If I file for bankruptcy in Arizona am I going to lose everything?
No. You will not. The purpose of making bankruptcy available as an option is not to punish you for whatever circumstances have lead to financial troubles or for getting in over your head. For the vast majority of our clients, they have gotten too deeply into debt through no fault of their own. Maybe they have been ill or have had to cut back their hours at work to care for a family member who has been ill or been laid off or lowered pay in these tough times. There are a number of reasons why the debt people carry becomes too heavy of a load to handle on their own.
The government recognizes this and allows you to keep many of your belongings so that when you emerge from bankruptcy, you have more than just the clothes on your back. Each state has its own rules regarding what and how much you get to keep; Arizona Exemption Laws. Often, people who are under the impression that they will be losing everything are quite surprised at how little they actually have to give up.
When you get to keep something, we say that the property is “exempted” from the bankruptcy estate, meaning that if you own this kind of property, get to keep it subject to certain dollar amounts. In Arizona, you are allowed to exempt $150K of equity in your home. Equity means the amount of the asset that you own or have paid for, so for example if you have paid $100,000 on your house that is worth $250,000 your house has $100,000 in equity and would be exempt. You can keep $4K of certain household goods. In some cases, if you are married and are filing with your spouse, each of you receives an exemption. So actually, married couples will get to keep up to $8K of exempt household assets. This isn’t true for all types of assets however. Married people don’t get to exempt $300K of equity in their homes unfortunately.
Each person get to exempt up to $5K equity in one car. If you have a handicapped placard on your vehicle, your exemption amount doubles to $10K. If both husband and wife are filing, they will each get one $5K exemption for their car, or they are allowed to stack those two exemptions and use a $10K exemption on one car.
The biggie is any IRA or pension that you might have. These are almost always fully exempt. So as you can see, when you start your new life, you will be doing so with a fresh start but not from the very bottom.
One thing that you do not want to do is try and transfer property in order to avoid having it taken, this can cause serious problems for your case and you should consult with a Tucson Bankruptcy attorney before doing so.