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Understanding Tennessee's bankruptcy exemptions

Anyone in our state who is wondering about the wisdom of filing a Chapter 7 bankruptcy should make an effort to understand the kinds of assets that cannot be claimed by creditors. These assets are usually referred to as "exemptions" because they are exempt from the claims of creditors.

The most important personal bankruptcy exemption is the homestead, the building used by the debtor and his or her spouse as their residence. A debtor who is filing only singly can claim up to $5,000 in the home's equity as exempt from the claims of creditors. Joint filers can claim $7,500 as exempt. For persons age 62 or older, the limit is higher: a single filer can claim $12,500 as exempt. Married filers who both live in the house can claim $20,000. If both filers are 62 or older, the limit is $25,000.

Tennessee also allows debtors to claim exemptions for particular kinds of personal property. Burial plots of less than one acre may be claimed as entirely exempt. The family Bible, pictures and portraits are exempt. Clothing is also exempt with no limit. Health aids such as wheel chairs and hearing aids are exempt. Damages recovered for a personal injury are exempt up to $7,500. Tools of a trade that are used to earn a living are beyond the reach of creditors. A number of public benefits, such as Social Security benefits, workers' compensation benefits, old-age assistance and aid to the blind, are also on the list of exemptions.

Most types of insurance benefits are exempt, including accident and health benefits, life insurance and fraternal benefit society insurance policies. Other exemptions may be available to individuals or couples depending upon their individual situation. A conference with an experienced bankruptcy attorney can help answer questions about the availability of specific exemptions.

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