Home Blog Chapter 7 and Chapter 13 Bankruptcy: What Are the Exemptions

Chapter 7 and Chapter 13 Bankruptcy: What Are the Exemptions

Chapter 7 and Chapter 13 are the commonest bankruptcy types filed by people who are facing huge debts. They are designed to protect consumers from the collection efforts of creditors who wish to recoup their money. Each of these bankruptcy types offers exemptions that can be used to protect properties owned by the debtor. Borrowers who are unable to pay back their debts are advised to visit the nearest bankruptcy law office to seek legal guidance on how to approach bankruptcy filing and what is exempted.

A common misconception about a bankruptcy filing is that you have to surrender all of your assets and properties. However, this isn’t so. You can protect your home, car, and other properties despite filing for bankruptcy. To know how to do that, read on.

What Are Exemptions According to Arizona Laws?

Bankruptcy exemptions are put in place to protect the properties of borrowers who have filed for bankruptcy. In any bankruptcy case, there are two types of exemptions at play, the State and Federal Bankruptcy Exemptions. Exemptions are essentially a way to level the playing ground to ensure that the borrower has a soft landing at the end of the day.

State of Arizona Bankruptcy Exemptions

  • Homestead Exemption

The State of Arizona allows a person that is filing for bankruptcy to have as much as $150,000 equity in their home. To clarify, a person whose home is worth $500,000 and has paid $100,000 has equity of $100,000. For such a person, the equity amount is lower than the state’s limit which means that they can retain their home.

However, if the person had $200,000 equity in their home, then the home will be sold, the $150,000 equity will be returned to the borrower, and any amount over the $150,000 will be distributed among the creditors.

  • Motor Vehicles

The State of Arizona allows a debtor to have as much as $6,000 in equity on their vehicle for Chapter 7 bankruptcy filing. For a married person, both spouses may have vehicles worth $6,000 each in equity or $12,000 in total. For example, a married person with a paid-off car that is worth $5,000 and a financed car worth $25,000 with a balance of $10,000 will be allowed to keep the paid-off car while the financed car will have to be surrendered. The exemption limit rises from $6,000 to $25,000 if the person requires special equipment to operate their vehicle.

  • Bank Accounts

Your payday is an important consideration when filing bankruptcy in Arizona. As a single entity, you are allowed to have $300 and $600 for a married person. As part of the bankruptcy process, your bank account statement will be requested to ascertain that you are indeed unable to repay the loans. It is important to make sure that your bank account balance matches what has been reported in the petition.

  • Personal Items and Household Goods

This exemption covers a wide range of household items including furniture, electronic appliances and fixtures, gadgets, and more. The exemption limit as a single filer is $6,000 and $12,000 for married filers.

Other Exemptions include:

  • Clothing – Exemption is set at $500
  • Pets, Horses, and more – Exemption is set at $500
  • Engagement and Wedding rings – Exemption is set at $2,000
  • Tools and Equipment – Exemption is set at $5,000
  • Pension and Retirement – Safe from bankruptcy

If you wish to know more about bankruptcy and how to approach the process, visit

Do You Qualify for Bankruptcy?

Filing for bankruptcy isn’t the right solution for everyone. The determination of whether or not bankruptcy is an appropriate debt relief solution for your will be made based on a number of factors including the type and total level of your debt. Use this form to schedule an appointment with one of our bankruptcy attorneys. The consultation is completely free and there is no obligation.