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What bankruptcy exemptions can Tennesseans utilize?

To some Tennesseans, bankruptcy is a scary word. To them, the term conjures up images of destroyed finances and being left with absolutely nothing after creditors take it all. In fact, bankruptcy does not take the shirts off the backs of filers. Tennessee law allows the debtor to keep certain property under bankruptcy exemptions. The exemptions allow debtors to keep some property, remain in their community, and participate in the economy.

Perhaps the biggest asset many bankruptcy filers are concerned about is their home. Fortunately, a homestead exemption exists that is directly tied to home equity. The amount of the exemption is based on many factors, including marital status, age, and the number of dependents the filer has. For example, an individual who is 62 or older can exempt $12,500 if unmarried, or $20,000 if married. Up to $25,000 may be exempted if both spouses are 62 or older. Those who own a home in joint tenancy may claim up to $7,500 in exemptions and tenancies by the entirety may have no limit if debt is held by one spouse.

Those who are considering filing for bankruptcy may also be concerned that their wages will be garnished. However, wages may be protected, too. Under state bankruptcy law, a bankruptcy filer can keep the greater of 30 times the minimum wage or 75 percent of weekly disposable income. A filer may be able to keep more of his or her wages if he or she has children.

There are many other exemptions that include injury settlements, education scholarships, personal property, insurance and disability benefits, and pensions. This area of law can quickly become complicated, so it is best to work with an experienced bankruptcy attorney to make sure one is maximizing their exemptions. Hopefully then a bankruptcy filer will feel confident going through the bankruptcy process, knowing that he or she is about to open a door that leads to freedom from debt.

Source:, "Tennessee Bankruptcy Exemptions," Kathleen Michon, accessed on July 27, 2014

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