Author Archive
When you file for bankruptcy, it is important to note that some of your assets are protected by “exemptions” laws. If an asset falls under these laws, the debtor is allowed to keep the item when filing for bankruptcy. Usually, these assets are protected only if the court decides that the asset’s value falls under a certain limit. Some states follow federal government exemption guidelines for bankruptcies, however, Arizona is one of a few states that has its own exemptions. In fact, Arizona allows more assets at higher values than states that follow federal guidelines. For debtors facing a bankruptcy in Arizona, this can be welcome news.
One of a debtor’s most important assets is, of course, the family home. Under the homestead exemption, the home of a single or married debtor is protected providing that the home is the debtor’s primary residence. The home can even have as much as $150,000 in equity and still be exempt. However, any equity above this amount is not protected so a debtor might be ordered to pay the amount of excess equity to the court in order to keep the bankruptcy from being dismissed. Your bankruptcy trustee might decide to force a sale of the home. If this happens, the debtor is still entitled to $150,000 in equity. Any remaining moneys will be distributed to the creditors. This exemption may only be used once in a bankruptcy.
The vehicle exemption allows a bankruptcy filer to keep his vehicle as long as it has less than $5,000 in equity. A married couple who files for bankruptcy protection can use two, $5,000 exemptions toward two vehicles. Any vehicle equity over those amounts will be treated as it would with the homestead exemption.
The personal property exemption includes household furniture, furnishings, and appliances. A single debtor can protect up to $4,000 in used value of these assets and a married couple can protect $8,000 in used value. A detailed list of these assets must be provided to the court by the debtor.
Other, miscellaneous assets are protected up to specific values set by the bankruptcy laws. Tools and equipment used in commercial activity are protected. Wedding jewelry, clothing, weapons, hobby equipment, books, musical instruments, and certain life insurance proceeds, all have their own value limits set by the bankruptcy code.
Assets for the purpose of retirement are protected with no restrictions on value. These must be qualified retirement assets such as a 401k, IRA, state retirement fund and the like.
Also, if the debtor has assets that do not have a value at the time of filing, these assets generally are protected by bankruptcy laws and codes. For example, if the debtor has an annuity that has not yet been vested or perhaps a future interest in a business as per corporate bylaws or even employee stock purchase plans that have not yet been vested, these assets are usually protected.
