When filing for bankruptcy, particularly Chapter 7, you don’t need to sell all your property to pay creditors. Some properties are exempted from bankruptcy. However, while there are federal exemptions, each state, including Tennessee, has its own set of exemptions.
Here is what you should know about this matter:
Tennessee does not allow residents to use federal exemptions
Tennessee is one of the states that do not allow the use of federal exemptions. Residents must use the state’s bankruptcy exemptions.
Therefore, in the homestead category, single filers are exempted $5,000, $7,500 for joint owners, $12,500 for individuals who are 62 years and older, $20,000 for married couples with one spouse aged 62 years and older, $25,000 for married couples who are both 62 years and older and $25,000 for individuals with a minor child in their custody.
Other vital categories that differ include personal property, pensions, public benefits, tools of trade, alimony and child support and insurance.
Tennessee does not have an automobile exemption
Federal bankruptcy exemptions include motor vehicles under personal property, and petitioners are exempted up to $ 3,675. But this is not the case in Tennessee, as the state doesn’t have automobile exemption. However, petitioners have a wildcard exemption of $10,00 to use on any personal property. Thus, one can use this option to exempt car equity.
Some of the federal bankruptcy exemptions are arguably more comprehensive. For instance, they exempt personal injury recovery up to $22,975 except for pain and suffering or pecuniary losses, whereas Tennessee exempts personal injury recoveries to $7,500. However, the state has special exemptions. For example, its household exemptions are unique and fair. Further, the state’s wildcard exemption is generous.
Bankruptcy exemptions can be complicated. You should obtain adequate information to make informed decisions.
