So you have made your decision to file bankruptcy – probably because there is no other viable option that you are aware of and you have heard stories from some of your friends who have had to file. The big question now is whether to hire an attorney to help you or to attempt to do it yourself. After all, how hard can it be filling out the Petition, Schedules and Statements required? And on top of that, you have already admitted that need to file bankruptcy which means money is really tight, so how can you possibly afford to pay for an attorney?

At this point, let me recommend that you pause, take a deep breath before proceeding, and consider a few preliminary steps.. First, you should at least consult with an Arizona bankruptcy attorney. There might be non-bankruptcy solutions you were unaware of. Or you might find out that you cannot or should not file (perhaps because you filed before, or you have non-exempt equity in a valuable asset). This consultation could also provide valuable advice even if you do proceed to file on your own.

Second, before proceeding on your own, please review a new video prepared by a former bankruptcy judge. Judge Case just retired after being on the bench since 1994. He has seen innumerable cases come through his court room, and the pitfalls that ensnare those who do not understand or have experience with the bankruptcy rules and statutes. The video is on the Arizona Bankruptcy website. Is just over three minutes long and can be accessed by clicking this link.

Arizona Bankruptcy Exemptions Increased

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:


Under A.R.S. 33-1101, Arizona provides an exemption of $150,000 to homeowners. This exemption protects a sizable portion of the homeowner’s equity in their home from creditors and reflects the legislature’s opinion that a person’s home ought to have some minimum protection against creditors. The homestead exemption’s protections extend even into bankruptcy proceedings.

It used to be that documents had to be filed with the County Recorder’s office in order to invoke the homestead protection. However, back in the early 1990’s the laws in Arizona were changed such that the homestead exemption now applies automatically. Only in the case where you might own more than one residence would you be required to designate on which property the homestead exemption is to apply.

If you are in the process of selling your home, the title companies may inform you that any recorded judgments need to be paid on or before closing. However, that is not necessarily true. Only where the equity in the home exceeds the homestead exemption is this required. But, you may have to provide a copy of the statute to your title company or get an attorney involved to convince them of this.

Changing Perceptions About Bankruptcy

Perceptions about bankruptcy have been changing. In the past, bankruptcy was seen as a mark of failure, something shameful not to be discussed. Now, bankruptcy is more often recognized as what it was always intended to be–a powerful planning option to re-organize, rehabilitate and empower. Bankruptcy clears away obstacles. It enables payment of college tuition. It facilitates planning for retirement. It makes life full of possibilities again. It gives hope.

But not all obstacles can be overcome. Some debts cannot be discharged in bankruptcy. Some of these are most taxes, most student loans, criminal fines and restitution payments, court ordered child support, debts that arise as a result of fraud or misrepresentation and also debts that you forgot to list on your bankruptcy petition. See our previous article discussing these kinds of debts and their ability to be discharged.

Even here, however, there can be exceptions. Taxes can sometimes be discharged if they are old. Student loans can be discharged where there is extreme hardship. The damage of a Federal Tax lien can be minimized by motion in an appropriate case. A second mortgage can be eliminated in a Chapter 13 bankruptcy.