Snap to face didn't help as expected I did the following:


Imported my character from make human.
Added a plane. Moved it to center. 
Split it in half. Removed the left half. 
Enabled mirror. 
In view display enabled in front. 
Enabled snap to face.
Added a shrinkwrap modifier.
Extruded the t-shirt along the character. 
Now when I disable "in front" in view display, the t-shirt seems to be below the character mesh.


I thought with snapping to face and the shrinkwrap modifier it would be over the character.

Now what are the options I have other than manually pulling out all the vertices?
Finally I did the following:


Applied shrinkWrap modifier.
Applied mirror modifier
Used ShirkFlatten and was able to scale the tshirt


But still few vertices were sticking to body object.

Then finally ended up clearing things. Selected faces from body object that will form tshirt and duplicated it. Then P to separate then Shrink Flatten. Used this as tshirt, it was easier this way.