Tennessee Bankruptcy Exemptions: Protect Your Property in Chapter 7

Exemptions help bankruptcy filers protect their property and assets. Tennessee bankruptcy laws require you to use state exemptions only. You can’t choose federal bankruptcy exemptions. However, you can use federal non-bankruptcy exemptions to protect certain retirement accounts and disability benefits.

Why Tennessee Bankruptcy Exemptions Matter in Chapter 7

Tennessee bankruptcy exemptions allow you to protect specific things you own. Each exemption covers property up to a certain dollar value.

When you file bankruptcy, you must claim exemptions to protect your property. Property without proper exemption claims can be sold by the bankruptcy trustee. The trustee distributes proceeds to your creditors. Though legally possible, property loss is very rare. Most Chapter 7 filers keep all their belongings.

Married couples filing jointly can claim the full exemption amount for each spouse. Each spouse needs an ownership interest in the property. You can double most exemptions when filing jointly. The homestead exemption has different rules.

Can You Use Federal Bankruptcy Exemptions in Tennessee?

No, you cannot.

Some states let bankruptcy filers choose between federal and state exemptions. Tennessee isn’t one of these states. You must use state exemptions if you’ve lived in Tennessee for at least two years.

You can use federal non-bankruptcy exemptions for certain retirement accounts and disability benefits. These work alongside Tennessee state exemptions.

Tennessee Bankruptcy Exemptions Explained

Exemptions fall into three categories: real property, personal property, and intangible property. Money benefits count as intangible property. Each category offers different protections.

Real Property: The Tennessee Homestead Exemption

The homestead exemption protects equity in your home. Individual filers can protect up to $35,000 in home equity. Married couples who jointly own and live in the home protect up to $52,500 total. The exemption splits equally between spouses.

Equity equals current market value minus remaining mortgage balance. For example, a $300,000 home with a $250,000 mortgage has $50,000 in equity. A single person filing bankruptcy couldn’t fully protect this amount. You might consider Chapter 13 bankruptcy or other debt relief options instead.

If you’re concerned about protecting home equity, speak with a bankruptcy attorney for free to explore your options.

Source: Tennessee Code § 26-2-301

Personal Property Exemptions in Tennessee

Tennessee filers can usually keep their personal property by claiming exemptions. You can protect essential items and valuable possessions.

Exemptions protect the following items:

• Clothing, school books, pictures, portraits, and a Bible
• A burial plot up to one acre
• Health savings accounts and health aids
• Wages: 75% of earnings or 30 times federal minimum wage (whichever is greater)

You can exempt tools, books, and implements for your profession. The exemption covers up to $1,900 in value.

Personal injury recoveries have a combined limit of $15,000:

• $7,500 for personal injury claims
• $10,000 for wrongful death actions
• $5,000 for crime victim reparation awards

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

Tennessee has no specific motor vehicle exemption. You can use the $10,000 wildcard exemption to protect car equity instead.

Equity equals fair market value minus remaining car loan balance. If you own the car outright, equity equals current fair market value. Check Kelley Blue Book for fair market values.

Wildcard Exemption

You can exempt up to $10,000 in any personal property. The wildcard exemption works for property without other coverage. You can add it to existing exemptions that don’t fully protect an asset.

Source: Tennessee Code § 26-2-103

Money Benefits and Other Tennessee Exemptions

Exemptions protect money in retirement accounts, pensions, and public assistance benefits. You can also protect insurance plans and similar accounts.

Retirement Accounts and Pensions

Federal non-bankruptcy law exempts many tax-exempt pensions and retirement accounts. The exemption covers up to $1,512,350 per person for:

• 401(k)s and 403(b)s
• Profit-sharing and money purchase plans
• SEP and SIMPLE IRAs
• Traditional and Roth IRAs
• ERISA-IRAs

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

Tennessee law exempts 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

Tennessee exempts the following public benefits up to 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)

Filing Chapter 7 Bankruptcy in Tennessee

Understanding Tennessee exemptions is crucial before filing Chapter 7 bankruptcy. Proper exemption claims protect your property from liquidation. Most filers keep their essential belongings when they file correctly.

A bankruptcy attorney can help you maximize your exemptions. They’ll ensure you claim every protection available under Tennessee law. Professional guidance helps avoid costly mistakes during the filing process.