Bankruptcy Exemptions when Filing Bankruptcy in Phoenix
What Can I Exempt If I am Filing Bankruptcy in Arizona?
Arizona Bankruptcy Exemptions Include:
The top 5 exemptions under Arizona state law.
Arizona Homestead Exemptions in Bankruptcy
Arizona debtors can protect up to $150,000 of home equity through the bankruptcy process. Married couples filing jointly cannot double the Arizona homestead exemption. (Thus, it is $150,000 for a single individual or a married couple.) Additionally, it is also important to keep in mind that Arizona homestead exemptions apply to your primary residence, not investment property. Therefore, you cannot use the homestead exemption to shield real estate that you do not currently occupy. A.R.S. § 33-1101. This is very important to follow.
Phoenix Vehicle Exemptions in a Bankruptcy
There is an Arizona BK exemption for a vehicle. In addition to the protection afforded to homestead property in Arizona, Debtors can exempt one car with $6,000 of equity or $12,000 of equity if the debtor is currently disabled. A.R.S. § 33-1125(8).
Personal Property Exemption in Phoenix
Arizona bankruptcy exemptions allow debtors to protect property beyond just their homes and cars. Debtors can exempt $6,000 of value in household furnishings and goods or $12,000 if a married couple filed a joint case. A.R.S. § 33-1123.
Other notable Arizona BK Exemptions, which can also be doubled if filing jointly, include:
- All food, fuel, and provisions for the debtor and his or her family to last up to 6 months. A.R.S. § 33-1124.
- All wearing apparel up to $500 in value. A.R.S. § 33-1125(1).
- All musical instruments not to exceed $400 in value. A.R.S. § 33-1125(2).
- Domestic pets, horses, milk cows, and poultry with a fair market value not to exceed $500 in value. A.R.S. § 33-1125(3).
- All engagement and wedding rings with a fair market value not to exceed $2,000. A.R.S. § 33-1125(4).
- $5,000 in tools of the trade (does not include vehicle). A.R.S. § 33-1130(1).
Exempted Wages in Phoenix
Another popular exemption in Arizona is the wage exemption. Therefore, Up to 75% of all disposable earnings are exempt. A.R.S. § 33-1131(B).
Arizona Exempted Retirement/Pensions
IRAs, in addition to public pensions and retirement payments, are exempt. Social Security payments also are exempt.
It’s important to note that these exemption amounts change periodically, so check in with a bankruptcy attorney to see how the exemptions may apply in your case.
What Are Bankruptcy Exemptions?
Bankruptcy exemptions are specific laws. Exemptions are either based the Bankruptcy Code and vary by state as each state has it’s own specific bankruptcy exemptions. BK exemptions in Arizona determine what property your creditors and your bankruptcy Trustee can’t touch. If one of your assets are exempt, the asset can not be taken by either the bankruptcy trustee nor your creditors.
Property that is exempt can’t be sold for the benefit of your unsecured creditors. To protect your property, you have to claim an appropriate bankruptcy exemption when filing bankruptcy. If you don’t claim any exemptions, or you claim the wrong exemption, the property is not protected from the Chapter 7 bankruptcy trustee.
Who Can Claim Exemptions when Filing Bankruptcy?
Only individuals can claim exemptions when filing bankruptcy. This includes married couples filing jointly. Business entities can’t claim property exempt. Typically, when a business files a bankruptcy case under Chapter 7 of the Bankruptcy Code, the business closes and its property is returned to secured creditors or sold to pay unsecured creditors. Individuals and married couples don’t “go out of business” like that, so they’re able to protect certain types of property.
How Does a Debtor Claim Bankruptcy Exemptions?
When filing bankruptcy in Phoenix you submit a document titled Schedule C to the Bankruptcy Court. This is the document where you (or your bankruptcy lawyer) “claim” your BK exemptions by listing the state law or Bankruptcy Code provision and specify the exemption amount. Thus, each type of property you own is matched with the law that protects it.