If you file for Chapter 7 bankruptcy in Arizona, you can protect some or all of your property with Arizona’s bankruptcy exemptions. The bankruptcy exemptions in Arizona also play a role in Chapter 13 bankruptcy. Read on to learn about what property is covered by Arizona’s bankruptcy exemptions.
For a general overview of bankruptcy exemptions, visit the Bankruptcy Exemption topic page.
Arizona Requires Debtors to Use State Exemptions
Arizona has enacted legislation “opting out” of the federal bankruptcy exemptions. This means that bankruptcy filers in Arizona are only permitted to exempt property using the state laws.
Married Couples May Double Certain Arizona Exemptions
Married couples filing a joint bankruptcy in Arizona may “double” the exemption amount for certain items such as motor vehicles and household goods. Notably, doubling does not apply to the homestead exemption. If the specific exemption allows for doubling, each spouse may claim the full exemption amount for the property (which means that combined, they get to double the exemption).
Common Arizona Exemptions
Here are some of the most common exemptions available under Arizona law:
A debtor may exempt $150 in a single bank account. Ariz. Rev. Stat. Ann. § 33–1126(8).
Cemeteries and Burial Funds
A debtor may exempt a lot in any burial ground and prearranged funeral trusts up to $5,000. Ariz. Rev. Stat. Ann. §§ 32–1391.05 and 33–1125.
Fraternal Benefit Society Benefits
Fraternal benefit society benefits are 100% exempt. Ariz. Rev. Stat. Ann. § 20–877.
Homestead or Residential Property
Under Arizona law, debtors may exempt up to $150,000 (per debtor or married couple) of their home or other property covered by the homestead exemption. Ariz. Rev. Stat. Ann. §§ 33–1101, 33–1103 and 33–1104.
For more details about how the homestead exemption works in Arizona, see The Arizona Bankruptcy Homestead Exemption.
Insurance benefits that are payable or received by a surviving spouse or child are exempt up to $20,000. All payments or installments to a beneficiary under any policy of health, accident or disability insurance, or any similar plan or program of benefits. There are some exceptions. Claims for the destruction of, or damage to, exempt property are exempt. A debtor may exempt the cash surrender value of life insurance policies, subject to length of ownership requirements and other exceptions. Ariz. Rev. Stat. Ann. §§ 33–1126(1), 1126(4), 1126(5), and 1126(6).
A debtor may exempt up to $5,000 in one or more motor vehicles. An elderly or disabled debtor, or an elderly or disabled spouse or dependent of the debtor, may exempt up to $10,000. Ariz. Rev. Stat. Ann. § 33–1125(8).
To learn more, visit The Arizona Motor Vehicle Exemption in Bankruptcy.
Pension and Retirement Benefits
Benefits from various employee pension systems are exempt. Benefits from federally tax exempt retirement plans are exempt except for child support purposes. Ariz. Rev. Stat. Ann. §§ 33–1126 and 38–792.
A debtor may exempt the following personal property:
- up to $4,000 in household goods
- up to $500 in clothing
- up to $250 in musical instruments
- up to $500 in animals
- up to $1,000 in engagement and wedding rings
- up to $250 in books
- up to $500 in miscellaneous items
- all teaching materials for youth, and
- certain professionally prescribed health aids.
Ariz. Rev. Stat. Ann. §§ 33–1123, 33–1125 and 33–1127.
Tools of the Trade
A debtor may exempt up to $2,500 in trade implements, which includes farming tools if the debtor’s primary income is from farming. All arms and uniforms that a debtor is legally required to keep are exempt. Ariz. Rev. Stat. Ann. §§ 33–1130(1), 33–1130(2), 33–1130(3), 33–1130(5), and 33–1130(6).
Unemployment compensation is exempt as long it is not commingled with other funds and except for the enforcement of child support orders. Ariz. Rev. Stat. Ann. § 23–783.
A debtor may exempt the lesser of the following wages, per week:
- 25% of his or her disposable earnings, or
- earnings in excess of 30 times the federal minimum wage.
This exemption does not apply to taxes and is modifiable to account for support claims. Ariz. Rev. Stat. Ann. § 33–1131. (Learn more about wage exemptions in Arizona.)
Workers’ compensation is exempt, but employers are entitled to a credit for benefits that had been previously awarded. Ariz. Rev. Stat. Ann. § 23–1068.
Confirming the Status of Arizona's Bankruptcy Exemptions
Arizona's exemption amounts are adjusted periodically. To make sure you have the most recent figures, be sure to check for any updates at the official website of the Arizona Secretary of State at www.azsos.gov.
For additional information on how to research and find the latest exemption amounts, see our Legal Research Center.