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Bankruptcy Information

Matthew Foley

Matthew Foley

Esq. & MBA

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Arizona Bankruptcy Property Exemptions

Can I Keep My Assets if I File Bankruptcy?

Many people mistakenly believe that if they file for bankruptcy they will lose all of their assets. This is incredibly inaccurate and would defeat the purposes of filing bankruptcy.  Arizona law provides exemptions for your personal property and real estate. This means that many of your belongings are off limits to your creditors. Some exemptions are unlimited. Other exemptions have monetary limits.

If you have lived in Arizona for two years prior to filing for bankruptcy, these exemptions apply to you:

  • Equity in your home — $150,000
  • Equity in your Car — $6,000
  • Cash on hand or in your checking account — $300.00
  • Retirement Accounts – most are unlimited
  • Pensions – most are unlimited
  • Unemployment Compensation – unlimited
  • Worker’s compensation – unlimited



Chapter 7 Bankruptcy Exemptions

In a Chapter 7 liquidation bankruptcy, a trustee is appointed to oversee your case. The trustee may legally sell your property to pay your creditors. Under Arizona law, you are protected from losing much of your personal property by claiming the allowable exemptions.


Maximizing Your Arizona State Exemptions

An experienced Tucson bankruptcy attorney at the Law Offices of Matthew T. Foley, PLC, can meet with you during a free consultation and review your economic situation. He can tell you which Arizona bankruptcy property exemptions apply to you. He will maximize the exemptions to protect your assets in a Chapter 7 or Chapter 13 bankruptcy.

The Petition provides a Schedule C, which allows the debtor to “exempt” specific property as allowable by state and federal law, which includes bankruptcy and non-bankruptcy statutes (11 U.S.C. § 522(b)). Arizona is an “opt out” state, which means that an Arizona resident that has lived here for the greater part of 180 days prior to filing must use Arizona’s exemptions (A.R.S. § 33-1126, et seq.). A debtor should consult an experienced attorney to determine the proper exemptions and how best to take advantage of them. If an exemption is not used or incorrectly applied, it can be waived or overruled upon an objection.


Non-Exempt Assets

A debtor’s property is either exempt (i.e. protected), excluded from the estate (i.e. not part of bankruptcy estate), or non-exempt (i.e. unprotected).  The bankruptcy estate is broadly defined under § 541(a) and is enhanced with a trustee’s unique ability to avoid liens, recover payments, and undo certain transfers.  Other property is excluded from the bankruptcy estate via §541(b).  Finally, property is exempted via state and federal law, and the applicable exemption may vary depending upon length of residency in Arizona.

The trustee has the option to pursue property that is neither exempt nor excluded.  If the value of the non-exempt property reaches a particular threshold, for example $800, a trustee will then decide to take the property and use it to help repay scheduled creditors.  Each trustee has a minimum threshold of how much money justifies administering an “asset” case.  (see Closing Case).  The most common non-exempt assets include too much equity in a vehicle and tax refunds, as well as, whole life insurance policies and annuities that fail to meet the exemption requirements under Arizona’s statues.

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