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You will not lose everything you own by filing bankruptcy! In some cases you may not lose any property. Call one of our Bankruptcy attorneys and they can go over which of your assets will be exempt, meaning you get to keep the asset.

Exempt property means property that the bankruptcy trustee is not allowed to take possession of and liquidate for the benefit of your creditors. Historically, the purpose of allowing individuals to exempt property has always been to allow debtors to retain those items of property deemed essential to daily life. In the bankruptcy context, allowing an individual to exempt certain assets serves the purpose of allowing the individual to obtain a fresh start. To determine what property will be exempt in your case will depend on what exemption statutes you are required to use. If you have lived in Arizona for the 730 days (2 years) before the bankruptcy is filed the Arizona exemption statutes must be used. If you have not lived in Arizona for 730 days before the filing of the case, the exemption statutes for the state that you lived in during the 180 days preceding the 730 day period must be used. If you lived in more than one state during the 180 day period, the exemption statutes for the state that you lived in the most during the 180 day period must be used. To make things even more complicated, if the previous state that you lived in requires that you be a resident of that state to claim the exemptions, you must then use the Federal exemptions. If you are unsure what exemptions will be applied in your case, consult with your attorney.

If the Arizona exemptions must be used in your case, some of the more common exemptions include:

  • Homestead. A.R.S. 33-1101. If you are living in the home at the time of filing or have not abandoned the homestead, and the home was purchased more than 1215 days (3 years and 4 months) before filing the bankruptcy, the exemption is $150,000.00. If the home was purchased within 1215 days (3 years & 4 months) of the filing of the bankruptcy, the homestead exemption will be $146,450.00 unless you sold a house in Arizona that was purchased over 1215 days before filing and then purchased the existing house. [A.R.S. 33-1101]

  • Household furniture, furnishings and appliances. A.R.S. §33-1123.

Household furniture and furnishings, household goods, including consumer electronic devices, and household appliances personally used by the debtor or a dependent of the debtor and not otherwise specifically prescribed in this chapter are exempt from process provided their aggregate fair market value does not exceed six thousand dollars.

[A.R.S. §33-1123]

  • Food, Fuel and provisions. All food, fuel and provisions actually provided for the debtor's individual or family use for six months are exempt from process. [A.R.S. §33-1124]

  • Personal Items. The following property of a debtor used primarily for personal, family or household purposes shall be exempt from process:

1. All wearing apparel not in excess of a fair market value of five hundred dollars.

2. All musical instruments provided for the debtor's individual or family use not in excess of an aggregate fair market value of four hundred dollars.

3. Domestic pets, horses, milk cows and poultry not in excess of an aggregate fair market value of eight hundred dollars.

4. All engagement and wedding rings not in excess of an aggregate fair market value of two thousand dollars.

5. The library of a debtor, including books, manuals, published materials and personal documents not in excess of an aggregate fair market value of two hundred fifty dollars.

6. One watch not in excess of a fair market value of one hundred fifty dollars.

7. One typewriter, one bicycle, one sewing machine, a family bible, a lot in any burial ground, one shotgun or one rifle or one pistol, not in excess of an aggregate fair market value of one thousand dollars.

8. Equity in one motor vehicle not in excess of six thousand dollars. If the debtor or debtor's dependent is physically disabled, the equity in the motor vehicle shall not exceed twelve thousand dollars.

9. Professionally prescribed prostheses for the debtor or a dependent of the debtor, including a wheelchair is 100% Exempt

[A.R.S. §33-1125]

  • Money, benefits or proceeds. The following property of a debtor is exempt from execution, attachment or sale on any process issued from any court:

1. All money received by or payable to a surviving spouse or child on the life of a deceased spouse, parent or legal guardian, not exceeding twenty thousand dollars.

2. The earnings of the minor child of a debtor or the proceeds of these earnings by reason of any liability of the debtor not contracted for the special benefit of the minor child.

3. All monies received by or payable to a person entitled to receive child support or spousal maintenance pursuant to a court order.

4. All money, proceeds or benefits of any kind to be paid in a lump sum or to be rendered on a periodic or installment basis to the insured or any beneficiary under any policy of health, accident or disability insurance or any similar plan or program of benefits in use by any employer, except for premiums payable on such policy or debt of the insured secured by a pledge, and except for collection of any debt or obligation for which the insured or beneficiary has been paid under the plan or policy and except for payment of amounts ordered for support of a person from proceeds and benefits furnished in lieu of earnings that would have been subject to that order and subject to any exemption applicable to earnings so replaced.

5. All money arising from any claim for the destruction of, or damage to, exempt property and all proceeds or benefits of any kind arising from fire or other insurance on any property exempt under this article.

6. The cash surrender value of life insurance policies where for a continuous unexpired period of two years the policies have been owned by a debtor and have named as beneficiary the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, in the proportion that the policy names any such beneficiary, except that, subject to the statute of limitations, the amount of any premium that is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1, with interest thereon, is not exempt. The exemption provided by this paragraph does not apply to a claim for the payment of a debt of the insured or beneficiary that is secured by a pledge or assignment of the cash value of the insurance policy or the proceeds of the policy. For the purposes of this paragraph, "dependent" means a family member who is dependent on the insured debtor for not less than half support.

7. An annuity contract where for a continuous unexpired period of two years that contract has been owned by a debtor and has named as beneficiary the debtor, the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member, except that, subject to the statute of limitations, the amount of any premium, payment or deposit with respect to that contract is recoverable or avoidable by a creditor pursuant to title 44, chapter 8, article 1 is not exempt. The exemption provided by this paragraph does not apply to a claim for a payment of a debt of the annuitant or beneficiary that is secured by a pledge or assignment of the contract or its proceeds. For the purposes of this paragraph, "dependent" means a family member who is dependent on the debtor for not less than half support.

8. Any claim for damages recoverable by any person by reason of any levy on or sale under execution of that person's exempt personal property or by reason of the wrongful taking or detention of that property by any person, and the judgment recovered for damages.

9. A total of three hundred dollars held in a single account in any one financial institution as defined by section 6-101. The property declared exempt by this paragraph is not exempt from normal service charges assessed against the account by the financial institution at which the account is carried.

10. An interest in a college savings plan under section 529 of the internal revenue code of 1986, either as the owner or as the beneficiary. This does not include money contributed to the plan within two years before a debtor files for bankruptcy.

B. Any money or other assets payable to a participant in or beneficiary of, or any interest of any participant or beneficiary in, a retirement plan under section 401(a), 403(a), 403(b), 408, 408A or 409 or a deferred compensation plan under section 457 of the United States internal revenue code of 1986, as amended, whether the beneficiary's interest arises by inheritance, designation, appointment or otherwise, is exempt from all claims of creditors of the beneficiary or participant. This subsection does not apply to any of the following:

1. An alternate payee under a qualified domestic relations order, as defined in section 414(p) of the United States internal revenue code of 1986, as amended. The interest of any and all alternate payees is exempt from any and all claims of any creditor of the alternate payee.

2. Amounts contributed within one hundred twenty days before a debtor files for bankruptcy.

3. The assets of bankruptcy proceedings filed before July 1, 1987.

C. Any person eighteen years of age or over, married or single, who resides within this state and who does not exercise the homestead exemption under article 1 of this chapter may claim as a personal property homestead exempt from all process prepaid rent, including security deposits as provided in section 33-1321, subsection A, for the claimant's residence, not exceeding two thousand dollars.

D. This section does not exempt property from orders that are the result of a judgment for arrearages of child support or for a child support debt.

[A.R.S. 33-1126]

  • School equipment. The library and philosophical and chemical or other apparatus belonging to a debtor and used for the instruction of youth in any university, college, seminary of learning, or school shall be exempt from execution, attachment or sale on any process issued from any court. [A.R.S. 33-1127]

  • Tools and equipment used in commercial activity, trade, business or profession. The following tools and equipment of a debtor used in a commercial activity, trade, business or profession shall be exempt from process:

The following tools and equipment of a debtor used in a commercial activity trade, business or profession shall be exempt from process:

1. The tools, equipment, instruments and books, including telephone numbers, client or customer contact information, or marketing tools, such as websites, domain names or any other intangible work product, in the possession of a debtor or the spouse of a debtor primarily used in, and necessary to carry on or develop, the commercial activity, trade, business or profession of the debtor or the debtor's spouse, not in excess of an aggregate fair market value of five thousand dollars. For the purpose of this paragraph, tools do not include a motor vehicle primarily used by a debtor for personal, family or household purposes such as transportation to and from the debtor‘s place of employment.

2. Farm machinery, utensils, implements of husbandry, feed, seed, grain and animals not in excess of an aggregate value of two thousand five hundred dollars belonging to a debtor whose primary income is derived from farming.

3. All arms, uniforms and accoutrements required by law to be kept by a debtor.

[A.R.S. 33-1130]

  • Wages, salary and compensation. A. For the purposes of this section, "disposable earnings" means that remaining portion of a debtor's wages, salary or compensation for his personal services, including bonuses and commissions, or otherwise, and includes payments pursuant to a pension or retirement program or deferred compensation plan, after deducting from such earnings those amounts required by law to be withheld.

B. Except as provided in subsection C, the maximum part of the disposable earnings of a debtor for any workweek which is subject to process may not exceed twenty-five per cent of disposable earnings for that week or the amount by which disposable earnings for that week exceed thirty times the minimum hourly wage prescribed by federal law in effect at the time the earnings are payable, whichever is less.

C. The exemptions provided in subsection B do not apply in the case of any order for the support of any person. In such case, one-half of the disposable earnings of a debtor for any pay period is exempt from process.

D. The exemptions provided in this section do not apply in the case of any order of any court of bankruptcy under chapter XIII of the federal bankruptcy act or any debt due for any state or federal tax.

[A.R.S. 33-1131]

More Information About Filing Chapter 7 Bankruptcy Chapter 7 Bankruptcy Overview
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Please call McDonald Law Offices to schedule a time to talk to one of our experienced Arizona bankruptcy attorneys. If you call during our business hours it is likely that one of our bankruptcy lawyers will be available to talk to you when you call.

The attorney will be able to go over how you can stop foreclosure, stop garnishment, and eliminate other debts through the filing of bankruptcy. During the call our lawyers will be able to determine if you qualify, how much it will cost to declare bankruptcy, what debts your bankruptcy will cover, and how long it takes to file.

CALL NOW! There is no obligation and the consultation is free.

The experienced attorneys at McDonald law Offices help clients achieve debt relief by stopping foreclosure, garnishment, repossessions, and judgments. Our lawyers represent clients throughout the state of Arizona including the following areas:

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