Hi Ignite,
As Ehamlotiran mentioned Nvidias Destructibles and Cloth are included in the engine from the get go and you can use the engine to get the basics of what you would like.
However, if you use the plugins Destructibles for 3Ds Max you can do more. There is a stand alone version of the destructibles for max named PhysX Labs that you can sign up for free and download from Nvidias site.
You will need to play and tweak with the settings to get everything setup the way you would like. It will probably require some time reading through the documentation for Nvidias Destrucibles from their site.
If you have any questions or need help let us know! 
Tim