The Tennessee Motor Vehicle Exemption in Bankruptcy

Tennessee doesn't have a special motor vehicle exemption, but you can use its $10,000 general property exemption to protect equity in your car if you file for bankruptcy.

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If you file for bankruptcy in Tennessee, you can use Tennessee’s general property exemption to protect equity in your car, truck, van, or other vehicle. Here you’ll find information about the Tennessee exemptions you can use to protect your car: what types of exemptions are available, exemption amounts, covered vehicles, how the exemptions work for married couples, how to find the applicable statute, and more.

(For more information about exemptions, including how they work and which ones you can use, see our Bankruptcy Exemptions area. For information specific to the motor vehicle exemption, see our Motor Vehicle Exemption in Bankruptcy area.)

The Tennessee Exemptions and Your Car

Tennessee’s motor vehicle exemption plays a large role in determining whether or not the bankruptcy trustee can take your vehicle to repay your unsecured creditors. If the equity in your car is less than the exemptions you can use to protect your car, then the trustee cannot sell it. If the equity in your car is significantly more than the applicable exemption amount, the trustee is likely to sell your car to repay your unsecured creditors. For details, see The Motor Vehicle Exemption: Can You Keep Your Car in Chapter 7 Bankruptcy? 

Keep in mind that even if your car is safe from the bankruptcy trustee, the lender may be able to repossess your car during or after bankruptcy. To learn more, see Your Car in Chapter 7 Bankruptcy and If You Are Behind on Your Car Payments, Can Chapter 7 Help?

The Amount of Tennessee’s Property Exemption

Tennessee does not have an exemption specifically for motor vehicles. Instead, Tennessee allows you to protect one large lump sum of equity or value in any property you own, including your vehicle, household furnishings, crops, animals, and cash on deposit. This lump sum property exemption amount is currently$10,000.  

The Federal Motor Vehicle Exemption

Some states allow bankruptcy filers to use the federal bankruptcy exemptions instead of state exemptions, but Tennessee is not one of these states.

Can Married Couples Double Tennessee’s Exemptions?

Some states allow married couples filing a joint bankruptcy petition to double the listed exemption amounts. Tennessee allows married couples to double the general property exemption and protect up to $20,000 of equity or value in their property.

(To learn about the advantages and disadvantages of joint bankruptcy filings, see Nolo's section on Bankruptcy Options for Married Couples).

What Vehicles and Insurance Are Covered by the Motor Vehicle Exemption?

Because Tennessee’s property exemption is general in nature, you can use the exemption to protect equity in any vehicle or vehicles you own, such as cars, vans, trucks, motorcycles.

Checking Tennessee’s Exemption Laws

You can find Tennessee’s general property exemption at Tenn. Code Ann. Section 26-2-103.

You can find a link to the Tennessee statutes on the website of the Tennessee Government’s Department of Environment and Conservation at http://tn.gov/environment/permits/tcalink.shtml. To more about finding  state statutes, see Nolo’s Laws and Legal Research area.

by: , Attorney

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