Do you need to file for bankruptcy to solve your financial problems? If you do, make sure that you file under a bankruptcy chapter that will garner you the best possible outcome. Assuming that you have certain assets you want to protect during the bankruptcy process, it behooves you to study the different bankruptcy exemptions available to you.

In filing personal bankruptcy, you’ll probably choose between Chapter 7 and Chapter 13. Both offer exemptions, allowing debtors to spare some assets from being liquidated during bankruptcy proceedings to pay your creditors.

Different assets fall under different kinds of exemptions. Here are some examples:

  • Homestead exemption – This allows you to keep your primary residence.
  • Motor vehicle exemption – This offers protection for a car that you need.
  • Wildcard exemptions – They allow filers to apply a particular value to a property. Whether the asset is liquidated or not depends on its worth and the exemption coverage value.


ExemptionsSome assets simply aren’t likely to be exempted. These usually include luxury items, such as boats, fancy cars, other houses, jewelry, and designer articles. Bankruptcies generally require their liquidation in order to pay off the filers’ debts. If you do have luxuries that are likely to be sold off during bankruptcy, you may prefer to sell them yourself and perhaps avoid filing for bankruptcy.

Pets are not exempted, but the bankruptcy trustee isn’t likely to bother selling them off unless they’re very high value and would help in accumulating the sum necessary to pay back your creditors.

Chapter 7 Exemptions

A Chapter 7 bankruptcy is about liquidation, so when you file such a bankruptcy petition, be prepared to have your assets sold off to pay your debts. Exemptions may allow you to spare some items. For example, when the exemption coverage amount is higher than the asset’s worth, you’ll get to keep the asset. If the asset has a higher value than the exemption, then the trustee is likely to sell the asset, pay your creditors, and then give you the amount cited in the exemption.

Chapter 13 Exemptions

A Chapter 13 bankruptcy, on the other hand, is about the reorganization. To reorganize your finances, you need to come up with an acceptable debt repayment plan. While your property won’t be liquidated, you do have to pay non-priority unsecured debts. The exemptions will help in reducing your monthly payments since they are in proportion to your non-exempt assets.

Federal Exemptions

The different states have their own bankruptcy exemption statutes, but in many cases, the states allow their debtors to use federal bankruptcy exemptions instead. This isn’t the case for Arizona, however. Its bankruptcy law requires its residents to use the state statutes, although Arizona debtors may add federal non-bankruptcy exemptions as well. If you want to have a better idea of what exemptions you qualify for, talk to one of your local bankruptcy lawyers and find out which bankruptcy options afford you the best bankruptcy protection.

Learn More about Bankruptcy Exemptions! Contact an Arizona Bankruptcy Attorney Now!

Any bankruptcy filing is better conducted with the legal guidance of a bankruptcy lawyer. Have your case reviewed so you can be advised on which course to take to arrive at the best possible outcome. Call us now at Phoenix Fresh Start Bankruptcy Attorneys to talk to one of our experienced bankruptcy lawyers.