The list below contains some of the most common bankruptcy exemptions provided by the state exemption guidelines in Tennessee. While reviewing this list of assets, it is very important that a debtor bear in mind that many of these property exemptions will likely increase in value for those who are married and filing a petition for joint bankruptcy with their spouse. 

It also should be noted that unlike many other states, Tennessee has decided to opt out of the federal bankruptcy exemption rules. Instead, Tennessee has created its own set of bankruptcy property exemptions under state law. Accordingly, if a debt intends to file for bankruptcy in Tennessee, then they should consult a local bankruptcy lawyer prior to filing. This is because they will already be familiar with the bankruptcy property exemption laws in the state of Tennessee. 

The following is a list of some property and assets that may be exempted under Tennessee bankruptcy exemptions, such as:

    • The Tennessee homestead exemption: In general, a homestead exemption refers to the amount of equity that a person has in their primary residence and how much of that equity can be protected under this exemption. For example, if a debtor owns more of their house than they owe on the mortgage, then their house could potentially be sold to pay off their debts. On the other hand, if they owe more than they own in equity in their house, then this exemption will apply up to a certain amount.
      • Specifically, in Tennessee, the homestead exemption will apply to certain parties as follows:
        • If the debtor is filing as a single individual without a family, then they may be granted an exemption of up to $5,000 in equity;
        • If the debtor is filing a joint petition for bankruptcy along with their spouse, then they may qualify for an exemption of up to $7,500 in equity;
        • However, if a spouse and a debtor own their property as “tenants by the entirety”, then this exemption is unlimited.
        • Additionally, if the person or couple filing for bankruptcy are above 62 years of age, then the exempted amount will increase to a value of $12,500 and $25,000, respectively. It should be noted that Tennessee has the lowest homestead exemption of states that do not give debtors the option of choosing between the federal or their own state’s bankruptcy exemption laws.

 

    • Personal property exemptions in Tennessee: The Tennessee bankruptcy exemption rules grant a debtor an unlimited exemption in items of personal property. For example, there is no limit to the amount that a debtor can have exempted if the property is clothes, textbooks, portraits, pictures, storage containers, funds held in a health savings account, bibles, burial plots, or damages recovered in a personal injury or wrongful death lawsuit. 

 

    • Tools of the trade and wage exemptions: Tools of the trade exemption, such as physical tools, equipment, inventory, and books used to perform a profession or trade, may be protected for up to a value of $1,900. As for the amount of wages that can be exempted, whichever of the two percentages is greater will be protected from garnishment:
      • Either thirty times the federal minimum wage, or
      • Seventy-five percent of disposable income earnings in a single workweek. 
      • Note that the wage exemption may be increased by $2.50 per each workweek if a debtor has a dependent child under the age of 16 years old. An extra $2.50 will also be applied for each child that is dependent on the debtor and under the age of 16. 

 

    • Pension and retirement plan exemption: Some pensions and/or retirement plans may be exempt in part or in full. These include retirement accounts that are already tax exempt; pensions or accounts given to employees of nonprofit corporations or that are considered to be public employees; pensions granted to teachers; state and local government employees; and various other types of retirement accounts, such as:
      • 401ks or 403bs;
      • Traditional IRAs and Roth IRAs;
      • ERISA benefits; and
      • Profit-sharing or money purchase plans. 

 

    • Insurance exemption: Some examples of insurance that may qualify for an exemption when a debtor files for bankruptcy in the state of Tennessee include the following:
      • Life insurance proceeds and annuity benefits;
      • Benefits provided to Tennessee residents in connection with an accident, their health, or a disability;
      • Other benefits that may be necessary to support a disability or illness;
      • Benefits distributed by a fraternal benefit society, such as the Elks, Freemasons, or Knights of Columbus; and
      • An exemption of up to $5,000 in proceeds from homeowners insurance.

 

    • Public benefit exemption: Some public benefits that may also be eligible for a partial or full exemption include workers’ compensation, unemployment benefits, public assistance, relocation assistance, crime victims’ compensation, old age assistance, benefits given to the blind or to persons for other medical disabilities, Social Security benefits, and veterans’ benefits.

 

    • Wildcard exemption in Tennessee: The wildcard exemption in Tennessee will allow a debtor to exempt up to $10,000 in personal property if applied. This can either include property that exceeds the exemption limit for any of the above categories or may apply to a category of personal property that does not exist under state bankruptcy exemption laws.
      • For instance, unlike other states, Tennessee does not offer a separate category designated for motor vehicle exemptions. Thus, a Tennessee debtor can use their wildcard exemption to protect up to $1,325 in equity in their vehicle. Alternatively, this is also where the unused portion of the homestead exemption can be found and applied to a debtor’s motor vehicle.  

 

In addition, Tennessee also offers several other exemptions for miscellaneous property, such as full exemptions for alimony and child support. To learn more about the bankruptcy property exemptions provided to debtors in the state of Tennessee, a debtor should consult with a local bankruptcy lawyer prior to filing a petition for bankruptcy. 

Do I Need a Bankruptcy Lawyer?

Filing for bankruptcy requires knowledge and a thorough understanding of intricate laws and complex legal procedures. This is no exception when it comes to navigating state bankruptcy exemption guidelines, which happen to be a major component of filing for bankruptcy. 

In fact, state property exemption guidelines may make the process of filing for bankruptcy even more difficult since it must be done correctly or else it can result in the loss of property that should have been exempt. The state bankruptcy exemption laws in Tennessee are particularly complicated due to the fact that the state has created its own detailed set of guidelines.

As such, if you need assistance with filing for a specific chapter of bankruptcy or have questions regarding state bankruptcy exemptions in Tennessee, then you should contact a Tennessee bankruptcy lawyer immediately for further legal guidance. 

An experienced bankruptcy lawyer in Tennessee will be able to answer any questions you may have about the exemption laws in your state as well as those you have about the overall bankruptcy process. Your lawyer will also be able to review and discuss the types of properties that may be exempt based on the chapter of bankruptcy you choose to declare.

In addition, your lawyer will be able to ensure that you divide your assets in accordance with Tennessee bankruptcy exemption guidelines and can help you in securing certain items of property. Lastly, your lawyer will also be able to provide legal representation during any court proceedings that are connected to your bankruptcy case.