What Are the Tennessee Bankruptcy Exemptions?

Why Are Tennessee Bankruptcy Exemptions Important in Chapter 7 Bankruptcy?

Tennessee bankruptcy exemptions allow you to protect specific things you own up to a certain value. 

When you file bankruptcy, you need to claim exemptions to protect your property. If you don’t do this or if you have property that isn’t protected by exemptions, the bankruptcy trustee can sell the property and give the proceeds to your creditors. Though this is legally possible, it’s very rare. Most Chapter 7 filers don’t lose any of their property when they file their case.

As a rule of thumb, when married couples file jointly, each spouse is allowed to claim the full amount of exemption as long as each spouse has an ownership interest in the property. This means you can double most of the exemptions if you're filing jointly. One important exception is the homestead exemption.

Does Tennessee Allow Filers To Use Federal Bankruptcy Exemptions?

No.

Some states allow people filing bankruptcy to choose between the federal bankruptcy exemptions and state exemptions. But Tennessee isn’t one of these states. If you’ve lived in Tennessee for at least the last two years, you need to use the state exemptions to protect your property when you file Chapter 7.

You can also use the federal non-bankruptcy exemptions to protect certain retirement accounts and disability benefits.

What Are the Tennessee Bankruptcy Exemptions?

Exemptions fall into three broad categories: real property, personal property, and intangible property like money benefits. Let’s take a look at the exemptions for each type of property.

Real Property: The Tennessee Homestead Exemption

The homestead exemption helps protect the equity you have in your home. If you live in Tennessee, and you're filing bankruptcy individually, you can protect up to $35,000 in home equity using the state’s homestead exemption. Married couples who jointly own and live in the home can protect up to $52,500 total, divided equally between them.

🏠 Equity is equal to the current market value of your house minus what you still owe on the mortgage. For example, if your home is worth $300,000 and you owe $250,000 on it, you’d have $50,000 in equity. If you were filing bankruptcy as a single person, your equity wouldn’t be protected by the state exemption. In this case, you might want to look into filing Chapter 13 bankruptcy or other debt relief options instead.

Source: Tennessee Code § 26-2-301

Personal Property Exemptions in Tennessee

Tennesseans filing bankruptcy can usually keep their personal property by claiming exemptions. 

Exemptions can help you protect:

• Clothing, school books, pictures, portraits, and a Bible

• A burial plot

• Health savings accounts and health aids

• Wages: 75% of your earnings or 30 times the federal minimum wage, whichever is greater

• Burial plot: exempt up to one acre for a burial plot

You can exempt tools, books, and implements of trade for your profession worth up to $1,900.

Personal injury recoveries are subject to a total up to $15,000 for the following:

• $7,500 for personal injury 

• $10,000 for a wrongful death action

• $5,000 for a crime victim’s reparation award

Source: Tennessee Code §§ 26-2-104, 26-2-305, 26-2-105(b), 26-2-106 and 107, 26-2-111(4)

Motor Vehicle Exemption

There's no specific exemption for motor vehicles in Tennessee. However, you can use the $10,000 wildcard exemption to protect the equity in your car. Equity is equal to the fair market value of your vehicle minus what you still owe on your car loan, if you’re financing the car. If you own the car outright, your equity is equal to the current fair market value of the car. You can find the fair market value by looking at sites like Kelley Blue Book.

Wildcard Exemption

You can exempt up to $10,000 in any personal property using the wildcard exemption. You can add this to any property that isn't otherwise covered by an exemption or doesn't have enough to cover what you want to protect. 

Source: Tennessee Code § 26-2-103

Money Benefits and Other Tennessee Exemptions

Exemptions can also help you protect money you have in retirement accounts and pensions, as well public assistance you receive, insurance plans you have, and more. Let’s take a closer look at the specific accounts you can protect.

Retirement Accounts and Pensions

Federal non-bankruptcy laws allows you to exempt many tax-exempt pensions and retirement accounts up to $1,512,350 per person, including:

• 401(k)s and 403(b)s

• Profit-sharing and money purchase plans

• SEP and SIMPLE IRAs

• Traditional and Roth IRAs, Roth IRAs

• ERISA-IRAs

Source: 11 USC 522(b)(3)(C), (n)

Tennessee law also has exemptions for certain pensions and retirement accounts including: 

• Tennessee Consolidated Retirement System benefits

• State pension or retirement plans

• ERISA-qualified benefits

• Teachers’ retirement benefits

Source: Tennessee Code §§ 8-35-111, 26-2-105(a), 26-2-111(D), 49-5-909

Public Benefits 

The following public benefits can be exempt up to the full monetary value:

• Workers' compensation

• Unemployment compensation

• Veterans' benefits

• Social Security

• Crime victims' compensation

• Local public assistance

• Alimony and child support needed for support

Source: Tennessee Code §§ 26-2-111(1)(A)(B)(C)

Need Help Filing Chapter 7 Bankruptcy in Tennessee?

Being in debt is stressful. Chapter 7 bankruptcy can give you a much-needed fresh start, but it takes some effort to fill out the paperwork and submit it to the court. Luckily, help is available! Upsolve can help you apply exemptions properly to protect what you own. See if you’re eligible to use Upsolve’s free bankruptcy filing tool to complete your Chapter 7 case. If you aren’t eligible or you simply prefer to work with a lawyer, we can also help you get a free consultation with an experienced bankruptcy attorney in your area.

Upsolve is a nonprofit organization that’s helped thousands of people get rid of over $700 million of debt through Chapter 7 bankruptcy. Our services are 100% free and our users love us.