November 01, 2012 /24-7PressRelease/
-- According to a recent article by Reuters, consumers face a bleak 2013 as both healthcare and food costs are likely to rise next year - with increased tax burdens also looming on the horizon. This is likely the worse time for such news as the economy is still struggling to grow after a disastrous few years.
The sluggish economy has taken its toll on almost every area of the financial world, including the decimation of retirement funds and "underwater" mortgages. However, for many people there is help out there in the form of bankruptcy.
Many in Arizona have contemplated bankruptcy, but the fear that they might lose everything often keeps them from making the best choice for themselves and their families. However, one important thing for Arizonans to know when filing for Chapter 7 bankruptcy
is that many of their assets are protected from the bankruptcy estate and thus the debtor does not lose them - otherwise known as bankruptcy exemptions.
These exemptions can be very specific and often vary from state to state, but a decision by the Ninth Circuit Court of Appeals
recently determined the proper scope of certain bankruptcy exemptions available when filing for bankruptcy in Arizona - meaning some debtors will end up being able to keep more of their assets.
Arizona Bankruptcy Exemptions
Generally, federal bankruptcy law allows states to opt-out of the federal bankruptcy exemptions and create their own, which Arizona has elected to do. This allows Arizona to specifically delineate what is safe from collectors during a bankruptcy.
In Arizona, some of the common bankruptcy exemptions
include a person's car (up to a value of $5,000.00) and a person's homesteaded property (up to a value of $150,000.00). However, Arizona law also permits an exemption for the cash surrender value of life insurance policies - which is the exemption the Ninth Circuit Court recently had to address.
In the appellate court case, the court was charged with the task of determining whether life insurance policies were exempt from the bankruptcy estate when an adult non-dependent daughter was listed as the beneficiary. The issue stemmed from the fact that an Arizona statute states that policies are only exempt if they have "named as beneficiary the debtor's surviving spouse, child, parent, brother or sister, or any other dependent family member" - with the bankruptcy trustee arguing that since the daughter was no longer a dependent, then the policies were not exempt.
The court disagreed and ultimately held that a surviving child no longer needs to be a dependent in order for the policies to be protected from the bankruptcy estate, thus deciding the exemption was broader than the trustee wanted.
As this recent decision illustrates, Arizona bankruptcy law can be quite complex, with many areas of the law still unsettled. If you are contemplating a bankruptcy filing, it may be advisable to speak with an experienced attorney who can help with sorting out all of these complexities.
Article provided by Arizona Law Group of Trezza & Associates, LLC
Visit us at www.filebankruptcyinarizona.com