Are financial problems driving you to file for bankruptcy? It can very well be the solution to your situation, but you need to make sure that you go through the bankruptcy process, ensuring the best possible outcome for you. Choose to file under a bankruptcy chapter that will allow you to keep important assets through exemptions.
When it comes to personal bankruptcy, Chapters 7 and 13 are the most common choices. Both allow debtors to exempt certain assets from being affected by bankruptcy proceedings. Exemptions allow you to avoid having everything liquidated to pay off your creditor.
There are different kinds of exemptions. Two of the most familiar ones are the homestead exemption, which allows you to hold on to your primary residence, and the motor vehicle exemption, which offers protection for a car. Wildcard exemptions, on the other hand, allow you to apply a certain value to any asset. You can use this exemption to protect a cherished property up to a certain amount. Whether you can get to keep the asset depends on the exemption coverage amount and the value of the property.
There are things that are just not likely to qualify as exemptions, mainly items considered to be luxuries instead of necessities. If you have a boat, a sports car, a vacation home, expensive jewelry, and designer items, they will probably be sold off in order to pay off your debts. In fact, if you have such possessions, you’re better off selling them on your own instead of filing for bankruptcy. As for pets, while they’re not usually exempted, the bankruptcy trustee isn’t likely to be interested in selling them unless they’re high value.
Chapter 7 and Chapter 13 Exemptions
Filing a bankruptcy petition under Chapter 7 will lead to liquidation of your non-exempted assets to pay your debts. There are items that will be spared. For instance, when the exemption amount has a higher value than the asset, you’ll be allowed to keep this item. In cases where the exemption has a lower value than the asset, the trustee will sell it to pay off your debts and just give you the remainder from the proceeds after.
If you file bankruptcy under Chapter 13, you will go through financial reorganization, which requires you to propose an acceptable repayment plan to the bankruptcy court. While your assets won’t be liquidated, you’ll have to pay non-priority unsecured debts. Exemptions figure into the amount you pay since it’s proportional to your non-exempt assets. In effect, the exemptions help reduce your monthly payments.
Arizona has its own bankruptcy exemption statutes. They are separate from federal bankruptcy exemptions. There are states that allow bankruptcy filers to choose between state statutes and federal statutes, but Arizona isn’t one of them. According to state bankruptcy law, Arizona residents must use state exemptions, so debtors are allowed Arizona statutes as well as federal non-bankruptcy statutes. To understand this better and figure out how you can give your property good bankruptcy protection, it’s best that you speak with one of your local bankruptcy lawyers.
Understand Your Bankruptcy Options! Consult an Arizona Bankruptcy Attorney Today!
Do you want to ensure the best outcome in a bankruptcy filing? Seek the counsel of a bankruptcy lawyer so your case can be reviewed and your best bankruptcy option, identified. For legal advice and guidance on bankruptcy matters, call us at Zolman Law to speak with one of our experienced Arizona bankruptcy attorneys.