Arizona Exemptions – What can I keep after I file bankruptcy?

Bankruptcy provides people with a fresh start, allowing them to discharge (get rid of) debts, catch up on mortgage payments, and generally get their finances together. The flip side to this process is that all of a person’s assets become property of the bankruptcy estate. These assets include pretty much everything a person owns, but with some exceptions, or rather exemptions. There is a list of Federal exemption (as bankruptcy is a federal, not state court matter. Arizona, however, passed its own statutes with a list of exemptions, instead of relying of federal exemptions (Arizona is an opt-out state).
The list of exemptions is found in A.R.S. Title 33, Chapter 8. It includes household good and furnishings, equity in a car and house, clothing, and other necessities. A bankruptcy lawyer can review your assets and make determinations as to what is exempt and what is not. For more information on filing bankruptcy in Arizona, call us at 602-977-2859.

Tax refunds in Chapter 7 Bankruptcy

As tax return season approaches, many people will be receiving a tax refund. This is a big issue when it comes to filing a bankruptcy. With proper planning, you can, in most cases, keep the money and spend it in certain areas. Otherwise, you could lose the tax refund in its entirety.
As a starting point, if you file for bankruptcy before you receive your tax refund, you stand to lose it to the Trustee (who will distribute it to the unsecured creditors). One way to prevent this is to make sure you receive your tax refund and spend it before filing. This is where things get tricky, as certain items may qualify as exempt (allowable) expenses, while others may not.
In Arizona, the most common exempt areas are: the principal balance on your mortgage, car loan (up to a limited amount). food, fuel, and provisions (which includes gas heating, clothing, and other necessities). There are a few other areas which your attorney may direct you to spend your refund.
Perhaps the best time of year to file a bankruptcy is after filing a tax return. If the money was spent on exempt items, the Trustee would not be able to demand you turn over the tax refund. In addition, you would only stand to lose a small portion of your next tax refund, as the Trustee is entitled to the last 12 months of your tax refund. For example, if you spend your 2012 tax refund by the end of February, 2013, and then filed your bankruptcy on March 1, 2013, the Trustee would only be entitled to 2/12ths of your 2013 tax refund.
For more information on tax refunds and bankruptcy filings, give us a call at 602-977-2859

The Law Office of Phil Hineman Blog is now open!

Hello, and welcome to our blog.  Here we will be discussing several issues that relate to bankruptcy law, with additional posts on family law and criminal matters.  Attorney Phil Hineman has been practicing law in Arizona for almost 25 years.  He has offices in Phoenix, Yuma, and Payson.  He handles Chapter 7 Bankruptcy, Chapter 13 Bankruptcy, Family Law (Divorce, Decree Modification, Adoption), and a wide range of criminal matters.