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What are some personal exemptions when filing for bankruptcy?

Some Tennesseans need a fresh financial start. They tried to start a business that did not work out. They got sick and racked up significant medical bills. They made some financial decisions that they would like to take back. But whatever the reason, some Tennesseans may be reluctant to file for bankruptcy. A part of that reluctance is often the worry that the person will have to give up everything as part of the bankruptcy. That worry is unfounded though: Tennessee provides a variety of bankruptcy exemptions designed to ensure that Tennesseans land on their feet following the end of the bankruptcy process.

The first exemption is for homestead. The size of the exemption depends on a variety of factors such as the person's age and marital status as well as whether they have any dependents and whether they own the property on their own or jointly. This exemption can be worth as much as $25,000, depending on the circumstances.

Another exemption is for wages. Tennessee exempts at least 75 percent of a person's disposable weekly income or 30 times the federal minimum wage, whichever is greater. If the person has a child, then the exemption may be even larger.

A third exemption is for retirement accounts. Certain accounts like 401(k)s and defined benefit plans are fully exempt. Other accounts like traditional and Roth IRA are exempt up to more than $1.1 million.

Beyond these exemptions, a variety of smaller ones also exist. For instance, there are exemptions for annuities, life insurance, alimony, child support, clothing, burial plots, tools of your trade and so on.

As these exemptions demonstrate, filing for bankruptcy does not mean that a Tennessean needs to give up everything as part of the process. To the contrary -- they can retain quite bit. Tennesseans interested in learning more may benefit from discussing their situation with a bankruptcy attorney.

 

Source: startfreshtoday.com, "Personal exemptions allowed by Tennessee Bankruptcy Law," Accessed May 22, 2016

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