Tennessee Bankruptcy Exemptions

Disclaimer: This page is general legal information, not legal advice. Bankruptcy exemption amounts and rules can change. Consult a licensed Tennessee bankruptcy attorney before filing.

Why Tennessee Uses Its Own Exemption Schedule

When you file for bankruptcy, exemptions are the laws that protect your property from being liquidated by the trustee. Federal bankruptcy law offers a set of exemptions under 11 U.S.C. § 522(d), but it also allows each state to opt out and require its residents to use state-law exemptions instead. Tennessee exercised that right through T.C.A. § 26-2-112, making Tennessee an opt-out state.

This means that if you file bankruptcy in Tennessee, you must use Tennessee’s exemptions — you cannot choose whichever set is more generous. Understanding what Tennessee protects (and what it does not) is essential before deciding whether and how to file.

The Homestead Exemption

Tennessee’s homestead exemption protects equity in your primary residence. Under T.C.A. § 26-2-301, the current amounts are:

• $35,000 for a single owner
• $52,500 for joint owners who both occupy the property as their principal residence

These amounts were significantly increased effective January 1, 2022. Prior to that date, the single-filer limit was $5,000 — a fraction of the current protection. If your home equity is below the applicable cap, a trustee cannot force a sale of your home in Chapter 7. If it exceeds the cap, the trustee may sell the home, pay you the exempt amount, and use the remainder to pay creditors.

The Wildcard Exemption — and Your Vehicle

Tennessee provides a $10,000 wildcard exemption under T.C.A. § 26-2-103, which can be applied to any personal property the debtor selects, including money and bank deposits. Unlike many states, Tennessee has no separate motor vehicle exemption. If you have equity in a car, truck, or other vehicle, that equity must be protected using all or part of this $10,000 wildcard. A debtor with a vehicle worth more than the wildcard allowance risks losing it in Chapter 7 unless the loan balance is close to the vehicle’s value.

Retirement Accounts

Tennessee provides strong protection for retirement savings. Under T.C.A. § 26-2-105, retirement accounts qualified under Internal Revenue Code sections 401(a), 403(b), 408 (traditional IRA), 408A (Roth IRA), 414, 457, and similar provisions are essentially fully exempt with no dollar cap. This protection applies in both Chapter 7 and Chapter 13. Most filers can retain their entire retirement savings regardless of the account balance.

Absolutely Exempt Property

Certain items are protected entirely regardless of value under T.C.A. § 26-2-104: necessary wearing apparel, family portraits, and the family Bible. No dollar cap applies to these items — the trustee cannot touch them.

Life Insurance and Annuity Proceeds

Proceeds from life insurance policies and annuity contracts are exempt under T.C.A. § 26-2-110 when they are payable to the debtor’s spouse, child, or dependent. The purpose of this exemption is to ensure that death benefits and annuity payments intended for dependents are not diverted to the debtor’s creditors.

Tools of Trade

If your livelihood depends on specific tools, equipment, or instruments, Tennessee exempts up to $1,900 in tools of trade under T.C.A. § 26-2-111(4). This is a modest exemption; filers with significant professional equipment should plan carefully.

Personal Injury Awards

Tennessee exempts up to $7,500 in personal injury awards for bodily injury under T.C.A. § 26-2-111. This protects a portion of a personal injury settlement or judgment from being claimed by the bankruptcy trustee.

Wage Garnishment Limits

Tennessee follows the federal Consumer Credit Protection Act (CCPA) limits on wage garnishment, incorporated through T.C.A. § 26-2-106. The amount a creditor can garnish is the lesser of: 25% of disposable earnings, or the amount by which disposable earnings exceed 30 times the federal minimum wage per week. Filing bankruptcy stops all garnishments via the automatic stay, but these limits apply outside of bankruptcy as well.

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Related guides:

• How Bankruptcy Works in Tennessee
• Chapter 7 Bankruptcy in Tennessee
• Chapter 13 Bankruptcy in Tennessee