Tennessee bankruptcy laws combine the federal Bankruptcy Code with a set of state-specific exemptions that Tennessee filers are required to use in place of the federal exemption list. That combination decides three things that matter to you: which chapter you can file, which property the trustee cannot touch, and which debts actually go away when your case closes. The homestead exemption protects up to $35,000 in home equity for an individual filer, and the Chapter 7 means test for cases filed through March 2026 uses a median income of $62,339 for a one-earner household in Tennessee.
Chapter 7 or Chapter 13
Almost every consumer bankruptcy in Tennessee is one of two chapters. Chapter 7 is liquidation. A court-appointed trustee can sell your non-exempt assets to pay creditors, and in exchange most unsecured debts (credit cards, medical bills, old utility balances) are permanently discharged.1United States Courts. Chapter 7 – Bankruptcy Basics In practice, most Chapter 7 filers have nothing non-exempt for the trustee to sell, so the “liquidation” is mostly paperwork. A typical case runs three to four months from filing to discharge.
Chapter 13 is a repayment plan. You keep your property and pay a trustee monthly for three to five years, and the trustee distributes the money to creditors under a court-approved plan.2United States Courts. Chapter 13 – Bankruptcy Basics You need regular income to qualify. The main reason people choose Chapter 13 is to save something Chapter 7 would put at risk, most commonly a home in foreclosure or a car with too much equity to cover with the exemption. The trustee’s commission, generally around 10% of what runs through the plan, is built into your monthly payment.
Do You Qualify for Chapter 7
Chapter 7 eligibility runs through the means test. It compares your household income over the past six months to Tennessee’s median income for a household of your size. For cases filed through March 2026:
- One earner: $62,339
- Two-person household: $80,722
- Three-person household: $95,011
- Four-person household: $106,775, plus $11,100 for each additional person
Below the applicable figure, you pass and can file Chapter 7.3U.S. Trustee Program. Census Bureau Median Family Income By Family Size Above it, the test continues: certain allowed expenses come off your income, and if the remainder is too low to fund a repayment plan you still qualify. Filers who cannot get through the means test are pushed to Chapter 13 instead.
Chapter 13 has its own limits. As of April 2025, your unsecured debts must be under $526,700 and your secured debts under $1,580,125.4Office of the Law Revision Counsel. 11 USC 109 – Who May Be a Debtor These figures adjust for inflation. You also need steady income to keep up monthly plan payments for the full three to five years.
Prior filings create waiting periods. You cannot get a second Chapter 7 discharge within eight years of the first. Between Chapter 13 discharges the gap is two years.5United States Bankruptcy Court. Prior Bankruptcy – How Soon Can I Get Another Discharge If a previous case was dismissed within the past year, the automatic stay in your new case lasts only 30 days unless the court extends it, and with two or more dismissals in the prior year there is no stay at all without a judge’s order.6Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay
What Tennessee Lets You Keep
Tennessee opts out of the federal exemption list, so filers here must use the state’s exemptions. The dollar limits below decide what the Chapter 7 trustee cannot reach and how much you have to pay unsecured creditors in Chapter 13.
Home Equity
Tennessee’s homestead exemption protects up to $35,000 of equity in your primary residence for an individual filer. Joint owners who both use the property as their principal residence can protect up to $52,500 combined.7Justia Law. Tennessee Code 26-2-301 – Basic Exemption The exemption does not cover unpaid property taxes or the purchase mortgage on the home.
Personal Property and Vehicles
Tennessee gives filers a $10,000 personal property exemption that works as a wildcard: you choose which items to apply it to, from furniture and electronics to money in a bank account.8Justia Law. Tennessee Code 26-2-103 – Personal Property Selectively Exempt From Seizure There is no separate motor vehicle exemption in Tennessee, so this same $10,000 is what protects your car. If you own a car with $8,000 of equity, that leaves $2,000 of wildcard for everything else.
Wages
Unpaid earned wages are partly shielded. Tennessee follows the federal garnishment cap: no more than 25% of your disposable earnings, or the amount by which weekly earnings exceed 30 times the federal minimum wage, whichever is less.9Justia Law. Tennessee Code 26-2-106 – Maximum Amount Subject to Garnishment At least 75% of disposable earnings stay with you.
Retirement, Benefits, and Trade Tools
401(k)s and IRAs receive broad protection under federal law, and Tennessee reinforces those exemptions. Social Security, veterans’ benefits, unemployment compensation, and disability payments are exempt. Tools, professional books, and implements used in your trade are protected up to $1,900.10Justia Law. Tennessee Code 26-2-111 – Additional Exemptions Crime victim reparations are exempt up to $5,000, personal injury awards up to $7,500, and wrongful death payments up to $10,000, with a $15,000 combined cap across those three categories.
Debts That Bankruptcy Will Not Erase
Some debts survive a discharge under either chapter. The main ones under 11 U.S.C. ยง 523 are:11Office of the Law Revision Counsel. 11 US Code 523 – Exceptions to Discharge
- Child support and alimony
- Most recent income taxes and tax fraud penalties
- Student loans, unless a separate adversary proceeding proves undue hardship. Most courts apply the Brunner test, which requires showing you cannot maintain a minimal standard of living while repaying, your situation is unlikely to improve, and you made good-faith repayment efforts.
- Criminal fines and restitution
- Judgments for personal injury or death caused by drunk driving
- Debts you failed to list in your petition
Timing creates two more traps. Luxury purchases over $900 from a single creditor within 90 days before filing are presumed non-dischargeable. Cash advances totaling more than $1,250 within 70 days of filing carry the same presumption.12Federal Register. Adjustment of Certain Dollar Amounts Applicable to Bankruptcy Cases You can try to rebut the presumption, but the burden is on you.
Filing the Case
Consumer petitions go to the U.S. Bankruptcy Court for the Eastern, Middle, or Western District of Tennessee, based on where you live. The petition lists every asset, every debt, monthly income and expenses, and a sworn statement of financial affairs. Omitting an asset or underreporting income can get your case dismissed, and intentional misstatements can bring criminal charges carrying up to five years in prison.13Office of the Law Revision Counsel. 18 US Code 157 – Bankruptcy Fraud
Filing fees are $338 for Chapter 7 and $313 for Chapter 13. Installment plans are available, and Chapter 7 filers earning below 150% of the poverty line can apply for a fee waiver. Attorney fees vary, but a straightforward Chapter 7 typically starts around $1,300 and Chapter 13 runs $3,000 or more.
The Two Required Courses
Every filer takes two educational courses. Credit counseling from a U.S. Trustee-approved agency must be completed within 180 days before filing, and the certificate goes in with your petition.14U.S. Trustee Program. Frequently Asked Questions – Credit Counseling After filing but before discharge, you also complete a personal financial management course. Skip it and the court will not grant your discharge, no matter how far you have come in the case.15Office of the Law Revision Counsel. 11 USC 727 – Discharge Both are online and generally cost $15 to $50.
The 341 Meeting
Between 21 and 40 days after filing, the court schedules a meeting of creditors, known as the 341 meeting. Creditors rarely appear. The trustee runs it and questions you under oath about your paperwork and finances.16United States Department of Justice. Section 341 Meeting of Creditors Attendance is mandatory. In Chapter 13 cases the meeting also covers your proposed repayment plan.
The Automatic Stay
The moment you file, federal law imposes an automatic stay that stops most collection activity. Lawsuits, wage garnishments, collection calls, and foreclosure sales all pause.17Office of the Law Revision Counsel. 11 US Code 362 – Automatic Stay Creditors who knowingly ignore the stay can be held in contempt and ordered to pay damages.
The stay has limits. It does not stop criminal proceedings, most tax audits, or the collection of child support and alimony. A creditor can also ask the court to lift the stay by showing cause, which happens often with car loans when payments fall behind. And as noted above, repeat filers face a shortened stay or none at all.
Keeping a Financed Car or House: Reaffirmation
In Chapter 7, discharge wipes out your personal liability on secured debts, but the lender’s lien on the property survives. If you want to keep a financed car, one route is a reaffirmation agreement, a voluntary contract to continue paying the loan as if you never filed. Reaffirmations must be filed with the court before discharge. If you have a lawyer, the lawyer certifies the agreement does not create undue hardship. Without a lawyer, or when the agreement leaves you with a budget deficit, a judge has to approve it.18Office of the Law Revision Counsel. 11 US Code 524 – Effect of Discharge You can cancel a reaffirmation within 60 days after it is filed with the court or before discharge is entered, whichever is later.
The trade-off is real. If you reaffirm a car loan and later default, the lender can repossess the vehicle and sue you for the remaining balance. You have given up the bankruptcy protection on that debt.
Credit and Life After Discharge
A Chapter 7 stays on your credit report for ten years from the filing date. Chapter 13 stays for seven.19United States Bankruptcy Court. How Many Years Will a Bankruptcy Show on My Credit Report The impact hits hardest in the first two to three years and fades from there. Credit card offers often start arriving within months of discharge, though at unfavorable terms.
Rebuilding usually starts with a secured credit card (you deposit money as collateral) or a credit-builder loan from a credit union. Small, consistent, on-time use is the point. Within two to three years many filers can qualify for a reasonable car loan, and FHA mortgage guidelines allow applications as early as two years after a Chapter 7 discharge or one year into a Chapter 13 plan.
Employers in Tennessee can pull credit reports during hiring, especially for financial roles. Federal law bars using a bankruptcy filing as the sole reason to deny employment, but it can weigh alongside other factors. Landlords routinely check credit when screening tenants, and a recent bankruptcy can make securing a lease harder.
Alternatives Worth Considering First
Bankruptcy is not always the right tool. Debt settlement means negotiating a lump sum for less than you owe; creditors sometimes accept because they would recover less in bankruptcy. Forgiven debt over $600 is generally reported to the IRS as taxable income.
Debt consolidation rolls several high-interest balances into one payment, ideally at a lower rate. Nonprofit credit counseling agencies can set up a formal debt management plan under which creditors agree to reduced interest and waived fees in exchange for structured monthly payments. Those agencies must be licensed in Tennessee and are regulated under state consumer protection laws.
For homeowners behind on payments, loan modification or forbearance with the lender can buy time without the credit damage of a filing. Tennessee is a non-judicial foreclosure state, so lenders do not need a court order to foreclose, which makes acting early important if you are falling behind.