Many people in eastern Tennessee who are contemplating bankruptcy are unaware of how the state's list of bankruptcy exemptions can help them. Under federal bankruptcy law, states are given the choice of requiring debtors to select either federal prescribed exemptions or accept the state's list. Tennessee has passed legislation requiring debtors to use the state's list of exemptions and precluding anyone from selecting exemptions from the federal list.
The most important bankruptcy exemption is the family homestead. The exemption may not exceed $5,000 for one person or $7,500 for a couple. For individual who are 62 or older, the exemption is $12,500 for one person and $25,000 if the two people are married and both are over 62. The real estate exemption applies only to the equity in the homestead and does not affect the balance on any loan that was used to purchase the property.
Personal property, including clothing, health aids, books and tools of the trade are exempt up to $10,000. Automobiles are not exempt, but the personal property exemption may be applied to a car. Tennessee also provides exemptions for other personal property, including clothing, family portraits, the family bible and schoolbooks.
Certain monetary assets are also exempt, including medical savings accounts, welfare and insurance benefits and financial recoveries for crime victim reparations up to $5,000, compensation for a personal injury up to $7,500 and compensation for a wrongful death up to $10,000. A debtor's interest in a retirement plan is also fully exempt under Tennessee law.
The listing of exempt assets can be complicated, especially with respect to real property. Anyone with questions may wish to consult a knowledgeable bankruptcy attorney for advice. A knowledgeable lawyer can help assemble the bankruptcy petition and insure that all assets and liabilities are listed properly.