Filing a Bankruptcy in Arizona? Know Which of Your Assets Are Protected

Written by Stephen Trezza on Thu, 25 Jun 2009

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When you file for bankruptcy, it is important to note that some of your assets are protected by "exemptions" laws. If an asset falls under these laws, the debtor is allowed to keep the item when filing for bankruptcy. Usually, these assets are protected only if the court decides that the asset's value falls under a certain limit. Some states follow federal government exemption guidelines for bankruptcies, however, Arizona is one of a few states that has its own exemptions. In fact, Arizona allows more assets at higher values than states that follow federal guidelines. For debtors facing a bankruptcy in Arizona, this can be welcome news.

One of a debtor's most important assets is, of course, the family home. Under the homestead exemption, the home of a single or married debtor is protected providing that the home is the debtor's primary residence. The home can even have as much as $150,000 in equity and still be exempt. However, any equity above this amount is not protected so a debtor might be ordered to pay the amount of excess equity to the court in order to keep the bankruptcy from being dismissed. Your bankruptcy trustee might decide to force a sale of the home. If this happens, the debtor is still entitled to $150,000 in equity. Any remaining moneys will be distributed to the creditors. This exemption may only be used once in a bankruptcy.

Another exemption pertains to vehicles. This vehicle exemption allows a debtor to keep his or her vehicle provided that it has less than $5,000 in equity. Married couples are allowed two $5,000 exemptions that can be applied toward two vehicles. Any amount of equity beyond the allowed $5,000 follows the same rules as the aforementioned homestead exemption.

Personal property exemptions include items such as appliances, household furniture and furnishings. Married couples can protect up to $8,000 in assets, while single debtors may protect up to $4,000 of assets. These items are assessed at their used value, rather than if they were new items. A detailed list of all of these personal assets must be given to the court.

Other, miscellaneous assets are protected up to specific values set by the bankruptcy laws. Tools and equipment used in commercial activity are protected. Wedding jewelry, clothing, weapons, hobby equipment, books, musical instruments, and certain life insurance proceeds, all have their own value limits set by the bankruptcy code.

Assets for the purpose of retirement are protected with no restrictions on value. These must be qualified retirement assets such as a 401k, IRA, state retirement fund and the like.

Some future assets also are protected by bankruptcy code. If the debtor has employee stock purchase plans that have not been vested or a future interest in a business, these potential future assets generally are protected. Annuities that have not yet been vested are another example of an asset that may be exempted.

About the Author

Stephen Trezza has successfully handled a vast number of cases, which includes many Tucson bankruptcy cases. If you are looking for a Tucson bankruptcy attorney, visit the FileBankruptcyinArizona site now.

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