Protect property would go from $4K to $10K

By Richard Locker, Commercial Appeal
March 19, 2010

NASHVILLE — Two Memphis area legislators voted Thursday against the first increase since 1980 in the value of personal assets a debtor can exempt from seizure or attachment in a bankruptcy.

Republican Sens. Brian Kelsey of Germantown and Delores Gresham of Somerville voted against the bill that passed 23-6, despite arguments for it by some of their fellow conservatives.

“This will allow the debtor to keep a little bit more personal property — maybe beds for their family, maybe a TV set, maybe a refrigerator — basic essentials you need in your home to get a fresh start,” said Sen. Dewayne Bunch, R-Cleveland, a lawyer who represents small businesses against debtors.

Sponsored by Sen. Lowe Finney and Rep. Jimmy Eldridge, a Democrat and a Republican from Jackson, the bill:

Increases to $10,000 the total amount of unsecured personal property a debtor can claim as an exemption, from the $4,000 set in 1980.

Exempts for the first time the federal refunds debtors receive for the child tax credit and the earned income credit on their federal tax returns. Some bankruptcy courts in Tennessee already exclude those refunds but others don’t, Bunch said.

The bill won an 89-4 vote in the House Monday but without the tax credit exemptions. It passed the Senate Thursday with tax refunds as an amendment. The two chambers must resolve that difference for it to win final approval.

Kelsey and Gresham were the only two West Tennessee legislators among the 10 in both chambers who voted “no” on the bill.

“I just think we have a problem in this country in that we are spending more money than we have and I am opposed to any legislation that will encourage Americans to spend more money than we have,” Kelsey said.

He said he is concerned with the tax refund exemptions. “It seems to me that if you receive a windfall and you owe a bunch of money to creditors, that you ought at least give some sort of credence to the idea that you pay some of that back to the creditors.”

Gresham did not speak during the 40-minute debate. Sen. Mark Norris, R-Collierville, abstained after expressing concern with the bill’s failure to clarify whether the higher exemptions apply only to credit issued after it goes into effect or to credit previously extended.

Bunch rejected arguments that it would increase bankruptcies. “It will do absolutely nothing to encourage bankruptcy. I think it will perhaps help because if you get a true fresh start, you won’t have to go back to bankruptcy again.”

He said Tennessee has one of the lowest exemptions levels and will remain among the lowest if it passes.

Comments are closed.