What Are the Arizona Bankruptcy Exemptions?

Why Are Exemptions Important in Chapter 7 Bankruptcy in Arizona?

Exemptions are laws that determine what property you can keep when filing Chapter 7 bankruptcy. 

Most Chapter 7 filers get to keep all their property. But if you own assets or property beyond a basic standard of living, the bankruptcy trustee has a right to sell the property and give the proceeds to your creditors. This is called non-exempt property, and it’s quite rare in Chapter 7 cases. 

👉 Essentially, bankruptcy is designed to give individuals a fresh start while also being fair to creditors. Exemptions protect your property so you can get a clean slate without starting over with nothing.

Does Arizona Allow Filers To Use Federal Bankruptcy Exemptions? 

No. Arizona has opted out of the federal bankruptcy exemptions.

This means that if you’ve lived in Arizona for at least two years when you file your bankruptcy case, you have to use Arizona's exemption laws. You also get to use the federal non-bankruptcy exemptions, which help protect retirement accounts and other money benefits like Social Security.

If this feels confusing, don’t worry. Help is available! See if you qualify to use our free filing tool by taking a short screener. If you’re eligible, Upsolve can help you prepare your bankruptcy forms for free without having to hire a lawyer.

What Are Arizona’s Bankruptcy Exemptions?

Different kinds of property or assets have different exemption amounts under Arizona law. Here are some of the most commonly used exemptions in the Grand Canyon State.

Under Arizona law, certain exemption amounts increase annually to account for increases in the cost of living. Double-check the state's statutes to see the most up-to-date numbers.

The Arizona Homestead Exemption

Arizona has a very generous homestead exemption of $250,000. 

This means you can protect up to $250,000 of equity in:

• A home you own (and the land it sits on)

• A condo or cooperative you own

• A mobile home you own (and the land it sits on)

🏠 The homestead exemption amount is the same whether the home is owned by a single person or a married couple. You can’t double this amount if you’re married.

How To Calculate Home Equity

Equity is calculated by subtracting what you owe on your mortgage from the current fair market value of the home. 

For example, if your home is currently valued at $400,000 and you still owe $300,000 on it, you have $100,000 in equity. In this case, your home would be protected by the state’s homestead exemption.

If you don’t own your home but had to pay a security deposit to your landlord, you can protect up to $2,000 of that deposit.

Source: A.R.S. § 33-1101, A.R.S. § 33-1126(C)

Arizona’s Motor Vehicle Exemption

🚗 Under state law, you can protect up to $15,000 of equity in a car.

If you or one of your dependents has a physical disability, you can protect equity of up to $25,000 in your car. 

If you own your car outright, your equity is equal to the car’s current fair market value. You can find this value on sites like Kelley Blue Book. 

If you’re financing your car, you’ll calculate equity by subtracting what you still owe on your car loan from the car’s current fair market value. 

Source: ARS § 33-1123

Personal Property Exemptions in Arizona

Personal property is a broad category that includes everything from household goods and electronics to food, fuel, and even your wedding ring. Different categories have different exemption amounts. 

Unlike the homestead exemption, Arizona allows married people who are filing jointly to double the exemption amount for personal property as long as these items are for personal use.

Here are some of the most common personal property exemption categories and amounts:

• $15,000: Household goods and furnishings, including electronic devices and appliances

• $500: Wearing apparel (clothes)

• $400: Musical instruments

• $1,000: Horses, milk cows, poultry

• $250: Your library, including books, manuals, published materials, and personal documents

• $2,000: Engagement and wedding rings

• $250: One watch

• $2,000: One typewriter, one computer, one bicycle, one sewing machine, a family bible, and a burial plot 

• $2,000: Firearms

• $5,000: Tools of the trade

• $2,500: Farming tools, if the filer’s primary income comes from farming

The following items are fully exempt:

• Up to six months’ worth of food, fuel, and provisions

• All legally required arms and uniforms

• Library and teaching aids of a teacher

There's no exemption limit for domestic animals and household pets or for professionally prescribed prostheses, a wheelchair, or a motorized mobility device.

Source: A.R.S. §§ 33-1123, 33-1124, 33-1125, 33–1130(1)-(3) 33–1130 (5)-(6)

Money Benefits

Not all property is tangible. Some of it is in the form of money or benefits that you’re entitled to. Arizona bankruptcy exemptions protect the following money benefits or proceeds up to the amount stated: 

• Up to $300 of bank deposits in a single bank account

• Fraternal benefit society benefits

• Life insurance benefits of up to $20,000 if payable to a surviving spouse or child 

• Alimony and child support (fully exempt)

• Certain pension benefits (fully exempt)

• Qualified retirement plans (fully exempt)

• Tax-exempt retirement accounts, such as 401(k)s and IRAs (fully exempt)

• Unemployment compensation

• Workers' compensation

• Welfare assistance benefits

Source: A.R.S. §§ 33-1126, 33-1131, 33–1126(A)(1), 33–1126(A)(3), 33–1126(A)(9), 20–881, 33–1126, 38–792, 33–1126(B), 23–783(A), 23–1068(B), 46-208

How To File Chapter 7 Bankruptcy in Arizona

If you're thinking about filing Chapter 7 bankruptcy in Arizona, it's helpful to know what the process looks like from start to finish. 

You don’t need a lawyer to file, but you do need to follow some specific steps and complete required forms and courses. 

Here’s a simple breakdown of what that usually involves:

1. Collect financial documents like your pay stubs, tax returns, and recent bank statements. 

2. Take a credit counseling course from an approved provider — this course is required by law and must be completed before you file.

3. Fill out the bankruptcy forms. These include federal forms used in all states and a few specific to Arizona. You can download and fill them out yourself, or use Upsolve’s free tool to help you generate the forms based on your answers to an online questionnaire.

4. Submit your forms to your local Arizona bankruptcy court and either pay the $338 filing fee or apply for a fee waiver or payment plan. 

5. Mail certain required documents to your bankruptcy trustee and attend a short meeting called a 341 meeting. 

6. Take a second required course called debtor education (also called financial management). 

If all goes smoothly, your debts will be discharged a few months after your case is filed.

Throughout this process, Arizona’s exemption laws help protect the property you need to keep your home, get to work, and care for your family. If you’re eligible, you can use Upsolve’s free tool to walk through each of these steps and file your case without having to hire a lawyer.

Need Help Filing Chapter 7 in Arizona? 

Most people who file Chapter 7 bankruptcy get their debt discharged successfully. And Upsolve has helped thousands of people do this without hiring and paying for an expensive lawyer. If you want some help with your Chapter 7 case, take our quick screener to see if you qualify to use our free filing tool. 

If you prefer to work with an attorney or have questions you’d like them to answer, you can also set up a free consultation with an experienced pro near you.

Upsolve has helped thousands of people file successful Chapter 7 cases and get over $700 million of debt discharged... and our help is 100% free.