New Arizona Bankruptcy Exemptions

What Do They Mean For You?

Bankruptcy exemptions are the state and/or federal laws that tell an individual who is filing for protection under the Bankruptcy Code what they get to keep while seeking protection under the bankruptcy laws.  Your choice of law is determined by your state of residence in the two years before filing your case.  For many people, the exemptions cover most or all of the personal property such as household goods, equity in a vehicle, retirement accounts, clothing, wedding rings and more.  Any unexempt assets become property of the bankruptcy estate and may be sold for the benefit of creditors.

Until recently the Arizona bankruptcy exemptions were antiquated and outdated.   The exemption allowed a debtor one television or one alarm clock.  Choices choices; do I watch the news or get up on time?    We didn’t have exemption for a computer; instead we had an exemption for a typewriter.  We all know that in today’s society a computer really is a necessity.  However, on September 13, 2013 the new and improved Arizona bankruptcy exemptions became effective, giving Arizona bankruptcy filers updated and more generous limits on personal property.  We have included a few examples of the new Arizona exemptions

Type of Property Exemption Limit Old Exemption
Homestead- consists of equity in your residence $150,000 (does not double for married couple) $150,000 (does not double for married couple)
Household furniture $6,000 aggregate value. Now includes computer, household appliances   and consumer electronics $5,000.  Old exemption was a very   specific list of items that was woefully inadequate.  It did not include any electronics, dishes,   pots & pans etc.
Engagement & Wedding Rings $2,000 $1,000
Motor Vehicle $6,000 or $12,000 for disabled Debtor/Dependent $5,000 or $10,000 for disabled Debtor/Dependent
Watch $150 $100
Pre-Paid Rent & Security Deposits $2,000 $1,000
Tools of the Trade used to carry on business activity $5,000 $2,500


The application of exemptions can sometimes be tricky and it always best to seek legal advice. Unfortunately we have all seen the cases where Debtors failed to properly plan and apply exemptions and ended up losing far more value in property than it would have cost to seek competent legal counsel.  The changes in Arizona law are a huge step in the right direction but making sure that your property is properly protected is more important than ever.