Vehicle Exemptions – Business v. Personal Use
Under the Arizona bankruptcy exemptions, a vehicle used by the debtor primarily for business purposes, must be claimed under the “Tools of the Trade” exemptions under A.R.S. § 33-1130.
The Arizona bankruptcy exemptions allow a debtor to keep equity in one vehicle of up to $6,000. (See A.R.S. § 33-1125(8)). If debtors are filing jointly, each debtor may claim a vehicle exemption. (See A.R.S. § 33-1121(1)). Tools of the trade up to $5,000 are exempt, but must not include a vehicle used primarily for personal purposes. (See A.R.S. § 33-1130).
In 2014, in the case of In re Letizia, the U.S. Bankruptcy Court for the District of Arizona ruled that (1) if a vehicle is used for personal purposes, it must be claimed under the personal exemptions (§ 33-1125(8)), and (2) if a vehicle is used for business purposes, it must be claimed under the tools of the trade exemptions (§ 33-1130). In re Letizia, 2014 Bankr. LEXIS 179.
In that case, debtors were the sole proprietors of a delivery business and attempted to claim personal exemptions for their two vehicles used exclusively in the business. Id. When property is used primarily for business purposes, debtors may only claim it exempt under the tools of the trade exemption, “regardless of how the business is owned.” Id.
KEYWORDS: Arizona Bankruptcy Exemptions, Tools of the Trade, Vehicle Exemption, Personal Property Exemption, Vehicle for Personal Use, Business Property Exemption, Vehicle for Business Use, A.R.S. Section 33-1130, A.R.S. Section 33-1125, In re Letizia, U.S. Bankruptcy Court for the District of Arizona