Property Exemptions in Arizona Bankruptcy
One of the main concerns, and myths, about filing bankruptcy is that you are going to lose everything and be left on the street with nothing. That’s just not true.
The U.S. Bankruptcy Code was not written so that people who find themselves in financial difficulty are left with nowhere to turn after bankruptcy. Bankruptcy is intended to give debtors a fresh start, which includes being able to keep certain essential property so that you can stay on your feet.
In a Chapter 13 proceeding, the court does not take any property because you are paying back your debt over time. In a Chapter 7 bankruptcy, your nonexempt property is sold and the funds are distributed to your creditors to satisfy your debt. But you can keep exempt property.
The Definition of “Exempt Property”
In bankruptcy, the trustee takes control of your property and liquidates it to pay off creditors. However, there is a long list of exemptions under Arizona law. Exemptions are items of property you can keep (up to a stated fair market value) even if you file for bankruptcy.
Since the goal of bankruptcy is to give you a fresh start, rather than put you out on the street, the law does not take everything away. For example, you can keep most of your common household goods and furnishings, like furniture, beds and appliances.
What follows are several types of exemptions in Arizona (disclaimer: the exemption amounts are subject to change from time to time as the legislature sees fit):
**Homestead: **Interest in real property upon which debtor’s house sits, condominium or cooperative, mobile home, or mobile home in which debtor resides plus the land upon which the mobile home is located in the amount of $150,000. May not be doubled by husband and wife. (A.R.S. § 33-1101)
Personal property: Household furniture, furnishings and appliances not to exceed $4,000 (fair market value). (A.R.S. § 33-1123)
All food, fuel and provisions for debtor’s individual or family use to last up to six months. (A.R.S. § 33-1124)
All wearing apparel used primarily for personal, family or household purposes with a fair market value not to exceed $500. (A.R.S. § 33-1125(1))
One car with a fair market value not to exceed $5,000. If debtor is physically disabled, the fair market value of the motor vehicle shall not exceed $10,000. (A.R.S. § 33-1125(8))
Life insurance proceeds not to exceed $20,000 if payable to surviving spouse or child upon the life of a deceased spouse, parent or legal guardian. (A.R.S. § 33-1126(A)(1))
Child support or spousal maintenance received pursuant to a court order. (A.R.S. § 33-1126(A)(3))
IRAs (In re Herrscher, 121 B.R. 29 (D. Ariz. 1990))
Workers' compensation benefits (A.R.S. § 23-1068)
Welfare assistance benefits (A.R.S. § 46-208)
There are other types of exemptions but these are the highlights. We will help you understand everything you need to know about property exemptions.
Contact our office today to discuss your exemption questions with a lawyer. We are located next to the Arizona Biltmore golf resort. Call (602) 648-3274 or send us an email to get started.
We are a debt relief agency. We help individuals and businesses file for bankruptcy relief under the Bankruptcy Code.