In deciding to declare bankruptcy, you’ll need to know not just how to file bankruptcy, but also what factors to consider in the bankruptcy process. Here’s a list of four things you shouldn’t overlook if you’re considering filing bankruptcy in Arizona.
1. Median Income Levels
You’ll need to pass the means test to be eligible to file for bankruptcy under Chapter 7. To pass the means test, the disposable income of a debtor (which is calculated by deducting living expenses from their monthly income) should be lower than the median income for their household size.
If you’re filing Chapter 7 bankruptcy, check the median household income in your state or consult with a local bankruptcy attorney to know whether you’ll be able to pass your means test.
2. Mandatory Course Providers
Bankruptcy laws require all filers to take mandatory courses before and after filing for either of the two types of bankruptcy. Before filing bankruptcy, a petitioner has to take a credit counseling course and include the certificate of completion in their bankruptcy petition. After filing bankruptcy, a debt management course is required to get your bankruptcy discharge.
These credit counseling and debtor education courses should be from a provider approved by the bankruptcy court to avoid any delays in your bankruptcy case. You can check the list of approved providers for your district on the U.S. Trustee website.
3. Arizona Exemptions
A bankruptcy filing allows petitioners to include a list of exempt property they wish to protect since the nonexempt property gets sold by the bankruptcy trustee in consumer bankruptcy to repay creditors. While a Chapter 13 filer can keep nonexempt assets by including it in their repayment plan, this option is not afforded to debtors in a Chapter 7 bankruptcy.
Assets exempted in Chapter 7 and Chapter 13 bankruptcy include:
- Alimony;
- Child Support;
- Benefits from fraternal benefit society;
- Benefits from various employee pension systems;
- Tax-exempt retirement accounts and plans;
- Workers’ compensation; and
- Unemployment compensation, if it isn’t involved in funds other than court-ordered child support.
Besides, bankruptcy laws impose a maximum limit on the exempt property in Arizona.
| Exemption | Maximum Limit |
| Homestead exemption | $150,000 |
| Motor vehicle exemption | |
| For one motor vehicle | $6,000 |
| For a disabled or elderly debtor or dependent | $12,000 |
| Life Insurance Benefits | $20,000 |
| Personal Property | $6,000 |
| Engagement and wedding rings | $2,000 |
| Prepaid rent, security deposit, or 1.5 times the rent
(instead of homestead exemption) |
$2,000 |
| Bible, bicycle, burial plot, computer, pistol, rifle, sewing machine, shotgun, typewriter | $1,000 |
| Animals | $800 |
| Clothing | $500 |
| Musical Instruments | $400 |
| Books | $250 |
| Watches | $150 |
| Tools of your trade | $5,000 |
| Farming tools, if farming is the primary source of income | $2,500 |
| Bank Deposit (in a single bank account) | $300 |
Talk to your bankruptcy lawyer to discuss whether your car, home or other property can be covered by the Arizona homestead or motor vehicle exemptions.
4. Filing Fees
Lastly, make sure to consider the rules of your local bankruptcy court about bankruptcy filings. You’ll need to pay the appropriate filing fees once you submit your bankruptcy petition, but some court locations may not accept payments in cash. In Arizona, the Phoenix and Tucson offices don’t accept cash payments, while the Yuma office doesn’t take any payments at all. You’ll have to pay the fees either via mail or with a cashier’s check or money order payable to the US bankruptcy court.
If you’re struggling with debt and considering bankruptcy for debt relief, it’s important to have the bankruptcy information you need about your situation so you can make the best decision for your financial future. Call WantAFreshStart, LLC today and schedule a free consultation with our experienced bankruptcy attorneys to discuss your options and take your first step to a fresh start.
