcy laws.

See: Kentucky Garnishment statutes

--oOo--

In Rice, Seiller, Cantor, Anderson & Bordy v. Fitzgerald, 824 S.W.2d 435 (Ky.App. 1992) the question before the court was "whether proceeds from a dairy farmer's sale of milk constitute 'earnings' within the meaning of KRS 427.005. If so, these 'earnings' are exempt under KRS 427.010 and partially protected from garnishment."

The Kentucky Court of Appeals cited with approval from Coones v. Federal Deposit Ins. Corp., 796 P.2d 803 (Wyo. 1990), construing a statute very similar to Kentucky's, "profits and business earnings are outside the meaning of wage and salary," and Roberts v. Frank Carrithers & Bros., 180 Ky. 315, 202 S.W. 659 (1918), which defined "wages and salary as consideration given by an employer to one who is providing the employer services."

Held: "The language of KRS 427.005 is limited in its application and does not include all compensation paid. We determine that proceeds from a diary farmer's sale of milk do not constitute "earnings" as defined in KRS 427.005. And, therefore, the proceeds from such a sale are not exempt under KRS 427.010."

--oOo--

The appeal in Mickler v. Mickler, 245 S.W.3d 809 (Ky.App. 2008) involved a garnishment of money owed by various insurance companies to a physician for medical services provided through his private practice. Although the Kentucky Court of Appeals approved the idea that "accounts receivable" could fall within the meaning of KRS §427.005's definition of "earnings" if the money owed "was actually derived from the personal services of the debtor," the decision hinged upon the debtor's failure to meet a burden to prove the funds represented fees for the personal professional service delivered individually by the debtor, and not also including fees for services delivered by other staff and employees in the medical practice. Specifically, there was no obligation upon the trial court "to determine a formula by which to segregate the funds attributable to Dr. Mickler's work from those earned by others."

--oOo--

Reinle v. Commonwealth, 170 S.W.3d 417 (Ky.App.2005) held that proceeds from the forced sale of real property to satisfy a judgment for child support was not "earnings."

--oOo--

Curl v. Sparkle Brite Inc., 518 S.W.2d 775 (Ky.App.1975) was a decision under prior law (KRS §425.210 Repealed, 1976) recognizing the "right of an employer to set off as against an attaching creditor such amounts which the employer could validly set off against the claim of the employee." There is an unanswered question if this right still exists under the current statutory scheme.

---

KRS §427.170 - Federal bankruptcy code exemptions applicable in Kentucky (but only in Bankruptcy proceedings).

In 2005 the Kentucky legislature amended K.R.S. 427.170 to read:

An individual debtor domiciled in this state is authorized to exempt from property of said debtor's estate the property specified under 11 U.S.C. sec. 522(d).

Acts ch. 141, sec. 1, effective June 20, 2005

See: Bankruptcy exemptions 11 U.S.C. 522(d)

--oOo--

MPM Financial Group, Inc. v. Morton
In 2007 the Kentucky Court of Appeals decided MPM Financial Group, Inc. v. Morton construing K.R.S. 427.170 to provide a general expansion of property exempt from execution for all purposes, and not just for Bankruptcy purposes.

In August, 2008, the Kentucky Supreme Court granted discretionary review of this decision. Its opinion was rendered June 25, 2009, and reversed the Kentucky Court of Appeals decision. See: MPM Financial Group, Inc. v. Morton, 289 S.W.3d 193 (2009).

--oOo--