When bills are unmanageable, there can be a source of relief for many debtors today. That relief can be found in filing a petition for bankruptcy. There are two options, which they may choose, however. For most, Chapter 7 allows them to liquidate some types of property, protect others, and erase most consumer debt, excluding alimony, child support, tax debt, and most student loans. In addition, while there are both state and federal exemptions that may allow those filing for Chapter 7 to protect their property, Tennessee requires its residents to use only state property exemptions.
How to Keep Your Car
State and federal exemptions differ in this area:
- Federal exemption – $3,225
- Tennessee state exemption – none
While there is no specific vehicle exemption in Tennessee, residents have several other personal property categories which may be applied to a vehicle. In addition, if that vehicle is collateral for a loan, in order to retain that vehicle the owner must continue to make payments or face the possibility of having it repossessed.
How to Keep Your Home
- Federal homestead exemption - $20,200
- Tennessee state exemption – $5,000, or $7,500 for joint filers
- Tenancies by the entirety have unlimited exemption concerning the debts of one spouse
- Exemptions may be claimed by the spouse or child of a deceased owner
- May also claim exemptions for life estates or leases lasting between 2 and 15 years
- Exemptions for those over 62 years of age – up to $12,500 for singles and $20,000 for couples; $25,000 if both spouses are over 62 years of age
In the midst of all of these options for exemptions under Tennessee law, the property owner must continue to make payments on mortgaged property or the creditor may exercise their lien and foreclose.
Tennessee allows exemptions for other forms of personal property:
- Clothing and storage containers, school books, pictures, portraits, and a Bible
- Health savings accounts
- Health aids
- Lost earning payments upon which the debtor depends; personal injury recovery up to $7,500; wrongful death recovery up to $10,000 – total exemption for personal injury, wrongful death, and crime victim claims cannot exceed $15,000
- Burial plot – up to 1 acre
- Tools of the trade – including books and implements of trade – up to $1,900
- Any personal property – up to $4,000
Schedule C of Your Bankruptcy Petition
All state property exemptions claimed by Tennessee residents must be listed on Schedule C and included with a bankruptcy petition. That form includes information concerning:
- The property claimed
- The state statutes substantiating those claims
- The property exemption value for each claim
- Each claim’s current assessed value (not the market value)
Getting Legal Help
Clearly, the homestead exemptions for Tennessee residents are quite complex, and it can be daunting attempting to determine which categories provide the greatest benefit for each debtor. Bankruptcy attorneys, however, have wide experience in these areas and are able to represent their client’s best interests in all of these legal processes and petitions.
