How Does Bankruptcy Affect Household Possessions?
When you file a Chapter 7 or Chapter 13 bankruptcy, you are allowed to exempt a certain amount of your personal assets from the proceedings. Under Arizona law, strict monetary limits are set on these exemptions. This means that you must sometimes make choices about which household possessions to keep and which to turn over to creditors if it becomes necessary to do so. One of the jobs of a bankruptcy attorney is to guide you through the process of declaring your assets properly and indicating which personal possessions you would like to claim as exemptions to your bankruptcy. Here are a few tips on handling personal possessions in the scope of a Chapter 7 or Chapter 13 bankruptcy filing: 1) Understand your exemption amounts. In general, the exemption amounts for various personal items are set by statute. There may be some exceptions to these rules, however, so be sure to discuss them with your attorney. Currently, Arizona allows debtors to exempt:
- All youth teaching materials for home school or children in public or private schools.
- Up to $150 in a watch, whether it is a pocket watch, wrist watch or some other form of timepiece.
- Certain professionally-prescribed health aids such as hearing aids, exercise equipment, wheelchairs or other items. However, the debtor must show that these items were specifically prescribed by a doctor or healthcare professional, not simply purchased in pursuit of wellness or better health.
- Up to $250 in books, including trade books. However, some trade books may be covered under work-related items in a different exemption.
- Up to $2,000 in engagement and wedding rings.
- Up to $800 in animals, including both pets and domestic animals.
- Up to $400 in musical instruments.
- Up to $500 in clothing.
- Up to $1,000 in a Bible, a sewing machine, a computer or typewriter, a burial plot, any firearms and a bicycle.
- Up to $6,000 in appliances and household furnishings.
2) Discuss the value of your household items. Household items are valued at “yard sale” prices, not new retail cost. Therefore, the exemptions may go farther than you think. However, do not try to undervalue your possessions, as this can cause the court to deny your exemptions. Instead, talk with your attorney about how to value your personal belongings accurately. Generally, courts rely on guidelines such as those published by the IRS to determine fair market value. 3) Remember that some personal items can be covered by more than one exemption. If possible, group your exemptions so that you can protect the maximum amount of your possessions. For help valuing your possessions or for any bankruptcy-related questions, contact the Oswalt Law Group in Phoenix today.