Arizona bankruptcy law allows for a set of exemptions for assets when filing for personal bankruptcy under any chapter. Exemptions are property the debtor, that is you, can keep when you file for bankruptcy and are later discharged therefrom.
You can only exempt assets specified under the law. There are some debts that are non-dischargeable, or cannot be erased by a judge. Examples of non-dischargeable debt include income taxes owed, student loans, and child support and domestic support obligations. There are much more.
Exemptions apply to single persons or married couples filing for bankruptcy. Married couples who file jointly can claim typically claim all exemptions unless a judge specifies otherwise. Here is a list of notable exemptions under Arizona law:
- Homestead—Real Property, like a home, where the debtor lives that is worth up to $150,000. Exemptions for sale last 18 months after or until a new property is purchased. A married couple cannot double the exemption up to $300,000 however.
- Personal property like furniture, vehicles worth less than $6,000, family portraits, electronic gadgets, rugs, bank deposits up to $150, books, and so on that are worth up to $4,000. A married couple can double personal property exemptions.
- Insurance proceedings such as group life insurance policies, fraternal benefit society proceeds, disability benefits, health insurance claims, and life insurance cash value up of total $25,000 (up to $1,000 per person, or $2,000 per dependent). A married couple can double life insurance value exemptions.
- Earnings of a minor child.
- Business or partnership property.
- Various types of pensions, such as ERISA, 401ks, the board of regents members, IRAs, government worker pensions such as those for firefighters and state employees.
- Public benefits received such as unemployment benefits, worker’s compensation, and welfare.
- Value of tools of the trade such as arms, farm machinery, uniforms, teaching aids, and seeds, animal feeds, and so on.
- Unearned wages for about 75 percent, payment pensions, and other forms of wage income.
The above is just a summary of exemptions. You can ask your bankruptcy attorney in Scottsdale for detailed clarifications. Some exemptions have value limits that you need to get clarified. Married couples can double on some exemptions, but not others.
Exemption limits also apply to equity debtors may have on their real property. Equity is defined as the difference between what the debtor owes on the real property and the actual value of the real property. For example, if you took out a $200,000 mortgage on a house worth $300,000 you would have $100,000 equity in the home.
Some equity is covered by exemptions, so the debtor can repay a previous loan. If the exemption doesn’t cover all of the property, then the appointed trustee can liquidate the asset and distribute the profits. However, remember that not all properties are exempt. You can still keep property without exemption by paying the trustee value of the property.
In addition to the above, there could be federal exemptions for which you are eligible. The federal exemptions are in addition to your Arizona exemptions. In the end, you should contact a lawyer to check out your eligibility for federal exemptions.