Tennessee Bankruptcy Laws : Tennessee State Exemptions

Complete state of Tennessee bankruptcy exemptions laws which protect a debtor’s property when personal bankruptcy is filed.

6-2-301. Basic exemption.

(a) An individual, whether a head of family or not, shall be entitled to a homestead exemption upon real property which is owned by the individual and used by the individual or the individual’s spouse or dependent, as a principal place of residence. The aggregate value of such homestead exemption shall not exceed five thousand dollars ($5,000); provided, individuals who jointly own and use real property as their principal place of residence shall be entitled to homestead exemptions, the aggregate value of which exemptions combined shall not exceed seven thousand five hundred dollars ($7,500), which shall be divided equally among them in the event the homestead exemptions are claimed in the same proceeding; provided, if only one (1) of the joint owners of real property used as their principal place of residence is involved in the proceeding wherein homestead exemption is claimed, then the individual’s homestead exemption shall be five thousand dollars ($5,000). The homestead exemption shall not be subject to execution, attachment, or sale under legal proceedings during the life of the individual. Upon the death of an individual who is head of a family, any such exemption shall inure to the benefit of the surviving spouse and their minor children for as long as the spouse or the minor children use such property as a principal place of residence.
(b) If a marital relationship exists, a homestead exemption shall not be alienated or waived without the joint consent of the spouses.
(c) The homestead exemption shall not operate against public taxes nor shall it operate against debts contracted for the purchase money of such homestead or improvements thereon nor shall it operate against any debt secured by the homestead when the exemption has been waived by written contract.
(d) A deed, installment deed, mortgage, deed of trust, or any other deed or instrument by any other name whatsoever conveying property in which there may be a homestead exemption, duly executed, conveys the property free of homestead exemption, but the homestead exemption may not be waived in a note, other instrument evidencing debt, or any other instrument not conveying property in which homestead exemption may be claimed.
(e) Notwithstanding the provisions of subsection (a) to the contrary, an unmarried individual who is sixty-two (62) years of age or older shall be entitled to a homestead exemption not exceeding twelve thousand five hundred dollars ($12,500) upon real property that is owned by the individual and used by the individual as a principal place of residence; a married couple, one (1) of whom is sixty-two (62) years of age or older and the other of whom is younger than sixty-two (62) years of age, shall be entitled to a homestead exemption not exceeding twenty thousand dollars ($20,000) upon real property that is owned by one (1) or both of the members of the couple and used by the couple as their principal place of residence; and a married couple, both of whom are sixty-two (62) years of age or older, shall be entitled to a homestead exemption not exceeding twenty-five thousand dollars ($25,000) upon real property that is owned by one (1) or both of the members of the couple and used by the couple as their principal place of residence.
(f) Notwithstanding subsection (a) to the contrary, an individual who has one (1) or more minor children in the individual’s custody shall be entitled to a homestead exemption not exceeding twenty-five thousand dollars ($25,000) on real property that is owned by the individual and used by the individual as a principal place of residence.

26-2-106. Maximum amount of disposable earnings exempt from garnishment — Garnishment costs.

(a) The maximum part of the aggregate disposable earnings of an individual for any workweek which is subjected to garnishment may not exceed:

(1) Twenty-five percent (25%) of the disposable earnings for that week; or
(2) The amount by which the disposable earnings for that week exceed thirty (30) times the federal minimum hourly wage at the time the earnings for any pay period become due and payable, whichever is less.

(b) In the case of earnings for any pay period other than a week, an equivalent amount shall be in effect.
(c) The debtor shall pay the costs of any and all garnishments on each debt on which suit is brought.

26-2-107. Exemptions for dependent children.

(a) To the above allowances, there shall be added as exempt to the judgment debtor the sum of two dollars and fifty cents ($2.50) per week for each dependent child under sixteen (16) years of age and a resident of this state.
(b) It is the responsibility of the judgment debtor to inform the employer of each dependent child claimed under this section.
(c) The provisions of this section shall not apply if the debtor fails to so inform the employer.
26-2-103. Personal property selectively exempt from seizure.
Personal property to the aggregate value of four thousand dollars ($4,000) debtor’s equity interest shall be exempt from execution, seizure or attachment in the hands or possession of any person who is a bona fide citizen permanently residing in Tennessee, and such person shall be entitled to this exemption without regard to the debtor’s vocation or pursuit or to the ownership of the debtor’s abode. Such person may select for exemption the items of the owned and possessed personal property, including money and funds on deposit with a bank or other financial institution, up to the aggregate value of four thousand dollars ($4,000) debtor’s equity interest.

26-2-104. Additional personal property absolutely exempt.

(a) In addition to the exemption set out in § 26-2-105, there shall be further exempt to every resident debtor the following specific articles of personalty:

(1) All necessary and proper wearing apparel for the actual use of debtor and family and the trunks or receptacles necessary to contain same;
(2) All family portraits and pictures;
(3) The family Bible and school books.

(b) The exemption under this section is absolute, and may be exercised by the judgment debtor before or after issuance of any execution, seizure or attachment by a judgment creditor, unless a judgment creditor, is by execution, foreclosing a security agreement on such property.

26-2-105. State pension moneys, certain retirement plan funds or assets, exempt.

(a) All moneys received as pension from the state of Tennessee, or any subdivision or municipality thereof, before receipt, or while in the recipient’s hands or upon deposit in the bank, shall be exempt from execution, attachment or garnishment other than an order for assignment of support issued under § 36-5-501, whether such pensioner is the head of a family or not.
(b) Except as provided in subsection (c), any funds or other assets payable to a participant or beneficiary from, or any interest of any participant or beneficiary in, a retirement plan which is qualified under §§ 401(a), 403(a), 403(b), 408 and 408A, or an Archer medical savings account qualified under § 220 or a health savings account qualified under § 223 of the Internal Revenue Code of 1986, as amended, are exempt from any and all claims of creditors of the participant or beneficiary, except the state of Tennessee. All records of the debtor concerning such plan and of the plan concerning the debtor’s participation in the plan, or interest in the plan, are exempt from the subpoena process.
(c) Any plan or arrangement described in subsection (b), except a public plan under subsection (a), is not exempt from the claims of an alternate payee under a qualified domestic relations order. However, the interest of any and all alternate payees under a qualified domestic relations order are exempt from any and all claims of any creditor, other than the state of Tennessee. As used in this subsection (c), “alternate payee” and “qualified domestic relations order” have the meaning ascribed to them in § 414(p) of the Internal Revenue Code of 1986, as amended. Notwithstanding any provision of this subsection (c) to the contrary, an optional retirement program established pursuant to title 8, chapter 35, part 4, shall honor claims under a qualified domestic relations order; provided, that such order complies with the provisions of § 8-35-410.
26-2-109. Debtor deserting family — Property exempt in hands of spouse or children.
When a debtor absconds or leaves such debtor’s family, the exempted property shall be set apart for the use of the spouse and family, and shall be exempt in the hands of the spouse or children.

26-2-110. Insurance benefits exempt.

(a) There shall be exempt from the claims of all creditors, and from execution, attachment, or garnishment, any sum or sums of money which may hereafter become due and payable to any person, who is a resident and citizen of this state, from any insurance company or other insurer, under the terms and provisions of any contracts of accident, health, or disability insurance insuring the assured against loss by reason of accidental personal injuries, or insuring the assured against loss by reason of physical disability resulting from disease.
(b) In the event of the death of any such person so insured as set out in subsection (a), any sum or sums of money so due and payable at the time of the death of the insured shall likewise be exempt from the claims of all creditors and from execution, attachment or garnishment, in the same manner as provided in §§ 56-7-201, 56-7-203.
(c) As regards those cases where disability may have begun prior to May 21, 1937, the exemptions granted in subsections (a) and (b) shall apply to installment payments under such contract or contracts of insurance which may become due and payable for such weekly, monthly or other installment term (as determined by the contract of insurance) as may have commenced on or after such date.

26-2-111. Additional exemptions — Certain benefit payments — Awards — Tools of trade — Health care aids — Child support obligations.
In addition to the property exempt under § 26-2-103, the following shall be exempt from execution, seizure or attachment in the hands or possession of any person who is a bona fide citizen permanently residing in Tennessee:

(1) The debtor’s right to receive:

(A) A social security benefit, unemployment compensation, a Families First program benefit or a local public assistance benefit;
(B) A veterans’ benefit;
(C) A disability, illness, or unemployment benefit, or a pension that vests as a result of disability;
(D) To the same extent that earnings are exempt pursuant to § 26-2-106, a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of death, age or length of service, unless:

(i) Such plan or contract was established by or under the auspices of an insider that employed the debtor at the time that the debtor’s rights under such plan or contract arose;
(ii) Such payment is on account of age or length of service; and
(iii) Such plan or contract does not qualify under §§ 401(a), 403(a), 403(b), 408, 408A, or 409 of the Internal Revenue Code of 1954 [26 U.S.C. §§ 401(a), 403(a), 403(b), 408, 408A or 409];
The assets of the fund or plan from which any such payments are made, or are to be made, are exempt only to the extent that the debtor has no right or option to receive them except as monthly or other periodic payments beginning at or after age fifty-eight (58). Assets of such funds or plans are not exempt if the debtor may, at the debtor’s option, accelerate payment so as to receive payment in a lump sum or in periodic payments over a period of sixty (60) months or less;

(E) Alimony to the extent that payment becomes due more than thirty (30) days after the debtor asserts a claim to such exemption in any judicial proceeding; and
(F) Child support payments to the extent that payment becomes due more than thirty (30) days after the debtor asserts a claim to such exemption in any judicial proceeding;

(2) The debtor’s right not to exceed in the aggregate fifteen thousand dollars ($15,000) to receive or property that is traceable to:

(A) An award not to exceed five thousand dollars ($5,000) under a crime victim’s reparation law;
(B) A payment, not to exceed seven thousand five hundred dollars ($7,500) on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or
(C) A payment not to exceed ten thousand dollars ($10,000) on account of the wrongful death of an individual of whom the debtor was a dependent;

(3) A payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor;
(4) The debtor’s aggregate interest, not to exceed one thousand nine hundred dollars ($1,900) in value in any implements, professional books, or tools of the trade of the debtor or the trade of a dependent of the debtor;
(5) Professionally prescribed health care aids for the debtor or a dependent of the debtor; and
(6) Liquid assets, stocks or bonds, to the extent of the amount of any obligations owed by the debtor pursuant to any final court order or judgment for child support. The exemption shall be effective as of the date such exemption is claimed by the debtor or by an intervening representative of the child or children to whom such support is owed. Further, this exemption is only valid if such assets are immediately deposited into court by the debtor or immediately executed upon, seized or attached on behalf of the child or children for the partial or full satisfaction of child support obligations.

26-2-305. Family cemeteries and burial lots.
Any interest or estate in a family cemetery, not in excess of one (1) acre, or in a burial lot in a cemetery, or a space in a mausoleum, or a certificate of ownership thereof, is exempt from levy of execution or attachment except as in case of homestead.
8-36-111. Exemption of benefits from execution, attachment, garnishment and assignment. (Public Employees)
All retirement allowances and other benefits accrued or accruing to any person under the provisions of chapters 34-37 of this title, the accumulated contributions of members and the cash and assets in the funds created under chapters 34-37 of this title shall not be subject to execution, attachment, garnishment, or other process whatsoever, nor shall any assignment thereof be enforceable in any court.

13-11-115. Payments not to be considered as income or resources.

(a) No payment received by a displaced person under this chapter shall be considered as income or resources for the purposes of determining the eligibility or extent of eligibility of any person for assistance under any state law or for the purposes of the state’s corporation tax law, or other tax laws.
(b) These payments shall not be considered as income or resources of any recipient of public assistance and the payments shall not be deducted from the amount of aid to which the recipient would be entitled.
(c) No payments under this chapter shall be subject to attachment or execution at law or equity.

49-4-108. Deposit of funds.

(a) All scholarship funds shall be deposited in special funds or trust funds established for the purpose of depositing all funds, contributions, donations, pledged earnings, interest, income and dividends, except enrollment fees and dues as set forth in § 49-4-103(b)(2), to be used exclusively and solely for scholarships and educational benefits for members found eligible and uses set out in the plan.

(1) The deposits or payments into the special funds or trust funds, and disbursements out of the funds, shall not be subject to levy, attachment or garnishment on account of any debts or liabilities of the corporation or of any member, trustee of member or recipient.
(2) The special fund is to be deposited in and managed by an insured bank or banks having trust powers, as trustees.

(b) The trustees shall be selected or appointed by the corporation and approved by the commissioner.
(c) The commissioner is authorized to adopt regulations respecting such security by the depository that is necessary for the protection of the funds and to assure their availability for the purposes set forth in the plan or plans under which the moneys are received.
(d) Operating capital of the corporation shall not be deemed trust funds. Operating capital shall consist of enrollment fees and annual dues of members. Advancements to the corporation for working capital shall be deemed operating capital repayable from the fees and dues only.

49-5-909. Exemption of benefits from process — Nonassignability.
All annuities granted and payable out of the teachers’ retirement fund shall be and are exempt from seizure or levy upon attachment, execution, supplemental process and all other process, whether mesne or final. The annuities or any payment of the annuities shall not be subject to sale, assignment or transfer by any beneficiary, and such transfer shall be absolutely void.
49-7-822. Exemption of assets and benefits from taxation, execution, garnishment and assignment.
Notwithstanding any law to the contrary, all assets, income and distributions of college education savings plans authorized by federal law, this part, part 9 of this chapter or by the laws of another state are exempt from any state, county or municipal tax and shall not be subject to execution, attachment, garnishment, the operation of bankruptcy, the insolvency laws or other process whatsoever, nor shall any assignment thereof be enforceable in any court. This exemption shall include, but is not limited to, plans defined in § 529 of the Internal Revenue Code, codified in 26 U.S.C. § 529, accounts properly designated as education savings accounts, education IRAs or future tuition payment plans, however described, and shall include any properly authorized payments made to or by such funds.

50-6-223. Exemption and nonassignability of compensation claims — Exceptions to nonassignability. (Workers’ Compensation)

(a) No claim for compensation under this chapter shall be assignable, and all compensation and claims for compensation shall be exempt from claims of creditors.
(b) Notwithstanding subsection (a), compensation made by periodic payments shall be subject to income assignment for payment of support as provided by title 36, chapter 5, part 5 and § 50-2-105.
(c) Notwithstanding subsection (a), the department of human services shall have a lien on any lump-sum settlements for the collection of current or overdue support as defined by § 36-5-113, and may enforce the lien as provided by title 36, chapter 5, part 9.
56-7-203. Life insurance or annuity for or assigned to spouse or children or dependent relatives exempt from claims of creditors.
The net amount payable under any policy of life insurance or under any annuity contract upon the life of any person made for the benefit of, or assigned to, the spouse and/or children, or dependent relatives of the persons, shall be exempt from all claims of the creditors of the person arising out of or based upon any obligation created after January 1, 1932, whether or not the right to change the named beneficiary is reserved by or permitted to that person.
56-25-1403. Exemption from attachment, garnishment or other process.
No money or other benefit, charity, relief or aid to be paid, provided or rendered by any society, shall be liable to attachment, garnishment or other process, or to be seized, taken, appropriated or applied by any legal or equitable process or operation of law to pay any debt or liability of a member or beneficiary, or any other person who may have a right thereunder, either before or after payment by the society.
71-2-216. Assistance not assignable — Exemption from execution. (Old-Age Assistance)
Assistance granted under this part is not transferable or assignable, at law or in equity, and none of the money paid or payable under this part shall be subject to execution, levy, attachment, garnishment or other legal process, or to the operation of any bankruptcy or insolvency law.
71-4-117. Assignment of benefits — Exemption. (Aid to Blind)
Assistance granted under this part shall not be transferable or assignable, at law or in equity, and none of the money paid or payable under this part shall be subject to execution, levy, attachment, garnishment or other legal process, or to the operation of any bankruptcy or insolvency law.
71-4-1112. Assignment of benefits — Exemption. (Aid to Disabled)
Assistance granted under this part shall not be transferable or assignable, at law or in equity, and none of the money paid or payable under this part shall be subject to execution, levy, attachment, garnishment or other legal process, or to the operation of any bankruptcy or insolvency law.

Note:While this reference information is current as of October 2010, it may not reflect the most up-to-date exemption figures on official state of Tennessee bankruptcy court statutes.

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