By: Samuel Pittman
Many people are concerned that they will lose everything if they file for Bankruptcy, however, this is not the case. The Bankruptcy Code allows debtors to keep certain exempt property. Section 522 of the Bankruptcy Code deals with exempt property and establishes that certain property is exempt under federal Bankruptcy law. The Bankruptcy Code also allows states to opt out of the federal exemptions and create their own exemptions. Under Arizona Revised Statute 33-1133(B), Arizona has opted out of the federal exemptions. This means that if you file your Bankruptcy in Arizona you probably will have to use the exemptions provided by Arizona.
Which Exemptions Apply to Me?
Under the Arizona law, if you have lived in Arizona for the last 730 days you must use Arizona’s Bankruptcy exemptions. In some cases, if you have not lived in Arizona for 730 days, you may use the federal Bankruptcy exemptions. 11 U.S.C. § 522(b)(3). Alternatively, you may be able to use the Bankruptcy exemptions of the state where you lived for the 180 days prior to the 730 days. Because these rules can be confusing, if you have not lived in Arizona for the last 730 days you should consult with one of our experienced Bankruptcy attorneys to determine which Bankruptcy exemptions apply to you. Because most of our clients qualify to use the Arizona Bankruptcy exemptions, let’s take a look at some of the most important Arizona Bankruptcy exemptions.
Most of the Arizona Bankruptcy exemptions are found in Title 33 of the Arizona Revised Statutes. Some of the more common property exemptions include a homestead, a motor vehicle, a bank account, and household goods and furnishings. While these items are frequently those of most concern to Bankruptcy debtors, there are exemptions for other type of property as well. To determine the exempt status of all of your property, schedule a free consultation with one of our experienced Bankruptcy attorneys.
Arizona allows for a $150,000.00 homestead exemption. This exemption covers your “interest in real property in one compact body upon which exists a dwelling house in which the person resides, interest in one condominium or cooperative in which the person resides, a mobile home in which the person resides or a mobile home in which the person resides plus the land upon which that mobile home is located.” A.R.S. 33-1101. This exemption only applies to the property in which you reside. Notice that it allows for your “interest”. Keep in mind that your interest in the property is the value of the property less the amount of any liens against the property.
Arizona allows each person $6,000.00 exemption in a motor vehicle. A.R.S. § 33-1125(8). If you are married, you would have a $12,000.00 combined exemption in one car or $6000.00 in each of two cars. A.R.S. § 33-1121.01. If a person is physically disabled that person’s allowed exemption in a motor vehicle increases from $6,000.00 to $12,000.00. Again, remember to deduct the amount of any liens against your vehicle when calculating the value of the vehicle to determine whether it is exempt under Bankruptcy law.
Arizona allows $300.00 per person in a single bank account. A.R.S. § 33-1126(9). A married couple can combine their exemptions to $600.00 in one account or separate them into two accounts up to $300.00 each.
Household Goods and Furnishings
Household goods and furnishings are exempt in an aggregate amount of $6000.00. In the event of a married couple, the amount is $12000.00. Keep in mind the value of such property is based on its current value, not the cost to replace the property with new items. You should consult with one of our experienced Bankruptcy attorneys to determine the exempt status of your household items.
Retirement accounts are generally exempt in your Bankruptcy. However, there are many statutes that govern the exempt nature of retirement accounts. One exception is that deposits made to retirement accounts within 120 days of your Bankruptcy filing are not exempt from the Bankruptcy. You should consult with one of our experienced Bankruptcy attorneys to determine the exempt status of your retirement account.
In almost all circumstances, social security benefits are exempt from creditors both inside and outside of Bankruptcy. This exemption is found in the social security statute, 42 U.S.C. § 407. If you are receiving social security benefits, consideration of this exemption is a critical component of your Bankruptcy planning. A consultation with one of our experienced Bankruptcy attorneys can provide you with a full understanding of how social security benefits may factor into your Bankruptcy filing.
Understanding your exemption rights is an important part of the Bankruptcy process. To fully understand how your exemptions may impact your Bankruptcy filing you should consult with one of our experienced Bankruptcy attorneys.