The Arizona legislature recently voted to update the exemptions protecting a debtor’s personal property. These exemptions are now available in bankruptcy proceedings, and even outside bankruptcy proceedings to protect against a creditor’s attempt to collect on a judgment against the debtor.
When filing for bankruptcy, a debtor must schedule all assets and interests in assets owned by the debtor. After this is completed, the debtor may then identify much of that property as exempt pursuant to the relevant law. This exempt property may be kept by the debtors.
Arizona has always had a generous homestead exemption which protects the first $150,000 in equity in a person’s home. This law remains unchanged. The more notable changes to the exemption laws are as follows:
- An increase in the debtor’s equity in a car from $5,000 to $6,000.00. Keep in mind that if you are filing for bankruptcy and are married, each spouse gets to claim an exemption so you can protect two vehicles, or you can combine your exemptions to protect a vehicle with a higher amount of equity in it. If a debtor is disabled, he/she is entitled to double this exemption.
- Household furnishings, appliances and consumer electronics went up from $4,000 to $6,000 per person (doubled if married).
- Money in one bank account was doubled from $150 per person to $300 per person (doubled if married).
- Prepaid rent and security deposits exempt from creditors was doubled from $1,000 to $2,000 (doubled if married).
- The tools-of-the-trade exemption was doubled from $2,500 per person to $5,000 per person (doubled if married) and now includes some of the intangible assets of a business owned by the debtor.
If you are considering bankruptcy, these changes help protect significantly more equity in your property than in the past. Keep in mind, however, that if you have not lived in Arizona for the past two years, that you will likely have to claim a different set of exemptions. Consult with a knowledgeable bankruptcy attorney to discuss your bankruptcy options, and to assist you in utilizing these important exemption protections.