Some Assets Are Protected When Filing an Arizona Bankruptcy
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In a bankruptcy, certain assets are protected by laws called "exemptions." If an asset is exempt, a debtor is allowed to keep that item if he files for bankruptcy. Typically, an asset can only be protected if the court determines that its value is under a certain maximum limit. Arizona, like some states, has chosen to create its own list of exemptions rather than follow the list of exemptions created by the federal government. The choice to create its own exemptions makes Arizona friendlier to debtors than states following the federal guidelines because Arizona's exemptions include more assets and greater allowable values than the standard, federal list of exemptions.
Even if you file for bankruptcy, your home may still be protected. The homestead exemption can be used to protect the primary resident of the single or married debtor. The debtor will be allowed to keep up to $150,000 in home equity, as well. If the debtor has more equity, the debtor might be ordered to pay the excess equity to the bankruptcy court. If this excess is not paid, it is more likely that the bankruptcy could be dismissed. A bankruptcy trustee might decide the best course of action is to force a sale of the home. If this happens, the debtor is still allowed to keep the $150,000 in equity. Any excess will be used to pay creditors. This helpful exemption may be used only once when filing for bankruptcy.
Vehicle exemptions also are allowed when filing a bankruptcy. A debtor may keep a vehicle as long as it has less than $5,000 in equity. If debtors are married, they are allowed two, $5,000 exemptions toward two of their vehicles. If there is any vehicle equity beyond the $5,000, this situation is treated in the same way as in the homestead exemption.
Another exemption concerns personal property. This might include items such as furnishings and household furniture, as well as appliances. The court requires that the debtor submit a detailed list of all these assets. A single person filing bankruptcy is allowed up to $4,000 in personal property exemptions. Married couples that file for bankruptcy are allowed no more than $8,000 in personal property exemptions.
There also are miscellaneous assets that are protected up to a certain set value. These values are based on bankruptcy laws and might include items such as tools or equipment used for commercial activity. Wedding jewelry, clothing, hobby items, musical instruments, books, weapons and some life insurance proceeds are other miscellaneous assets that may be allowed and have specific value limits set by bankruptcy codes.
Several types of retirement assets also are protected by bankruptcy laws. These include qualified retirement assets, such as IRA, 401k, state retirement funds and so on. These are protected with no limit on their value.
Some future assets also are protected by bankruptcy code. If the debtor has employee stock purchase plans that have not been vested or a future interest in a business, these potential future assets generally are protected. Annuities that have not yet been vested are another example of an asset that may be exempted.
Article Source: Articlelogy.com
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