October 11, 2013 /24-7PressRelease/ -- Arizona's bankruptcy exemptions protect your most important property---
Article provided by Law Offices of Campbell & Coombs, P.C.
Visit us at http://www.haroldcampbell.com
Many people who are hopelessly struggling with debt hesitate filing for bankruptcy because they fear that they will lose their important assets such as a house, car, or personal belongings. However, the reality is that bankruptcy exemptions protect most of a person's important property from being sold or taken by their creditors.
Depending on the type of bankruptcy filed, bankruptcy exemptions work in different ways. In Chapter 7 cases, a debtor's property is sold to pay his or her debts. Although this sounds dire, only property that is not covered by a bankruptcy exemption may be sold.
If Chapter 13 bankruptcy is filed, bankruptcy exemptions affect the amount that the debtor must pay under the repayment plan each month. As exempt assets are deducted from the value of the bankruptcy estate, bankruptcy exemptions can lower the monthly payment, since the payment amount is determined by the value of the bankruptcy estate.
Exemptions available in Arizona
In some states, debtors may choose whether they would like the federal or state exemption law to apply in their bankruptcies. However, under Arizona law, debtors may not opt to use the federal exemptions, so debtors may only claim the exemptions available under Arizona law.
One of the most important assets protected by Arizona law is a residence. Under Arizona law, up to $150,000 of equity may be exempted for a debtor's primary residence, whether it is a house, condo or mobile home. If a debtor has more equity in his or her residence than is covered by the exemption, the residence may be sold to pay creditors the amount exceeding the exemption in Chapter 7 cases. However, this is rarely happens, since debtors have the option of filing for Chapter 13 instead, which allows them to stay in their homes.
Arizona's exemption laws also include important personal property. If a debtor is married, he or she may double the value of personal property that may be exempted. Some important assets that are exempt are:
-Up to $6,000 of equity in a car
-Up to $6,000 worth of household appliances, furniture and electronic devices
-Up to $20,000 for life insurance
-All pension or retirement benefits
-All child support or alimony
-Up to $5,000 of tools or equipment necessary for a business
-Up to $5,000 for burial plots or funeral trusts
-Up to $500 for clothing
A bankruptcy attorney can help
As bankruptcy law is complicated and full of exceptions, it is important to consult with an experienced bankruptcy attorney. An attorney can fully inform you how bankruptcy would affect your situation.
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