In bankruptcy, an exemption is what you are allowed to keep. Bankruptcy is meant as a way to satisfy creditors seeking unpaid money from you. Often times you are required to liquidate, or sell, your assets in order to use the money from the sales to pay back creditors. Under the rules of Arizona motor vehicle exemption you might be able to keep your car, truck, van, or other motor vehicle if you file for Chapter 7 bankruptcy.
Motor Vehicle Exemption in Arizona
Arizona’s motor vehicle exemption rules will determine whether or not your bankruptcy trustee will be able to take your motor vehicle to repay your unsecured creditors. If the equity of your motor vehicle is less than Arizona’s car exemption, then a trustee will not be allowed to sell it. But, if the equity in your motor vehicle is significantly more than the applicable exemption amount, a trustee will likely to sell your motor vehicle in order to repay your unsecured creditors.
Even if the motor vehicle has not been sold by a bankruptcy trustee, a lender is still able to repossess the car either during or after the bankruptcy as a way to satisfy debt.
Cars, trucks, vans, or other vehicles are also covered under the exemption law, but you are only allowed to exempt one vehicle. If the vehicle that you chose to exempt is damaged or destroyed, any compensation or proceeds a debtor receives is also exempt.
In Arizona, you can exempt up to $6,000 in equity in your motor vehicle or other vehicle.
What this means is that if the motor vehicle is worth $10,000, but you owe $7,000, you have $3,000 of equity in the motor vehicle. Should you file for bankruptcy, under the Arizona motor vehicle exemption, you are able to exempt the $3,000 of equity and keep your car.
This amount doubles to $12,000 if you are physically disabled.
Married couples filing a joint bankruptcy petition in Arizona are able to double the listed exemption amounts. This means that if you are married and filing a joint bankruptcy in Arizona, you are able to exempt up to $12,000 in equity in your motor vehicle.
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.
668 N. 44th St., Ste 320, Phoenix, AZ 85008