Making the Most of Your Exemptions

When you file bankruptcy, a certain portion of your assets can be protected by using your exemptions.  Exemptions are legal “free passes” that allow you to keep a part of your property without it being subjected to confiscation by your creditors. Arizona chooses to have its own exemption scheme that is slightly different than the federal exemption scheme.  Here are some highlights of Arizona bankruptcy exemptions.  By using your exemptions carefully, you can protect some of your property and still receive a discharge from your debt.

• Married couples can double some exemptions. If you are married and you and your spouse file a joint bankruptcy, you may be able to double your exemptions on certain items.
• Alimony and child support may be exempt. The amounts collected for alimony and child support may be exempted up to the amount needed for support.  This is calculated through a formula used by the court system.
• Bank deposits. You may keep up to $300 in a single bank account.
• You may exempt up to $150,000 of your home or other property covered by homestead exemption.
• Life insurance benefits. You may exempt life insurance benefits up to $20,000 when received from a spouse or child’s death.  Payments under health, accident or disability policies may also be exempt, although there are some exceptions.
• Motor vehicles. You may exempt up to $6,000 in one or more vehicles.  However, if you are elderly, disabled or a dependent, you may be able to exempt up to $12,000.
• Pension and retirement benefits. Many pension and retirement benefits are exempt under Arizona bankruptcy law.  However, there are exceptions, so talk to your attorney before assuming your retirement is exempt.
• Personal property. Arizona publishes a long list of personal property exemptions, including those for furniture, appliances, books, clothing, animals and wrongful death awards as well as security deposits for rent.
• Tools of the trade. Those who rely on tools to do their jobs may exempt certain items under this rule up to $5,000.
• Unemployment compensation. Payment for unemployment is exempt.
• You may exempt to up 25 percent of your disposable earnings or those in excess of 30 times the federal minimum wage, whichever is less.  However, this amount can be modified by tax liabilities or orders to pay support.
• Workers’ compensation. Workers’ compensation benefits are exempt from bankruptcy, but employers do get a credit for previously awarded benefits.

For more information on exemptions in Arizona, contact the experienced bankruptcy attorneys at the Oswalt Law Group in Phoenix.