Keeping Your Property After You File and Arizona Bankruptcy Exemptions

As a national statistic, 96% of bankruptcies are no asset no liqudation bankruptcies.  That means in 96% of national bankruptcies, the debtor does not lose any property.  In Arizona, most personal property that the average consumer has is exempt, meaning the court will not take any property.  The most important exemptions are listed below, and this exemption mainly applies in Chapter 7 cases.  Before listing the exemptions, however, I want to illustrate what I mean by the term equity.  Equity means value in property that you own above and beyond the loan against that property.  For example, if you have a car worth $10,000.00 but you still owe $20,000.00 on the car loan, you have no equity in that car.  If, however, you own a car worth $1,000.00, and it is totally paid off, you have $1,000.00 equity in that car.  Thus, even if the first car is technically more valuable, the second car has more equity.  The same reasoning applies to homes and all other secured property. In Arizona, except for the homestead exemption, married couples filing bankrupty get to double their exemptions, which essentially means they get to keep twice the amount of property that a single, or married filing single debtor gets to keep.

First, if you have lived in your personal residence for less than four years, up to approximately $120,000.00 of your equity is exempt.  That means if your house is worth more than the total of the loans in the home by less than $120,000.00, the court will not take your house.  If you have lived in your home more than four years, that equity exemption increases to about $150,000.00.  The housing exemption is not doubled for married debtors.

The next most important exemption is your car.  If you are single, you can protect up to $5,000.00 in equity in any one motor vehicle, and if you are disabled or married, that exemption is doubled and you can protect up to two motor vehicles.

Also, a single debtor gets to keep $150.00 in cash in hand or in any single bank account, while a married couple debtor gets to keep twice that amount of money in any two bank accounts.  With regard to pension or retirement accounts, most employee based or ERISA qualified accounts are protected.

In a chapter 13 bankruptcy, the exemptions are not really relevant in that you will not lose any property, even if that property is not exempt so long as you complete the chapter 13 plan.  However, during the course of the plan, if you have any non-exempt property, you must reimburse your general unsecured creditors at least as much the value of the non-exempt property. For example, in a chapter 13 plan, if you a Picasso worth $2,000.000.00 you get to keep that painting if during the chapter 13 plan you pay an additional$2,000.000.00 to your unsecured creditors above the base chapter 13 plan.  In a chapter 7 bankruptcy, the court would simply take the painting and sell it auction and distribute the money to your creditors.