If you’re considering bankruptcy in Tennessee, you’re probably wondering:

“Will I lose my home, car, or personal belongings?”

The good news is that bankruptcy exemptions are designed to protect essential property. Understanding how Tennessee exemptions work is critical before filing — especially because Tennessee law differs significantly from many other states.

Here’s what you need to know.

What Are Bankruptcy Exemptions?

Bankruptcy exemptions are laws that allow you to keep certain property when you file for Chapter 7 or Chapter 13 bankruptcy.

Exemptions determine:

• What property is protected from a Chapter 7 trustee
• Whether Chapter 7 is a safe option
• How much you may need to repay in Chapter 13
• Whether your home equity is at risk

Proper exemption planning can mean the difference between keeping everything and facing unnecessary complications.

Tennessee Requires Use of State Exemptions

Unlike some states, Tennessee does not allow most residents to choose the federal bankruptcy exemption system.

If you have lived in Tennessee for at least 730 days (2 years) before filing, you must use Tennessee’s state exemptions.

This makes it especially important to understand how Tennessee’s protections work.

Tennessee Homestead Exemption

Tennessee does provide a homestead exemption — but the amount depends on your circumstances.

Homestead Protection Amounts:

• $5,000 – Single filer under age 62
• $7,500 – Joint filers
• $12,500 – Single filer age 62 or older
• $20,000 – Joint filers where at least one spouse is age 62 or older
• Up to $25,000 – If you have custody of a minor child

This exemption protects equity in your primary residence.

Example:
If your home is worth $250,000 and you owe $240,000, your equity is $10,000. Depending on your eligibility category, some or all of that equity may be protected.

Homeowners with substantial equity should carefully review their options before filing.

Tennessee Personal Property Exemption

Tennessee provides a “wildcard-style” personal property exemption that can be used for various assets.

Personal Property Exemption Amount:

• $10,000 total in personal property

This can include:

• Cash
• Bank accounts
• Vehicles
• Furniture
• Electronics
• Jewelry
• Tax refunds

Because it is flexible, this exemption is extremely important in Tennessee bankruptcy cases.

Motor Vehicle Exemption

There is no separate large motor vehicle exemption beyond the personal property cap. Vehicle equity is generally protected under the $10,000 personal property exemption.

If you own your car outright or have significant equity, planning is critical.

Retirement Accounts and Benefits

Most tax-qualified retirement accounts are protected under federal law, including:

• 401(k)s
• IRAs (subject to federal limits)
• Pensions

Additionally, many public benefits are protected, including:

• Social Security
• Disability benefits
• Unemployment benefits
• Workers’ compensation

Tools of the Trade

Tennessee provides protection for certain tools necessary for your profession, typically within the broader personal property exemption limits.

How Exemptions Work in Chapter 7

In Chapter 7 bankruptcy:

• A trustee can sell non-exempt property.
• Exempt property is protected.
• Most consumer cases are “no-asset” cases where nothing is taken.

However, because Tennessee’s homestead exemption is relatively modest compared to some other states, homeowners with higher equity must proceed carefully.

How Exemptions Work in Chapter 13

In Chapter 13:

• You keep your property.
• You enter a 3–5 year repayment plan.
• The amount you must repay unsecured creditors depends on the value of your non-exempt property.

If you have non-exempt equity in your home or other assets, your Chapter 13 plan must account for that value.

Important Rules to Know

1. Residency Requirement

You must have lived in Tennessee for at least 730 days before filing to use Tennessee exemptions. If you recently moved, different rules may apply.

2. Exemptions Protect Equity — Not Total Value

Exemptions apply only to your equity.

Example:

• Car value: $20,000
• Loan balance: $18,000
• Equity: $2,000

Only the $2,000 equity must fit within your exemption limits.

3. Do Not Transfer Assets Before Filing

Transferring property before bankruptcy to protect it can result in denial of discharge or other serious consequences.

Is Bankruptcy Right for You?

Bankruptcy can:

• Stop wage garnishment
• Stop foreclosure
• Stop repossession
• Eliminate credit card debt
• Eliminate medical debt
• Provide a financial reset

But exemption planning must be done correctly to avoid unintended risks.

Speak With an Experienced Bankruptcy Attorney

Tennessee exemption law is technical and highly fact-specific. The right strategy depends on:

• Your home equity
• Your vehicle equity
• Your bank account balances
• Your tax refunds
• Your long-term financial goals

Before filing, make sure you understand what is protected and what is not.

If you’re overwhelmed by debt and considering bankruptcy in Tennessee, schedule a consultation to review your options and protect what matters most.