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Bankruptcy Exemptions in Arizona

Just like with any legal actions or processes, there are rules that vary from state to state. When it comes to declaring bankruptcy in the state of Arizona, there are some exemptions that you will come across.

Bankruptcy Exemptions in Arizona

When a person files for Chapter 7 bankruptcy or Chapter 13 bankruptcy in Arizona they are able to protect some or all of their property under Arizona’s bankruptcy exemptions. Additionally, Arizona has “opted out” of federal bankruptcy exemptions so a debtor is only allowed to exempt property under the state’s laws.

Here are some of the exemptions a debtor has in Arizona:

Married couples filing for joint bankruptcy in Arizona are allowed to “double” the exemption amount for certain items including motor vehicles and household goods.

Alimony and child support, up to the amount needed for support.

Debtors are allowed to exempt up to $150,000 (per debtor or married couple) of their home or other property under the homestead exemption.

Life insurance benefits up to $20,000. They must be payable or received by a surviving spouse or child.

Claims for the destruction of, or damage to, any exempted property.

Up to $6,000 in one or more motor vehicles. For debtor’s that are elderly or disabled, or an elderly or disabled spouse that is a dependent of a debtor, the exemption amount is up to $12,000.

All benefits from various employee pension systems are exempt.

Just as with federal rules, tax exempt retirement accounts (401ks and IRAs) are exempt.

A debtor may exempt the following personal property items:

  • up to $150 in watches
  • up to $250 in books
  • up to $400 in musical instruments
  • up to $500 in clothing
  • up to $800 in animals
  • up to $1,000 total of the following: bible, bicycle, typewriter, sewing machine, computer, burial plot, rifle, pistol, or shotgun
  • up to $2,000 in engagement and wedding rings
  • up to $6,000 in household furniture as well as appliances that are not already covered by other exemptions
  • prepaid rent or security deposit to $2,000 or 1.5 times your rent (whichever is less), in lieu of using the homestead exemption
  • awards received as the result of wrongful death
  • all teaching materials for youth, and
  • certain professionally prescribed health aids.

Unemployment compensation is exempt only if it is not co-mingled with other funds and only if it is not being used for child support orders.

A debtor is able to exempt the lesser of the following wages, per week:

  • 25% of disposable earnings, or
  • earnings in excess of 30 times the federal minimum wage.

This does not apply to taxes and is also modifiable to account for any support claims.

Workers’ compensation is exempt. Employers are entitled to receive a credit for benefits that have already been awarded.

Working with a Bankruptcy Attorney

Bankruptcy can be an overwhelming process. That’s why we advise that you work with a phoenix business bankruptcy lawyer that is familiar with various debt repayment options. We are committed to helping our clients understand their rights and options under the bankruptcy law and developing the debt relief solution that makes the most sense for each individual. We invite you to call (602) 648-3274 or contact our Arizona office to schedule a free initial consultation.

AZBK Lawyers

668 N. 44th St., Ste 320, Phoenix, AZ 85008

(602) 648-3274

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