When you file for bankruptcy, it is important to note that some of your assets are protected by "exemptions" laws. If an asset falls under these laws, the debtor is allowed to keep the item when filing for bankruptcy. Usually, these assets are protected only if the court decides that the asset's value falls under a certain limit. Some states follow federal government exemption guidelines for bankruptcies, however, Arizona is one of a few states that has its own exemptions. In fact, Arizona allows more assets at higher values than states that follow federal guidelines. For debtors facing a bankruptcy in Arizona, this can be welcome news.
The homestead exemption protects the home of a single or married debtor as long as he resides in the home as his primary residence. The home can have up to $150,000 in equity and still be protected in a bankruptcy. As with all exemptions, any equity over that amount is not protected. A debtor might be required to pay the amount of excess equity to the bankruptcy court in order to prevent the bankruptcy from being dismissed. A bankruptcy trustee might also choose to force the sale of the home, giving the bankruptcy filer the $150,000 to which he is entitled, and the rest of the proceeds will be distributed to the creditors by the court. Only one homestead exemption may be used in a bankruptcy.
Another exemption pertains to vehicles. This vehicle exemption allows a debtor to keep his or her vehicle provided that it has less than $5,000 in equity. Married couples are allowed two $5,000 exemptions that can be applied toward two vehicles. Any amount of equity beyond the allowed $5,000 follows the same rules as the aforementioned homestead exemption.
The personal property exemption includes household furniture, furnishings, and appliances. A single debtor can protect up to $4,000 in used value of these assets and a married couple can protect $8,000 in used value. A detailed list of these assets must be provided to the court by the debtor.
Other, miscellaneous assets are protected up to specific values set by the bankruptcy laws. Tools and equipment used in commercial activity are protected. Wedding jewelry, clothing, weapons, hobby equipment, books, musical instruments, and certain life insurance proceeds, all have their own value limits set by the bankruptcy code.
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.
The homestead exemption protects the home of a single or married debtor as long as he resides in the home as his primary residence. The home can have up to $150,000 in equity and still be protected in a bankruptcy. As with all exemptions, any equity over that amount is not protected. A debtor might be required to pay the amount of excess equity to the bankruptcy court in order to prevent the bankruptcy from being dismissed. A bankruptcy trustee might also choose to force the sale of the home, giving the bankruptcy filer the $150,000 to which he is entitled, and the rest of the proceeds will be distributed to the creditors by the court. Only one homestead exemption may be used in a bankruptcy.
Another exemption pertains to vehicles. This vehicle exemption allows a debtor to keep his or her vehicle provided that it has less than $5,000 in equity. Married couples are allowed two $5,000 exemptions that can be applied toward two vehicles. Any amount of equity beyond the allowed $5,000 follows the same rules as the aforementioned homestead exemption.
The personal property exemption includes household furniture, furnishings, and appliances. A single debtor can protect up to $4,000 in used value of these assets and a married couple can protect $8,000 in used value. A detailed list of these assets must be provided to the court by the debtor.
Other, miscellaneous assets are protected up to specific values set by the bankruptcy laws. Tools and equipment used in commercial activity are protected. Wedding jewelry, clothing, weapons, hobby equipment, books, musical instruments, and certain life insurance proceeds, all have their own value limits set by the bankruptcy code.
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.
About the Author:
Stephen Trezza has successfully handled thousands of cases, including filing many Phoenix bankruptcy cases. For further information regarding Phoenix bankruptcy attorneys, check out the FileBankruptcyinArizona site now.
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