In a bankruptcy, certain assets are protected by laws called \”exemptions.\” If an asset is exempt, a debtor is allowed to keep that item if he files for bankruptcy. Typically, an asset can only be protected if the court determines that its value is under a certain maximum limit. Arizona, like some states, has chosen to create its own list of exemptions rather than follow the list of exemptions created by the federal government. The choice to create its own exemptions makes Arizona friendlier to debtors than states following the federal guidelines because Arizona\’s exemptions include more assets and greater allowable values than the standard, federal list of exemptions.
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.
Another exemption concerns personal property. This might include items such as furnishings and household furniture, as well as appliances. The court requires that the debtor submit a detailed list of all these assets. A single person filing bankruptcy is allowed up to $4,000 in personal property exemptions. Married couples that file for bankruptcy are allowed no more than $8,000 in personal property exemptions.
There also are miscellaneous assets that are protected up to a certain set value. These values are based on bankruptcy laws and might include items such as tools or equipment used for commercial activity. Wedding jewelry, clothing, hobby items, musical instruments, books, weapons and some life insurance proceeds are other miscellaneous assets that may be allowed and have specific value limits set by bankruptcy codes.
Several types of retirement assets also are protected by bankruptcy laws. These include qualified retirement assets, such as IRA, 401k, state retirement funds and so on. These are protected with no limit on their value.
If an asset does not have a present, vested value at the time of filing, then typically it is protected under the bankruptcy code. Such assets include annuities that are not yet vested, future interest in a business as established by the corporate bylaws, and employee stock purchase plans that are not yet vested.
Stephen Trezza has effectively managed a large number of cases, including filing many Phoenix bankruptcy cases. For further information about Phoenix bankruptcy attorneys, visit the FileBankruptcyinArizona website now.
(out of reviews)
(out of 11 reviews)
