Arizona Bankruptcy Exemption Laws
(Portions reprinted by permission from How
to File for Chapter 7 Bankruptcy, Nolo © 1989-2014 )
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$150,000 for real property, an apartment, or mobile home you occupy to; sale proceeds exempt 18 months after sale or until new home purchased, whichever occurs first (husband & wife may not double) (more...)
Up to $6,000 ($12,000, if debtor is physically disabled) (more...)
household furniture & appliances to $6,000 (see );Books to $250; clothing to $500; wedding & engagement rings to $2,000; watch to $150; pets, horses, milk cows, & poultry to $800; musical instruments to $400; food and fuel to last six months; $500 of clothing; health aids (see details for more) (more...)
75% of earned but unpaid weekly net earnings or 30 times the federal minimum hourly wage; 50% of wages for support orders; bankruptcy judge may authorize more for low-income debtors (more...)
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Updates & Errata
I've been maintaining these tables since 1997. I try to update them twice a year. Laws change, and, even with a 99.9% accuracy, there are thousands of citations here, so a few might have a glitch or two. If I've missed something important, or something has changed, let me know. I'll fix it. Other users will thank you. - Albin Renauer
Protecting Your Assets in Bankruptcy: Arizona Property Exemption Laws
Property you get to keep*
The law of what has come to be called
"Asset Protection" is actually a mixture of laws that allow
you to keep certain property no matter what, even if you owe money to
others. Every state has laws that designate specific property you
get to keep so that you can continue living a productive life. That is,
even if you owe a trillion dollars to someone, the law won't make you
sell the shirt off your back to pay it. And in Texas and Florida, they
won't even make you sell your million dollar mansion, or in Nevada, your
These rules are called "property exemptions." They vary from state to
state. They designate what property is off limits to your 'creditors '-- the legal name for those who claim you owe them money.
When you fill out your bankruptcy forms (Form
6, Schedule C), you
will be asked what property you claim as exempt -- and a citation
of the law that allows it.
This page gives you those citations and gives a brief summary of the exemption.
The help topics on the right provide additional information.
*Exemptions & "secured debts"
Note that property that is collateral for a purchase-money loan (such
as a car securing a car loan or a home securing a first mortgage) is
not protected by exemptions from repossession actions by that lender. Any equity you may own in the property is protected and may give you certain
rights against holders of judgment liens and second or third lien holders.
Let's repeat that first point before
we go further: Exemption laws do NOT protect you from losing
property if you've voluntarily pledged the property as security for
a loan and you don't make the payments.
Unsecured vs Secured Debts
So... for example. If you owe $30,000 to credit card companies, that
debt is "unsecured". There is no collateral attached to it.
No matter what they threaten, the credit card company can't take any
of your exempt property. Likewise, most medical bills and
lawsuit settlements are "unsecured" debts. If an unsecured
creditor bothers to go to court get a judgment against you, they can
get the court to attach a "judgment
lien" to your property. But if the property is exempt, you
typically can (and should) ask the bankruptcy court to remove that
lien from your property (but you have to ask -- its not automatic).
Continuing the example ... If you were persuaded to pay off your
credit cards and other unsecured debts with a lower interest, "secured"
loan, say, from a loan consolidation company, you probably pledged
your home equity or other property as collateral.
As a general principle, once you've voluntarily
(i.e. through a contract or signing something) pledged your property as security for a loan, the exemption laws no
longer protect you. The creditor can repossess the property you pledged
regardless of whether it is protected by an exemption.
Note that this is a general principle, among other factors -- more than we can go into here.... That's why we wrote a book... Specific facts might lead the court to apply other principles to, for example, undo a recent transaction if it unfairly benefited a single specific creditor at the expense of many others.
See Chapters 3, 4 and 5 of the How to File for Chapter 7 Bankruptcy for more about this.
Conditions of use & common sense advice before you use
this information — Permission to use these materials
is given only on the condition that the user will be solely responsible
for verifying the accuracy of the information contained here.
This list was last updated, January 2014. Laws can and do change.
Before relying on this or ANY information you find on the internet,
confirm that it is current. (If you find something incorrect or out
of date, please report it here. Thanks.
Every effort has been made to report these laws accurately. However,
there could be errors or omissions which could change the effect of
the law in a particular case.
If you see a law listed here and want to know how it applies to you
-- that's what lawyers are for. A lawyer can tell you whether and how
a law would apply to your specific situation, and give you other
ideas of how the laws might work in your favor, in your particular
case. There are resources on this website to help you locate
a lawyer in your area.
Laws are interpreted and applied by trustees and judges, and often
even the judges don't agree on what the law means and when it applies.
Over time, and hundreds of cases, there develops a pretty clear
picture of what exemptions are allowed or routinely challenged within
the local bankruptcy practice. Local customs can vary one
district to the next, or even depend on the trustee. An experienced
local bankruptcy professional should have a good sense of what flies
and what doesn't with your local judge and trustee.
See the disclaimer, for other important
limitations regarding this information.
The Long Tradition of Property Exemptions
The most famous asset protection law is the "unlimited homestead
exemption " invented
in the 1800s by the Republic of Texas as a way of attracting settlers.
Other states across the plains, and Florida added unlimited homesteads
to their laws and today several states still have them. Several years
ago Nevada greatly expanded its exemption laws in hopes
of becoming a haven for those seeking asset protection. Its generous
homestead protection may be partly responsible for the Las Vegas
real estate boom. Unfortunately for debtors in the rest of the country,
most states offer far less protection.
Federal vs. State Exemption Statutes and How to Read Them
Some states offer you a choice of their State law exemptions or the Federal bankruptcy exemptions.
Other states require you to use their state exemptions.
Some states have special exemptions that apply specifically to bankruptcy, while others apply exemption laws that affect any kind of court-ordered collection activity.
As such, the wording of these statutes commonly speak in terms used in court-ordered procedures such wages not being subject to or "garnishment" or of property or pension funds not being subject to "attachment" ...they're not talking sentimental attachment... they mean liens -- that are "attached" to property -- and sometimes can be "stripped" away or "avoided" (i.e. eliminated) in bankruptcy.
Also, unlike what you see on this web page, most states don't list their exemptions in a neat little table.
What appears on this page is a rather simplified summary of exemption laws to let you know what laws are out there and where to find them.
Users should check the actual citations for specific limitations or qualifications or updates of these exemptions.
One more thing... Some states change the emeption amounts by adminstrative order, so the numbers in the statute are old, and don't match current amounts, which you'll see here.
In states where that is the case, I make a note of that.
A few courts offer a simplified list of current exemptions and their amounts, but most don't. Wouldn't hurt to ask the clerk.
Federal Bankruptcy Code Exemptions Not Available in Arizona
Although the federal bankruptcy code provides a list of exemptions,
these exemptions are not available in Arizona. Arizona law requires you to use the exemptions found in state law
-- not the U.S. bankruptcy code.
Federal "non-bankruptcy" exemptions are available
However you are entitled to
use so-called federal "non-bankruptcy" exemptions in addition
to your state law exemptions. Non-bankruptcy
exemptions are those found provisions of U.S. law that
are not part of the bankruptcy code.
The four most significant non-bankruptcy
exemptions are for
- Wages (a general cap on what percentage of your wages can be garnished),
- Social Security benefits,
- Civil Service benefits,
- Veterans Benefits
Other so called "non-bankruptcy" exemptions mostly deal with
various benefits to government and military personnel, with a few odd
laws regarding specially-regulated labor markets such as railroad workers,
seamen, and longshoremen.
Can you double exemptions for joint filers? (General principles)
If you are married and filing together, you and your spouse must use the same law; one cannot use federal law while the other uses state law. However, the exemption law chosen applies separately to each spouse. Thus, it is generally possible to double the amount of state law exemptions, Cheeseman v. Nachman, 656 F.2d 60 (4th Cir. 1981) (married couple filing a joint petition was entitled to double the Virginia homestead exemption), unless state law (e.g. California) specifically prohibits a couple from doubling certain exemptions. See First National Bank v. Norris, 701 F.2d 902 (11th Cir. 1984)(Alabama); Granger v. Watson, 754 F.2d 1490 (9th Cir. 1985)(California).
Arizona Homestead Exemption
Almost every state provides protection for equity in the family
home, and many states have increased the amount of protection in recent
years. Seven states offer unlimited protection. Most states are not as generous.
New Federal Residency Requirement
Under the new bankruptcy law, you must be have lived in the state for
at least 40 months (three years and four months) before you can claim
any homestead protection greater than $155,675. (If your state's exemption offers
less than this amount, the law is irrelevant to you.) The law is poorly
worded but seems to say that if you move from one home to another in
the same state, you can claim that state's homestead protection.
IF you are moving to another state, OR you moved to Arizona within in the last two years, click here.
- AZ Exemptions
- May record homestead declaration to clarify which one of multiple eligible parcels is being claimed as homestead
Ariz. Rev. Stat. § 33-1102
- Real property, an apartment, or mobile home you occupy to $150,000; sale proceeds exempt 18 months after sale or until new home purchased, whichever occurs first (husband & wife may not double)
Ariz. Rev. Stat. § 33-1101 (A)
Arizona Insurance exemptions
Virtually all states protect life insurance proceeds in some manner
or another. Some restrict it to proceeds paid to a dependent. Many
states also protect the cash-value or loan-value of insurance policies.
If a substantial amount of your assets are in life insurance, you
may want to consult a professional to determine the extent to which
those policies are exempt. The website AssetProtectionBook.com does
particularly thorough job of covering Arizona insurance
Miscellaneous other exemptions
This category covers items like partnership property, alimony & support
Arizona Pensions & Retirement Savings Exemptions
The new federal bankruptcy law now automatically exempts a virtually
all tax-exempt pensions and retirement savings accounts from bankruptcy,
even if you are using state law exemptions. 11 U.S.C. § 522(b)(3)(C).
(See Help Topic: Special Rules For Retirement Accounts.)
The law protects any pension or retirement fund that qualifies for
special tax treatment under Internal Revenue Code sections 401,
402, 403, 408, 408A, 414, 457, or 501(a).
Arizona Personal Property Exemptions
This category covers your car, your non-retirement bank accounts,
and most of your other personal possessions, other than your house.
States vary widely on how generous they are in this area. Some exemptions
may be for any combination of property up to an aggregate amount. Other
exemptions apply only to specific items, such as jewelry.
Remember that an exemption will not protect your car from being repossessed
by the holder of the car loan you used to purchase the vehicle
if you pledged the vehicle as security for the loan. To keep the car,
you will have to pursue other options such as 'redemption' or 'reaffirmation.'
See the help topics and How
to File for Chapter 7 Bankruptcy for more
Special notes about Arizona Personal Property Exemptions: married joint filers may double all personal property amounts
- Bank deposit to $300 in one account
Ariz. Rev. Stat. § 33-1126 (A)(9)
- Bible; bicycle; sewing machine; typewriter; computer, burial plot; rifle, pistol, or shotgun to $1000 total
Ariz. Rev. Stat. § 33-1125
- Books to $250; clothing to $500; wedding & engagement rings to $2,000; watch to $150; pets, horses, milk cows, & poultry to $800; musical instruments to $400
Ariz. Rev. Stat. § 33-1125
- Equity in one motor vehicle to $6,000 ($12,000, if debtor is physically disabled)
Ariz. Rev. Stat. § 33-1125 (8)
- Food & fuel to last 6 months
Ariz. Rev. Stat. § 33-1124
- Funeral deposits to $5,000
Ariz. Rev. Stat. § 32-1391.05 (4)
- Health aids
Ariz. Rev. Stat. § 33-1125 (9)
- Household furniture and furnishings, household goods, including consumer electronic devices, and household appliances personally used by the debtor or a dependent of the debtor and not otherwise specifically prescribed in this chapter are exempt from process provided their aggregate fair market value does not exceed $6,000.
Ariz. Rev. Stat. § 33-1123
- Prepaid rent or security deposit to $2,000 or 1-1/2 times your rent, whichever is less, in lieu of homestead
Ariz. Rev. Stat. § 33-1126 (C)
- Proceeds for sold or damaged exempt property
Ariz. Rev. Stat. § 33-1126 (A)(5),(8)
- Wrongful death awards
Ariz. Rev. Stat. § 12-592
Arizona Public Benefits Exemptions
Most states exempt public benefits, consistent with the notion that
such benefits are intended as a safety net for the recipient.
Arizona Tools of Trade Exemptions
These are the things you use to make a living. An automobile or truck
can be a tool of trade if you use it as such. Commuting to work doesn't
count, but if driving is a necessary component of transacting your
business, you can claim your vehicle is a tool of trade.
Special notes about Arizona Tools of Trade Exemptions: married joint filiers may double amounts
Arizona Wage Garnishment Laws
Most states have a wage garnishment law. In some states, wage garnishment laws can be used in bankruptcy as an exemption to protect income that you had coming due, but not yet received, as of the day you filed, for work you had already done -- so called "earned but unpaid wages".
In some states, the wage garnishment law protects not only wages owed to you, but also wages already in your possession and saved over time preferably holding it in a separate bank account. In other states wage garnishment laws do not protect wages once they are they are in your possession.
There is a federal wage garnishment protection found in the CCPA (Consumer Credit Protection Act), 15 U.S.C. § 1673, which limits how much of your pay can be taken for collection purposes. But this law law is generally found not to be an exemptions in bankrupty. See, e.g. IN RE HORTON, Case No. 10-53495., Bankr. ED Kentucky, 3/4/2011
Some courts have also held that some state wage garnishment laws do not create an exemption in bankruptcy. See, eg. Utah, Tennessee, Vermont, Missouri.
Other courts have held that state garnishment statutes DO create an exemption. See, e.g., Oregon, Iowa, Ohio, Kansas, Indiana.
And in Illinois there are recent published bankruptcy court opinions going both ways on the issue of whether Illinios wage garnishment law can be used as an exemption in bankruptcy.
Click here for collected case law on the question: Do wage garnishment laws create an exemption in bankruptcy?
Finally, if you live in a state that lets you use the Federal bankruptcy exemptions in 522(d), and you choose to use them, then you get no exemption for earned but unpaid wages; the wildcard exemption is your only option. See, e.g. U.S. v. Christensen, 200 B.R. 869 (D.S.D. 1996) (applying FDCPA law, based on similar statutory structure to bankruptcy's opt-out law)
- 75% of earned but unpaid weekly net earnings or 30 times the federal minimum hourly wage; 50% of wages for support orders; bankruptcy judge may authorize more for low-income debtors
Ariz. Rev. Stat. § 33-1131
Arizona Wild Card Exemption
Most, but not all, states allow a so-called "wild-card" exemption that can apply to any property. The wild card exemption can be of particular help if one or more of
your other exemptions falls short of protecting your equity. You may
split your wild card exemption amount over multiple items and stack
it atop other exemptions as needed to protect exposed equity.
Links About Arizona Exemptions