What Are the Tennessee Bankruptcy Exemptions?

Why Are Tennessee Bankruptcy Exemptions Important in Chapter 7 Bankruptcy?

Tennessee bankruptcy exemptions let you protect certain property up to a set dollar amount. These laws are important because they help you keep the things you need to live and work when you file Chapter 7.

You must claim exemptions to protect your property. If you don’t, or if something isn’t fully protected, the trustee can sell it and use the money to pay creditors. While that’s legally allowed, it’s rare. Most people who file Chapter 7 don’t lose any property.

👥 If you’re married and file jointly, each spouse can usually claim a full exemption as long as both have an ownership interest in the property. This often allows you to double the exemption amount. One important exception is the homestead exemption. While it doesn’t fully double, married couples filing together can protect more equity than a single filer.

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.

🛡️ 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. In Tennessee, you can protect up to $35,000 of equity in your primary residence. 

If you and your spouse jointly own your home and file bankruptcy together, the combined homestead exemption is $52,500. This amount is split evenly between you. 

🟰 Equity is the difference between your home’s current market value and what you still owe on your mortgage. For example, if your home is worth $300,000 and you owe $275,000, you have $25,000 in equity. 

Source: Tenn. Code § 26-2-301

Personal Property Exemptions in Tennessee

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

Tennessee’s personal property exemption works similarly to a wildcard exemption. You can protect up to $10,000 in personal property of your choosing. This can include a vehicle, money in a bank account, or other belongings. You can apply it to property that isn’t fully covered by another exemption.

Source: Tenn. Code § 26-2-103

📚 Exemptions can help you protect:

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

• Health savings accounts and health aids

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

• A burial plot up to one acre

• Tools, books, and equipment you use at your job, up to $1,900 in value

You can also protect up to $15,000 total from certain legal claims and awards, including:

• Up to $5,000 from a crime victim’s reparation award

• Up to $7,500 for a personal bodily injury claim

• Up to $10,000 for a wrongful death action

Sources: Tenn. Code §§ 26-2-104, 26-2-105(b), 26-2-106, 26-2-111(2), 26-2-111(4), 26-2-305

Motor Vehicle Exemption

🚗 Tennessee doesn’t have a separate motor vehicle exemption. Instead, the law provides a general personal property exemption that lets you protect up to $10,000 of total equity in the personal property you choose. Many filers use this exemption to protect some or all of their car’s equity.

Equity is the fair market value of your car minus what you still owe on your loan. If you own the car outright, your equity is its current market value. You can estimate this value using resources like Kelley Blue Book.

Money Benefits and Other Tennessee Exemptions

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

Retirement Accounts and Pensions

💰 Federal law protects many tax-exempt retirement accounts and pensions in bankruptcy. Traditional and Roth IRAs are protected up to $1,512,350 per person. Most employer-sponsored retirement plans are fully protected. These include:

• 401(k)s and 403(b)s

• Profit-sharing and money purchase plans

• SEP and SIMPLE IRAs

• Traditional and Roth IRAs

• Other ERISA-qualified retirement plans

Source: 11 U.S.C. § 522(b)(3)(C), (n)

Tennessee law also protects certain state and public retirement benefits, including:

• Tennessee Consolidated Retirement System (TCRS) benefits

• State pension and retirement plans

• Teachers’ retirement benefits

Source: Tenn. Code § 26-2-105(a) 

Public Benefits 

The following public benefits are generally protected from creditors:

• Workers’ compensation

• Unemployment compensation

• Veterans benefits

• Social Security

• Local public assistance

• Alimony and child support 

Sources: Tenn. Code §§ 26-2-111(1), 50-6-223

Need Help Filing Chapter 7 Bankruptcy in Tennessee?

✨ Debt can feel overwhelming. Chapter 7 bankruptcy can give you a fresh start, but the paperwork and court process may feel intimidating at first. Upsolve offers a free tool that can help eligible filers prepare their Chapter 7 forms and claim exemptions.

🤝 If you’d rather work with a lawyer or your situation is more complex, you can also set up a free consultation with an experienced bankruptcy attorney in your area.

Upsolve is a nonprofit that has helped thousands of people eliminate more than $700 million in debt through Chapter 7. Our services are 100% free for eligible users.