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Written by Canterbury Law Group

Can You File Bankruptcy For Medical Bills

You can file for bankruptcy to discharge or manage medical bills. Medical debt is considered unsecured debt, meaning it’s not tied to any specific asset, and it can be included in bankruptcy filings. There are two primary types of bankruptcy that individuals often file in the U.S. to manage medical debt:

1. Chapter 7 Bankruptcy (Liquidation Bankruptcy):

  • How it works: In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay off creditors, but most people who file do not have significant assets that can be liquidated. After the process, most unsecured debts, including medical bills, can be discharged (eliminated).
  • Impact on medical bills: Medical bills are typically fully discharged in Chapter 7, meaning you are no longer legally obligated to pay them.
  • Eligibility: To qualify for Chapter 7, you must pass a “means test,” which examines your income, expenses, and ability to pay back debts. If your income is below the median for your state, you likely qualify.

2. Chapter 13 Bankruptcy (Reorganization Bankruptcy):

  • How it works: In a Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over a three to five-year period. Unsecured debts like medical bills are included in the repayment plan, but after the repayment period, any remaining unsecured debts may be discharged.
  • Impact on medical bills: Medical bills are part of the debts that can be reorganized and partially repaid under this plan. Any remaining amount after the plan period may be discharged.
  • Eligibility: Chapter 13 is an option for individuals who do not qualify for Chapter 7 or who want to keep certain assets (such as a home or car) that they might lose under Chapter 7. It also requires a regular income.

Considerations:

  • Credit score: Filing for bankruptcy will negatively impact your credit score for several years (up to 10 years for Chapter 7 and 7 years for Chapter 13).
  • Consult an attorney: Bankruptcy laws can be complex, and consulting with a bankruptcy attorney can help you determine which type of bankruptcy is best for your situation.

Overall, bankruptcy is a legal way to manage overwhelming medical debt and can provide relief for individuals facing financial hardship due to medical expenses.

Can You Negotiate Medical Bills?

Yes, you can file for bankruptcy to discharge or manage medical bills. Medical debt is considered unsecured debt, meaning it’s not tied to any specific asset, and it can be included in bankruptcy filings. There are two primary types of bankruptcy that individuals often file in the U.S. to manage medical debt:

1. Chapter 7 Bankruptcy (Liquidation Bankruptcy):

  • How it works: In a Chapter 7 bankruptcy, non-exempt assets may be sold to pay off creditors, but most people who file do not have significant assets that can be liquidated. After the process, most unsecured debts, including medical bills, can be discharged (eliminated).
  • Impact on medical bills: Medical bills are typically fully discharged in Chapter 7, meaning you are no longer legally obligated to pay them.
  • Eligibility: To qualify for Chapter 7, you must pass a “means test,” which examines your income, expenses, and ability to pay back debts. If your income is below the median for your state, you likely qualify.

2. Chapter 13 Bankruptcy (Reorganization Bankruptcy):

  • How it works: In a Chapter 13 bankruptcy, you create a repayment plan to pay back some or all of your debts over a three to five-year period. Unsecured debts like medical bills are included in the repayment plan, but after the repayment period, any remaining unsecured debts may be discharged.
  • Impact on medical bills: Medical bills are part of the debts that can be reorganized and partially repaid under this plan. Any remaining amount after the plan period may be discharged.
  • Eligibility: Chapter 13 is an option for individuals who do not qualify for Chapter 7 or who want to keep certain assets (such as a home or car) that they might lose under Chapter 7. It also requires a regular income.

Considerations:

  • Credit score: Filing for bankruptcy will negatively impact your credit score for several years (up to 10 years for Chapter 7 and 7 years for Chapter 13).
  • Consult an attorney: Bankruptcy laws can be complex, and consulting with a bankruptcy attorney can help you determine which type of bankruptcy is best for your situation.

Overall, bankruptcy is a legal way to manage overwhelming medical debt and can provide relief for individuals facing financial hardship due to medical expenses.

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Bankruptcy Exemptions
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Federal and State Bankruptcy Exemptions

What are Bankruptcy Exemptions?

Bankruptcy exemptions are laws that allow debtors to protect certain property from being taken by creditors during the bankruptcy process. These exemptions help ensure that individuals can maintain a basic standard of living while resolving their debts. The specific exemptions available can vary by state, but they generally fall into two categories: federal exemptions and state exemptions.

Federal Bankruptcy Exemptions

The federal bankruptcy code provides a set of exemptions that apply in every state. Debtors can choose to use these exemptions instead of state exemptions if the state allows it. Some common federal exemptions include:

  1. Homestead Exemption: Protects a certain amount of equity in the debtor’s primary residence. In 2024, the federal homestead exemption is $27,900.
  2. Motor Vehicle Exemption: Protects up to $4,450 in equity in one motor vehicle.
  3. Personal Property Exemptions: Protects specific amounts of equity in personal property, such as:
    • Household goods and furnishings (up to $700 per item, with a total limit of $14,875).
    • Jewelry (up to $1,875).
    • Tools of the trade (up to $2,800).
  4. Wildcard Exemption: Allows debtors to protect any property up to a certain amount. In 2024, the federal wildcard exemption is $1,475, plus up to $13,950 of any unused portion of the homestead exemption.
  5. Retirement Accounts: Protects most tax-exempt retirement accounts, such as 401(k)s and IRAs, up to a certain limit (IRAs are capped at $1,512,350).
  6. Public Benefits: Protects Social Security, unemployment, and disability benefits.
  7. Life Insurance: Protects life insurance policies with a loan value up to $14,875.

State Bankruptcy Exemptions

Each state has its own set of bankruptcy exemptions, and some states allow debtors to choose between the state and federal exemptions. States that do not allow the use of federal exemptions require debtors to use state exemptions. Some examples of state exemptions include:

  1. Homestead Exemption: Varies widely by state. Some states, like Florida and Texas, offer unlimited homestead exemptions, while others have specific dollar limits.
  2. Motor Vehicle Exemption: Amounts vary by state. For example, California allows up to $3,325 in equity in one motor vehicle.
  3. Personal Property Exemptions: Protect specific types and amounts of personal property, such as:
    • Clothing, furniture, and appliances.
    • Tools of the trade.
  4. Wages: Many states protect a portion of the debtor’s wages from garnishment.
  5. Retirement Accounts: Most states offer exemptions for retirement accounts similar to federal protections.
  6. Public Benefits: Protects various public benefits, such as Social Security, unemployment, and disability benefits.
  7. Wildcard Exemptions: Some states offer a wildcard exemption that can be applied to any property.

Choosing Exemptions

Debtors must choose either the federal or state exemptions, depending on their state of residence. In some cases, the choice of exemptions can significantly impact the outcome of the bankruptcy case. Consulting with a bankruptcy attorney can help debtors understand which set of exemptions is more beneficial for their situation.

Arizona Exemptions

At Canterbury Law Group, our Scottsdale attorneys are renowned bankruptcy technicians. We represent clients through the entire bankruptcy process and, although all cases are unique, the end goal of bankruptcy is always a new beginning and fresh financial start.

We help clients determine eligible exemptions for their bankruptcy case. Here are some of the most common exemptions available under Arizona law (meaning that they will emerge from bankruptcy):

  • Alimony and Child Support – Alimony and child support, up to the amount needed for support. 33-1126.
  • Bank Deposit – A debtor may exempt $300 in a single bank account. Ariz. Rev. Stat. Ann. § 33–1126(8).
  • Homestead or Residential Property – Under Arizona law, debtors may exempt up to $150,000 (per debtor or married couple) of their home or other real property covered by the homestead exemption. Ariz. Rev. Stat. Ann. §§ 33–1101, 33–1103 and 33–1104.
  • Insurance Benefits – Life insurance benefits that are payable or received by a surviving spouse or child, up to $20,000.
  • Claims for the destruction of, or damage to, exempt property – Cash surrender value of life insurance policies, subject to length of ownership requirements and other exceptions.
  • Motor Vehicles – A debtor may exempt up to $6,000 in one or more motor vehicles. An elderly or disabled debtor, or an elderly or disabled spouse or dependent of the debtor, may exempt up to $12,000.
  • Pension and Retirement Benefits – Benefits from various employee pension systems are exempt. Ariz. Rev. Stat. Ann. §§ 33–1126 and 38–792.
  • Personal Property – A debtor may exempt the following personal property:
    • up to $6,000 in household furniture and appliances not covered by other exemptions
    • up to $1,000 total in bible, bicycle, sewing machine, typewriter, computer, burial plot, rifle, pistol or shotgun
    • up to $500 in clothing
    • up to $400 in musical instruments
    • up to $800 in animals
    • up to $2,000 in engagement and wedding rings
    • up to $250 in books
    • up to $150 in watch
    • wrongful death awards
    • prepaid rent or security deposit to $2,000 or 1.5 times your rent, whichever is less, in lieu of using homestead exemption.
    • all teaching materials for youth, and
    • certain professionally prescribed health aids.
  • Tools of the Trade – A debtor may exempt up to $5,000 in trade implements, which includes farming tools if the debtor’s primary income is from farming. All arms and uniforms that a debtor is legally required to keep are exempt. Library and teaching aids of a teacher.
  • Unemployment Compensation – Unemployment compensation is exempt as long it is not commingled with other funds and except for the enforcement of child support orders. Ariz. Rev. Stat. Ann. § 23–783.
  • Wages – A debtor may exempt the lesser of the following wages, per week:
    • 25% of his or her disposable earnings, or
    • earnings in excess of 30 times the federal minimum wage
    • Workers’ Compensation – A debtor may exempt up to $6,000 in one or more motor vehicles. An elderly or disabled debtor, or an elderly or disabled spouse or dependent of the debtor, may exempt up to $12,000.

Our legal team is ready to represent you in your Scottsdale business or personal bankruptcy case. Call us today to schedule your consultation. Our track record speaks for itself! 480-744-7711.

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Your 2019 Financial Resolutions to Get On Top of Your Debts

Making New Year’s resolutions can be challenging. Where do you start and what should it be about? Some popular resolutions revolve around finances – make more money, pay off the credit card, get out of debt, and another similar turn the corner ideas.

If you are struggling financially and worried about filing for bankruptcy, consider making a New Year’s resolution to help you take control of your debt.

Although when in doubt, there is your top bankruptcy attorney in Scottsdale, the lawyers do not always intend to file for bankruptcy for every client. Consider making some of the following financial resolutions to help you get on top of your debt.

Learn More About Finances

Make a New Year’s resolution to improve your financial literacy. The more you understand finances and how money, budgeting, investing, and debt work, the better off you can become.

The internet has tons of blogs that seek to help you take control of your finances. Browse through some that offer information to teach you about finances, rather than provide band-aid solutions to a single problem.

Start a Budget

If you are struggling with debt, you have likely heard the word budget from time to time. That is because a budget is one of the best ways to give you a snapshot of your actual financial situation. A budget shows you how much money you bring in each month and where you are spending it all each month.

To start a budget, write down your total monthly income after taxes. Then, begin to create expense categories. First, write out your fixed expenses (rent or mortgage, insurances, utility bills, and anything else that stays the same or similar each month), then move to your variable expenses (the ones that change month to month like entertainment or dining out). Be specific and honest with your categories.  Keep track of the spending on your phone or on a small notebook in your car.  Every dollar.

Increase Your Monthly Income

Another good resolution to help with debt is to aim at increasing your monthly income. It could be as little as $100 a month or up to $1,000. No matter what the number is though, make sure it’s realistic for you.

There are many side gigs you can do on top of your full-time job. You can get into some freelance work, teach students on the side (for example, guitar or piano lessons), or if you have a hobby in which you create things, you could start selling them.  You can drive for Uber or Lyft a few nights a week, for example.

Set Up a Savings or Emergency Account

Even though if you are in debt and you want to retire it quickly; it’s important that you have an emergency fund. That money is not there for whenever you want it. It’s there for when you absolutely need it.

Ask yourself if you could afford a $500 unexpected expense right now. Would you be okay, or would it push you even farther into debt? Either way, it’s in your best interest to start setting aside small amounts of money each month into an emergency account.

Target a Certain Debt

If you have multiple debts, one of your resolutions could be to target a particular debt. Instead of making the minimum payments on each debt every month, bump up the amount you pay for one debt that has the highest interest rate.

Take the debt with the highest interest rate and make that your primary target first. With the other debt, keep up with the minimum payments. Once you pay off the debt with the largest interest rate, that money can go towards the next debt, and so on. It will turn into a snowball effect until you have everything paid off.  It might take years to get there, but at least you will be on the path to paying everything off and avoiding bankruptcy.

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Moving Forward After Filing for Bankruptcy

Filing for bankruptcy is not something families want to do. Unfortunately, though, it is something many American’s have to do.

Filing for bankruptcy is not the end of the world. In reality, it is actually the opposite for many people. It can be looked at as a fresh start with finances, and a way to plan your path to financial freedom. However, it isn’t as easy as it sounds. After filing for bankruptcy, it takes a lot of time and dedication to continue moving forward. Bankruptcy is not a quick fix and is a decision that must be taken seriously.

For some, when the possibility of bankruptcy is an option, the question of how to move forward afterward will come up. With our bankruptcy help in Scottsdale, and along with some of the following tips, we will help you move on with your life after claiming bankruptcy.

Keep Paying Any Reaffirmed Debts

Some debts can survive bankruptcy, which means you will still have to pay them down. There are loans which are entitled to the value of the collateral. This means you will still be required to make the payments agreed upon in the original loan documents.

It would help if you didn’t look at these reaffirmed debts at as something negative. As long as you continue to make your payments on time, the reaffirmed debts can help you rebuild your future credit score.

Use a Secured Credit Card

Continuing with life without a credit card can be challenging. Many companies require a credit card before making a reservation, renting something, or even trying to purchase an item.

Using a credit card is what also helps build and improve your credit rating. A good credit score will allow you to apply for loans and mortgages, whereas a negative credit score is likely to get you denied. However, if you have a poor credit score or went through the bankruptcy process, it could be difficult to obtain one.

A secured credit card is something you should consider using after going through bankruptcy. These credit cards a basically pre-paid cards. You must deposit money into the card account before making any purchases with the card. The money is used as collateral; therefore you can only spend up to what you deposited. You can, though, deposit more to increase your credit, or even be rewarded an increased credit line from the bank.

Avoid Building Debt

One of the best things to do after applying for bankruptcy is avoiding what got you there in the first place. Try not to accumulate any new debt. Keep paying all of your bills on time. Create a budget to help you keep your spending in check, as to not spend more than what you’re earning. The more you can do to keep your cash flow higher than your expenses, the better chance you have of avoiding any more debt.

Don’t let bankruptcy be the end of your finances and your life. Although it will require work on your part, you should think of it as a fresh start to help you get your finances under control. By committing to it, you’ll be able to repair your credit score, pay off all of your loans, and work your way towards financial freedom.

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Keep Your Credit – Avoid Bankruptcy

Debt is scary. When you open up your account and see that you owe more money than you can spare, it can quickly become overwhelming. Sometimes, the stress leads one to believe that the only remaining option is to file for bankruptcy.

Although bankruptcy doesn’t have to be the end of the world, it is best to leave it as a last resort option. If you can no longer pay any of your debt and have done all that you can to try and get afloat, bankruptcy may be your only option and ironically, the best option.

Before you make your decision, see if there are any other things you can do before calling for bankruptcy help in Scottsdale.

Sell, Sell, and Sell Some More

When the word bankruptcy comes to mind when you look at your finances, that is when you know you need to take immediate legal action. See what you have that you can afford to live without and sell it. The more quick cash you can bring it, the more debt you can pay off and avoid filing for bankruptcy.  But do not do anything until you seek counseled advice from licensed bankruptcy lawyers.

Bring in More Money

See if there are ways that you can bring in more money each month. That additional income could go straight to your debt to pay it off quicker. There are many side-gig jobs available that will pay a decent wage. Whether it be a skill you have that you can teach to children, or are crafty and can sell items, there are lots of little things you can do for extra cash.

Crack Down on Your Spending

If you still have a bit of time before you have no choice but to file for bankruptcy, sit down and go through your spending habits. See where you can make cuts and by how much. Set up a budget based on your monthly income, and try to get as much money going into your debt as possible.  But do not do any of this until speaking to a licensed bankruptcy lawyer who can and will help you map it all out in advance—do not guess on the right steps, let your lawyer show you the actual steps to make as you go.  This feels better, a lot better, as you go.

Ask for Help

There is no shame in bankruptcy.  The President of the United States has done it. It is so easy to get ourselves into debt, and so hard to get out of it. Maybe all you need is a small loan from a family member to get your payments back on schedule. Asking for help from family, friends, and professional financial people can help keep you on track to avoid bankruptcy.  Your lawyers too will show a way out.

If you’ve done all you can and bankruptcy is your only hope, do not fret. Bankruptcy does not mean the end. Although it will affect your credit score, you can then get yourself back on your feet and start over.  Your bankruptcy attorneys will show you through the tunnel to the next and hopeful life phase beyond discharge.

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5 Logical Ways to Grow Your Money

Saving and growing your money is, oftentimes, easier than you think. There are a number of rudimentary saving habits that you can start today that could positively impact your money. Top bankruptcy lawyer in Scottsdale recommends adhering to the following five tips in order to double your money this year.

Automation

It’s important to automate your financial life. This means transferring your funds directly from your checking account to an interest-bearing savings account. Think about it: when you automate your financial life (putting money into a retirement or savings account), you won’t feel inclined to cut back on savings.

Track Expenses

It’s absolutely critical to have an in-depth understanding of where your money is going. You must look closely at your spending habits in order to figure out where you can cut back.

Monitor

Another important component to growing your money is making sure you monitor and measure your progress. Consider evaluating your net worth on a daily basis; you will find this both motivating and rewarding.

Alter Your Mindset

It’s never too late to start saving. Thus, you need to commit to saving money right here, right now.

Invest

The only way to build significant wealth is to have your money go to work for you through investments. Rather than having your money idle in a savings account (which is still good), throw those funds right into the market. Ultimately, the compound interest you earn will provide great returns.

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Five Must-Know Money-Saving and Success Tips

As you know, people rarely find success by accident. It’s important to set yourself up for financial gains by adhering to some of the best advice out there. Let’s take a look at five indispensable money-saving and success tips for your personal benefit.

Be Passionate

For most individuals, finding exactly what they love and monetizing it is one of life’s biggest challenges. Those tips are exactly what tycoon Warren Buffet says drove him to success in investing and finding great deals. Ultimately, being successful in almost anything means having a passion for it. If you see someone with even fair intelligence and a burning passion for what they do, they will almost undoubtedly find success.

Write Everything Down

Some of the most successful people make lists of all kinds. These can vary from lists of people to call, ideas, and/or companies to set up. Furthermore, you can create lists of topics to blog about, tweets to send, and even about upcoming plans. It’s important to write down every single idea you have, no matter how big or small, and then to challenge yourself to follow through. In doing so, you’ll be able to set financial priorities and reach your goals.

It’s Not All Luck

It’s easy to chalk up your success to being in the right place at the right time, but at the end of the day, no legitimate achievement can come without hard work. At times, success can be a lousy teacher; it seduces smart people into thinking they can’t lose. Don’t ever stop hustling or learning. As logic tells us, past success doesn’t ensure future success. Even the smartest and most talented people can lose.

Be Disciplined

The first step to getting rich requires a tremendous amount of discipline. Bankruptcy lawyers in Scottsdale note that if you really want to be rich, you need to find that discipline. If you’re looking to make money, you always need cash available. You aren’t saving for retirement. You are saving for the moment you need cash. Buy and hold is a relic. Ultimately, the first step to becoming rich is being a smart shopper and following through on that.

Find Online Resources

It is wise to check for discounts before you make a purchase. Websites like couponcabin.com and apps like Pic2Shop can help save you a lot of money. Furthermore, don’t forget to always check sites that give you cash back for your purchases, like ebates.com.

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3 Reasonable Alternatives to Bankruptcy

Declaring bankruptcy is a relatively extreme measure. Having said that, when used in the right way and at the right time, it can actually save you money, sustain your peace of mind, and get you back in a good place financially.  It can literally set you free.

Nonetheless, declaring bankruptcy can also be expensive and time-consuming. Furthermore, it can have an enormous impact on your credit score. As a result, this can have far-ranging effects on other aspects of your life, such as applying for an auto or home loan and even applying for jobs. You may be surprised to learn that waiting to declare bankruptcy until you are broke can actually do more harm than good.  If you’re on the path to financial ruin, you likely should consider bankruptcy sooner, not later.  You will end up with more in the end.

Because declaring for bankruptcy has long-lasting effects, bankruptcy lawyers in Scottsdale recommend the following alternatives to help you navigate through your financial situation.

Pay Bills Another Way

Working a second or third job is never a good time, nor is it a great way to spend your evenings and weekends. If it’s just for a short period of time, however, the extra income could put a real dent in your debt. What could be better? Although it may be difficult, consider working another job or two in order to make extra cash, if you can climb out of your debt hole within 12 to 24 months, this non-bankruptcy approach may make sense.

Follow a Budget

You’d be surprised to learn that many people don’t follow a budget and, as a result, don’t have a strong grasp on where their money goes (other than to pay bills, of course). In the absence of a written budget, it’s very difficult to see where or how you can make changes in your life that will free up your money.

For many people, the largest portions of our income go towards housing and transportation costs. For example, if you rent, downsizing your home and moving to a smaller place or searching for a roommate could largely impact your rent cost (it could also save you money on utilities as well). If your car is a gas guzzler, for example, selling and buying a small, fuel-efficient car could save you a lot of money that can be put towards debt payments.

Negotiate With Your Lenders

Fortunately, many lenders will lower interest rates or even consider adjusting your payment plan if you tell them you’re going to file for bankruptcy. This is particularly true of credit card companies, which stand to lose the most. Don’t be afraid to negotiate with your lenders in order to alleviate part of your situation. Or hire your bankruptcy counsel to conduct these negotiations for you.

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When to File For Bankruptcy

When it comes to filing for bankruptcy, timing is everything. While everybody’s situation is different, divorce lawyers in Scottsdale suggest paying attention to the following four signs, which may mean that it’s the right time to file for bankruptcy.

Behind on Bills

Sure, life is certainly unpredictable and, generally speaking, you may not be prepared for a financial crisis. If you are in a tough position and know you won’t be able to pay your bills on time each month, (or have already fallen behind), filing for bankruptcy can really help you get back to where you need to be. For example, a Chapter 7 bankruptcy is deemed a liquidation bankruptcy that is structured to immediately eliminate your debts. Throughout this process, your Trustee will sell your property and use the funds to compensate your creditors. Unless otherwise
specified by you, your automobile can also be included in the sale of your property.

You’re in Debt Through a Collection Agency

If you have debt that’s been building up, there is a chance you may end up being sued if you continue to ignore debt collectors. Filing for bankruptcy can really help if you think you may end up in this position. Filing for bankruptcy puts what’s known as an “automatic stay” against debt collectors and can put an end to any additional collection actions.

Your Wages Are Garnished

In order to pay down a debt, creditors often take extra action to ensure the amount owed is legitimately paid. In doing so, collection agencies obtain a court order to garnish your wages. As soon as this happens, your employer is bound by law to hold back a specified amount from each paycheck, which ultimately goes towards paying down the debt that you owe. Similar to being sued, the automatic stay after filing for bankruptcy can block a company from further garnishing your wages.

You Might Lose Your House or Car

Let’s say you’re behind on payments for your house or car. Bankruptcy might be an effective way to stop repossession or even foreclosure (even if it’s temporarily). Furthermore, this will give you enough time to catch up on payments. Nonetheless, you’ll always want to speak with your lender regarding various options before you take an initial step.
—
A great deal of thought should go into the decision to file for bankruptcy. As always, you should seek advice from an attorney if this is something you are considering. The sooner you consult a lawyer, the better, do not wait until the last minute when all of your money is gone and your debts are at their peak levels.

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Chapter 7 Bankruptcy Exemptions in Arizona

The Bankruptcy Code is governed by federal law, which means that many aspects of bankruptcy such as the “automatic stay” apply similarly regardless of the state the petitioner lives and files in. However, it’s important to know that Arizona has legally opted out of many federal bankruptcy exemptions under the code. So people who file for bankruptcy in the state can obtain exemptions only according to state laws. This particularly pertains to property exemptions. State bankruptcy exemptions work similarly for both Chapter 7 and Chapter 13 bankruptcy in the state. If you are filing for a Chapter 7 bankruptcy, read below to find out which exemptions you may qualify for in the state:

Residential Property and Homestead Assets

Arizona’s homestead exemption allows debtors to exempt up to $150,000 equity value from any real property considered a home. Other real property may also qualify if it falls within Arizona’s homestead laws. The exemption is the same for single as well as married couples. You will have to contact a lawyer regarding which of your real properties can be exempted under the homestead exemption clause in the state.

Certain Types of Personal Property

The courts allow debtors to get exemptions for various items that can be considered “personal property.” Your personal property includes items you own like clothes, computers, guns, furniture, books, pet animals, musical instruments, health aids, and wrongful death awards among others. The state allocates a specific amount of each personal property as exemptions. For example, Chapter 7 petitioners can exempt up to $2,000 for a wedding ring. You should refer to Ariz. Rev. Stat. §§ 33–1123, 33–1125 and 33–1127 for more information, or ask an experienced bankruptcy lawyer.

Deposits

A debtor filing for bankruptcy can exempt up to $300 from deposits in one bank account. If you have multiple bank accounts, contact a bankruptcy attorney in Scottsdale to find out how you can obtain exemptions.

Motor Vehicles

Arizona has very specific exemptions for motor vehicles for Chapter 7 bankruptcy. The courts allow debtors to exempt up to $6,000 equity for each vehicle owned. Elderly petitioners or their elderly or disabled spouses can exempt up to $12,000.  Again, consultation with your legal counsel is essential.

Retirement Benefits and Pension Funds

Under federal rules, qualified retirement plans such as 401ks and IRAs, which have tax-exempt status, are also exempt in bankruptcy proceedings. Arizona upholds this rule. In addition, debtors who benefit from any type of state employee pension plan can obtain exemptions. Amounts will vary depending on the type of plan you have.  So let’s say you have $200,000 in retirement assets, you can still file and procure a bankruptcy discharge and still own your $200,000 in retirement accounts post-discharge.

Life Insurance Benefits

Up to $20,000 in life insurance that could be paid to a child or a living spouse can be exempted when filing for Chapter 7 bankruptcy. Cash surrender value will be considered for exemptions. Similar exemptions can be obtained for insurance plans that cover ill health, accidents or disability. Insurance claims for damages or destruction to property that is exempt will also be exempted from proceedings. There are many insurance exemptions, but there are also exceptions. It’s important to ask a highly qualified lawyer whether your insurance benefits can be exempted under Chapter 7 bankruptcy proceedings.

Child Support

Arizona exempts all child support or alimony payments from discharge when filing for bankruptcy. So filing for bankruptcy is not a valid reason to not pay court ordered alimony or child support.  You are your estate (after you die) will owe child support and alimony for life—and even then, your estate will be compelled to pay.

Fraternal Benefit Society Benefits

If you claim benefits from the Fraternal Benefit Society, they will all be exempted under Arizona law. To find out more about exemptions you can get when filing for Chapter 7 bankruptcy, contact an experienced bankruptcy lawyer or call Canterbury Law Group at 480-744-7711.

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