What are the Arizona Bankruptcy Exemptions?

Jonathan Petts

Written by Jonathan Petts
Updated August 1, 2018

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What are the Arizona Bankruptcy Exemptions?

The Arizona bankruptcy exemptions help you keep certain property when you file. Unlike some other states, Arizona requires you to use the state exemptions. You don’t have the option to claim the federal bankruptcy exemptions.


How Do Exemptions Work?

When you file for Chapter 7 bankruptcy, one of the biggest questions is whether or not you will be able to keep your property.

That depends on which property exemptions you can use on your bankruptcy forms. They are called exemptions because they “exempt” -- or “excuse” -- certain property from being taken. In most cases, exemptions protect most day-to-day items that you own, unless you have expensive property like a house or a car.

Certain exemptions protect entire categories of property like retirements accounts, regardless of value. Other exemptions only protect specific property like a vehicle up to a certain value.

There are two types of exemptions: the Arizona bankruptcy exemptions and the federal bankruptcy exemptions.

Every state has its own set of property exemptions. And some states also allow you choose between their exemptions and a set of federal bankruptcy exemptions. When they do, they will generally let you to choose the system that is the best fit for you.

Although some states allow you to use the federal exemptions, others do not. Arizona does not recognize the federal bankruptcy exemptions.

This means that you don’t have the option to use the federal bankruptcy exemptions. You can only use the Arizona bankruptcy exemptions.

So, there are a few main things to keep in mind:

The Residency Requirement Although AZ won’t let you use federal bankruptcy exemptions, they will accept other Federal Nonbankruptcy Exemptions

This article will help you understand some of the ways Arizona bankruptcy exemptions work and the things to keep in mind when filing.

The Residency Requirement

First things first. . . Before settling on the Arizona state exemptions, it’s important to be sure that you meet the residency requirements.

You are required to have lived in Arizona for at least the past 2 years (720 days before filing) to use that state’s exemptions.

What if you haven’t lived in Arizona for the past 2 years? Then, you use the exemptions from the state you resided in for the majority of the 6 month period prior to 2 years ago.

For example, I am filing for bankruptcy in New York today where I live. But until I moved to New York last year, I lived in Vermont for my entire life. When I file for bankruptcy, I need to use Vermont exemptions.

Now that you’ve figured out which state exemptions apply to you, let’s discuss how they might compare to the federal exemptions.

Arizona Accepts Federal Nonbankruptcy Exemptions

Although you are limited to Arizona’s bankruptcy exemptions, there are certain instances where you can claim other federal exemptions that aren’t related to the bankruptcy code. These are called the federal nonbankruptcy exemptions.

You can use the federal nonbankruptcy exemptions if you belong to a specific group of people or work in a particular profession. These exemptions can be applied if you have special circumstances with:

  • Retirement benefits,
  • Death or disability benefits, or
  • Survivor’s benefits.

Some of the professions it applies to are:

It’s important to know whether or not these special cases apply to you. If you’re eligible, the federal nonbankruptcy exemptions can help you protect property that otherwise wouldn’t be protected under Arizona’s bankruptcy exemptions.

What Do the Arizona Bankruptcy Exemptions Cover?

This section highlights some of the most common Arizona Bankruptcy Exemptions.


Homestead Up to $150,000 (per spouse/debtor if filing together).

Amount: What It Covers:This Arizona bankruptcy exemption is important for homeowners. It covers real property such as family homes, co-ops, mobile homes, burial plots, etc. Fortunately, in Arizona, the Homestead Exemption is triggered automatically and you do not have to declare that you wish to use it. It can also be applied to proceeds from the sale of the home that you live in.

Motor Vehicles Amount: Up to $6,000. This number increases to $12,000 if you are elderly or disabled (or a dependent of someone who is). What It Covers: If you’re up-to-date on your payments, there is a possibility that the Arizona bankruptcy exemption for motor vehicles can help you keep your car during Chapter 7. This is only allowed if your payments have made up less than the amount above. If you’ve paid more than that on your car, it might not be protected when you file.

Personal Property

What It Covers: The Arizona bankruptcy exemption for personal property covers most of your day-to-day items. This likely includes items like clothing, appliances, animals, household goods, electronics, etc.

  • Household Goods Amount: Up to $6,000

  • Clothing Amount: Up to $500

  • Engagement and Wedding Rings Amount: $2,000

  • Musical Instruments Amount: $400

  • Animals Amount: $800


Wrongful Death Recovery Amount: Exempt. What It Covers: The Arizona bankruptcy exemption for “wrongful death”allows you to protect payments that you received for the death of someone you depended on such as a spouse.

Health Aids: Amount: Exempt. What It Covers: The Arizona bankruptcy exemption for health aid includes items where the sole purpose is to assist you in maintaining your health and quality of life. This often includes things like prosthetic or orthopedic equipment. What It Doesn’t Cover: Keep in mind that health aid equipment does not include anything that you could also use for recreational purposes. So, things like massage chairs would not be protected.

Youth Teaching Materials Amount: Exempt.

Prepaid Rent & Security Deposits Amount: The lesser of $2,000 or 1.5 times the rent. Renters: This can be used instead of the Arizona bankruptcy exemption for Homestead.

Other Amount: Varies depending on the item. See list below. What It Covers: The Arizona bankruptcy exemptions provide $1,000 to cover the following miscellaneous items: bible, bicycle, sewing machine, typewriter, computer, burial plot, rifle, pistol, or shotgun; books ($25); and a watch ($150).

Bank Deposits Amount: Up to $300 in a single accounts

Wages Amount: The Arizona bankruptcy exemption covers the lesser of two options: Either 75% of disposable earnings -- or -- earnings exceeding 30 times the federal minimum wage per week.

Tools of the Trade Amount: Varies. What It Covers: The Arizona bankruptcy exemption for tools of trade covers equipment that you need for your business or livelihood. This includes Up to $5,000 in trade implements; $2,500 in farm tools (if you’re primary source of income is from farming); Uniforms, protective gear, and arms necessary for your job are exempt. Teaching or Librarian aids are exempt as well.

Alimony & Child Support Amount: Any amount. What It Covers: This Arizona bankruptcy exemption covers the amount that you recieve for alimony or child support from a former partner or spouse. What It Doesn’t Cover: Be careful not to confuse this with money that you may pay in domestic support. This only applies if you are the recipient of support not the payer.

Employment Compensation Amount: Varies. What It Covers: The Arizona bankruptcy exemption for employment compensation provides that workers compensation is exempt and unemployment compensation is exempt as long as it hasn’t been mixed with other funds (exception to commingling: Alimony and Child Support).

Pension & Retirement Amount: Exempt What It Covers: This Arizona bankruptcy exemption covers: (1) Tax exempt retirement accounts including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans and (2) IRAS and Roth IRAs.


When you’re filing for Chapter 7 bankruptcy, Arizona does not give you the option to use the federal bankruptcy exemptions. Assuming you meet the residency requirements, you are required to use the Arizona bankruptcy exemptions alone.

Exemptions are useful and important features of the bankruptcy process. They help you to keep property the property that means the most to you while you take the necessary steps toward getting a fresh start.

So, unless you have very large or valuable assets, it is unlikely that the court with try and take the things you own.

Chapter 7 bankruptcy is a powerful social safety net. By erasing your debts and using the property exemptions to protect your stuff, you will be well on your way to a fresh start.

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