Tennessee Bankruptcy Exemptions

Find out what property you can protect in bankruptcy with the Tennessee exemptions.

Like all states, Tennessee has a set of exemptions you can use to protect some property when filing for bankruptcy, such as a home, car, and retirement account. In this article, you'll learn:

  • how long you must live in Tennessee before using its exemptions
  • whether Tennessee exemptions will protect all of your property, and
  • what will happen to any property you can't exempt.

If you have more questions, read Filing for Bankruptcy in Tennessee. Not only will you find answers, but it includes helpful checklists and a link to an interactive bankruptcy quiz. Or, try the start-to-finish bankruptcy guide, What You Need to Know to File for Bankruptcy.

How Tennessee's Bankruptcy Exemptions Work

You can protect property covered by an exemption regardless of whether you file for Chapter 7 or 13. But each chapter treats nonexempt property—things not covered by an exemption—differently.

  • In Chapter 7 bankruptcy, the bankruptcy trustee sells nonexempt property and distributes the proceeds to creditors.
  • In Chapter 13 bankruptcy, you keep everything you own. However, you must pay the value of the nonexempt property equity in your repayment plan, or your disposable income, whichever is more.

Common Tennessee Bankruptcy Exemptions

Use the list below to determine whether you can protect property important to you. Although the federal bankruptcy exemptions aren't available in Tennessee, keep in mind that spouses who share an ownership interest in property can increase some exemptions. Also, all filers are entitled to:

  • use the federal nonbankruptcy exemption list
  • protect stimulus payments, tax credits, and child credits using the federal COVID-19 recovery rebate exemption, and
  • keep tax-exempt retirement accounts, including 401(K)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans and traditional and Roth IRAs to $1,362,800 per person (as of June 2021). (11 U.S.C. 522(b)(3)(C); (n).) Learn more about retirement accounts in bankruptcy.

Tennessee Bankruptcy Exemption List

Unless otherwise noted, all law references are to the Tennessee Bankruptcy Code Annotated.

Homestead Exemption

Homeowners can exempt up to $5,000 of equity in a home or other property serving as their principal place of residence. The amount increases as follows:

  • $7,500 for co-owning spouses filing jointly
  • $25,000 for a filer with a minor dependent child in the household
  • $12,500 for an individual 62 years of age or older
  • $20,000 if one spouse is older than 62 and the other is younger, and
  • $25,000 if both spouses are 62 years old or older.

(§ 26-2-301.) Learn more about qualifying for Tennessee's homestead exemption in bankruptcy.

Motor Vehicle Exemption

Tennessee doesn't have a motor vehicle exemption. But you can use the $10,000 wildcard exemption discussed below to exempt car equity.

Wildcard Exemption

In Tennessee, you can use the wildcard exemption to exempt any personal property of your choosing (no real estate), cash, and funds in a bank account up to a value of $10,000. (§ 26-2-103.)

Personal Property

  • Clothing, family pictures, school books, and a Bible. (§ 26-2-104.)
  • Health savings accounts. (§ 26-2-105(b).)
  • 75% of earnings or 30 times Federal minimum wage per week (plus $2.50 per week per child). (§§ 26-2-106, 107.)
  • Personal injury recoveries to $7,5000, wrongful death recoveries to $10,000; loss of future income reasonably necessary to live. (§ 26-2-111(2)(B),(C), (3).)
  • Implements, books, and tools of the trade up to $1,900. (§ 26-2-111(4).)
  • Professionally prescribed health aids. (§ 26-2-111(5).)
  • Liquid child support assets owed. (§ 26-2-111(6).)
  • Burial plot. (§ 26-2-305.)
  • College education savings plan and scholarship benefits. (§§ 49-7-822, 4507.)

Pensions and Retirement

  • Tennessee Consolidated Retirement System benefits. (§ 8-36-111.)
  • State pension or retirement plan. (§ 26-2-105(a).)
  • ERISA-qualified benefits. (§ 26-2-111(d).)
  • Teachers' retirement benefits. (§ 49-5-909.)

Public Benefits

  • Aid to the blind, aged, and disabled. (§§ 71-4-117, 1112; 71-2-216.)
  • Crime victims' compensation up to $5,000. (§§ 26-2-111(2)(A).)
  • Local public assistance. (§ 26-2-111(1)(A).)
  • Social security, Veterans, disability, unemployment, and illness benefits; public assistance. (§§ 26-2-111(1)(A)-(C); 50-6-223, 1349.)
  • Criminal injuries compensation. (§ 29-13-111.)
  • Workers' compensation except for support obligations. (§ 50-6-223.)
  • Aid to the aged, children, and individuals with disabilities. (§§ 71-2-216; 3-121; 4-117 and 1112.)

Insurance

  • Accident, health, or disability benefits. (§ 26-2-110.)
  • Life insurance or annuity. (§ 56-7-203.)
  • Fraternal society benefits. (§ 56-25-403.)

Confirming the Tennessee Bankruptcy Exemptions

Exemptions adjust periodically. Check exemptions in the Tennessee Codes or consider consulting with a Tennessee bankruptcy attorney.

When You Can Use Tennessee Bankruptcy Exemptions

You can file for bankruptcy in Tennessee after living there for more than 180 days. However, you must live in Tennessee much longer before using Tennessee exemptions—at least 730 days before filing, to be exact. Otherwise, you'd use the previous state's exemptions.

But suppose you weren't living in any particular state during the two years before filing for bankruptcy. In that case, you'd use the exemptions of the state you lived in for most of the 180 days before the two-year period that immediately preceded your filing. (11 U.S.C. § 522(b)(3)(A).) Learn more about filing for bankruptcy after moving to a new state.

Also, to claim the total value of the Tennessee homestead exemption, you must have purchased and owned the property for at least 1,215 days before the bankruptcy filing. If you can't meet this requirement, your homestead exemption is limited by federal law to $170,350 (this figure will adjust on April 1, 2022).

Avoiding Exemption Issues in Tennessee

If you don't exempt your property carefully, you could lose it. Answers to these questions might help you steer clear of common issues.

Do I automatically get to keep exempt property? Generally, no. Here's the procedure you'll need to follow: You'll select the exemption set that best protects your property, list the exempt assets and applicable exemption laws on Schedule C: The Property You Claim as Exempt, and file it with your other required paperwork.

Will someone check my exemptions? The bankruptcy trustee—the court-appointed official tasked with managing your case—will review Schedule C to ensure that you have the right to protect the claimed property. A trustee who disagrees with your exemptions will file an objection with the court. The judge will decide whether you can keep the property.

Example. Jeff owns a rare, classic car worth $15,000, but the state vehicle exemption won't adequately protect it. Believing that the car qualifies as art—at least in his mind—Jeff exempts it using his state's unlimited artwork exemption. The trustee reviews Schedule C, disagrees with Jeff's characterization and files an objection with the court. After consideration, the judge will likely side with the trustee, determining that the vehicle doesn't qualify as a piece of art.

What if I make a mistake? Most trustees won't file an objection unless it's clear that the debtor is trying to pull something over on the court. At least not without trying to resolve the issue first. If there's a minor exemption problem, the trustee will likely call you to work out the matter informally.

It's worth noting that it's not a good idea to finesse exemptions. Not only do you have an obligation to supply correct information on your bankruptcy forms, purposefully making inaccurate statements could be considered fraudulent. Bankruptcy fraud is punishable by up to $250,000, 20 years in prison, or both.

Need More Help?

You might not know this, but Nolo has been making the law easy for DIYers for over fifty years. If you have questions, use the links we've included throughout for more details. Otherwise, you'll find the answers to almost all of your bankruptcy questions at nolo.com/legal-encyclopedia/bankruptcy or by consulting with a local bankruptcy lawyer.

This overview cannot provide all of the information you'll need to file a bankruptcy case. For more detailed information, consider buying a self-help book such as How to File Chapter 7 Bankruptcy by Attorney Cara O'Neill and Albin Renauer J.D.

Updated July 20, 2021

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