Arizona Bankruptcy Exemptions: Protect Your Property in 2024

Exemptions help you protect your property and assets in bankruptcy. Arizona has opted out of federal bankruptcy exemptions. If you’ve lived in Arizona for at least two years, you must use state exemption laws. Arizona offers a generous homestead exemption of $250,000. The motor vehicle exemption is $15,000 for single filers. If you or a dependent is disabled, that amount increases to $25,000. Arizona does not have a wildcard exemption.

Why Exemptions Matter in Chapter 7 Bankruptcy

Exemptions are laws that determine what property you can keep when filing Chapter 7 bankruptcy.

Most Chapter 7 filers get to keep all their property. But if you own assets beyond a basic standard of living, the bankruptcy trustee can sell them. The proceeds go to your creditors. Losing property is actually quite rare in Chapter 7 cases.

Bankruptcy gives you a fresh start while being fair to creditors. Exemptions protect your property so you don’t start over with nothing.

Can You Use Federal Bankruptcy Exemptions in Arizona?

No. Arizona has opted out of the federal bankruptcy exemptions.

If you’ve lived in Arizona for at least two years, you must use state exemption laws. You also get federal non-bankruptcy exemptions. These help protect retirement accounts and benefits like Social Security.

Arizona’s Bankruptcy Exemptions Explained

Different types of property have different exemption amounts under Arizona law. Here are the most commonly used exemptions in the Grand Canyon State.

Note: Certain exemption amounts increase annually for cost of living. Always check current statutes for the latest numbers.

Arizona Homestead Exemption

Arizona has a very generous homestead exemption of $250,000.

You can protect up to $250,000 of equity in:

• A home you own and the land it sits on
• A condo or cooperative you own
• A mobile home you own and the land it sits on

The homestead exemption amount is the same for single filers and married couples. You can’t double this amount if you’re married.

How to Calculate Home Equity

Equity equals your home’s current fair market value minus your mortgage balance.

For example, your home is valued at $400,000. You still owe $300,000 on it. You have $100,000 in equity. In this case, your home is fully protected by Arizona’s homestead exemption.

If you rent but paid a security deposit, you can protect up to $2,000.

Motor Vehicle Exemption in Arizona

Under state law, you can protect up to $15,000 of equity in a car.

If you or a dependent has a physical disability, you can protect up to $25,000.

If you own your car outright, your equity equals its fair market value. You can find this value on sites like Kelley Blue Book.

If you’re financing your car, subtract what you owe from its fair market value. The result is your equity.

Personal Property Exemptions

Personal property includes everything from household goods to electronics, food, fuel, and wedding rings. Different categories have different exemption amounts.

Unlike the homestead exemption, married couples filing jointly can double personal property exemptions. The items must be for personal use.

Here are common personal property exemption amounts:

• $15,000: Household goods, furnishings, electronics, and appliances
• $500: Wearing apparel
• $400: Musical instruments
• $1,000: Horses, milk cows, poultry
• $250: Your library, books, manuals, and personal documents
• $2,000: Engagement and wedding rings
• $250: One watch
• $2,000: One typewriter, computer, bicycle, sewing machine, family bible, and burial plot
• $2,000: Firearms
• $5,000: Tools of the trade
• $2,500: Farming tools if farming is your primary income

The following items are fully exempt:

• Up to six months of food, fuel, and provisions
• All legally required arms and uniforms
• Library and teaching aids of a teacher
• Domestic animals and household pets
• Prescribed prostheses, wheelchairs, and motorized mobility devices

Money Benefits and Financial Accounts

Not all property is tangible. Some comes as money or benefits you’re entitled to. Arizona bankruptcy exemptions protect these money benefits:

• Up to $300 of bank deposits in a single account
• Fraternal benefit society benefits
• Life insurance benefits up to $20,000 if payable to a surviving spouse or child
• Alimony and child support (fully exempt)
• Certain pension benefits (fully exempt)
• Qualified retirement plans (fully exempt)
• Tax-exempt retirement accounts like 401(k)s and IRAs (fully exempt)
• Unemployment compensation
• Workers’ compensation
• Welfare assistance benefits

How to File Chapter 7 Bankruptcy in Arizona

If you’re thinking about filing Chapter 7 bankruptcy in Arizona, understanding the process helps. You don’t need a lawyer to file. But you do need to follow specific steps and complete required forms.

Here’s what filing Chapter 7 bankruptcy typically involves:

1. Collect financial documents like pay stubs, tax returns, and bank statements.
2. Complete a credit counseling course from an approved provider. You must finish this before filing.
3. Fill out the bankruptcy forms. These include federal forms and a few specific to Arizona. You can download and complete them yourself or speak with a bankruptcy attorney for free.
4. Submit your forms to your local Arizona bankruptcy court. Either pay the $338 filing fee or apply for a fee waiver or payment plan.
5. Mail required documents to your bankruptcy trustee. Attend a short meeting called a 341 meeting.
6. Complete a second required course called debtor education or financial management.

If everything goes smoothly, your debts will be discharged within a few months. Arizona’s exemption laws help protect the property you need to maintain your home. They ensure you can get to work and care for your family.

Get Help With Your Arizona Chapter 7 Case

You have options when facing overwhelming debt in Arizona. Chapter 7 bankruptcy can eliminate most unsecured debts. You can keep essential property through Arizona’s generous exemptions.

Understanding your exemptions is the first step toward financial freedom. The $250,000 homestead exemption protects most homes. Your car, household goods, and retirement accounts remain safe too.

Ready to explore whether Chapter 7 is right for you? A free consultation can help you understand your options. You’ll learn which debts qualify for discharge. You’ll also discover which property you can keep under Arizona’s exemption laws.