A common misunderstanding about bankruptcy is that the person filing bankruptcy will lose everything – their home, car, retirement accounts, savings, etc. Nothing could be further from the truth. One of the primary purposes of bankruptcy is to give the borrower a fresh start and the ability to move on with their life. If a person lost all of their property in bankruptcy, the goal of providing a fresh start would never be achieved.
The federal bankruptcy code contains universal exemption laws to help protect certain property. These exemptions laws protect specific items of property from being sold or taken away in bankruptcy. These items are deemed by Congress to be necessary in assisting the individual to move on with their life. While the federal bankruptcy code offers these exemptions to everyone, it also allows each of the 50 states to “opt out” of the federal bankruptcy property exemption scheme. Arizona has opted out of the federal bankruptcy scheme.
Therefore, if you have lived in Arizona for the last two years and decide to file bankruptcy, the property you are entitled are entitled to keep will largely be determined by Arizona law rather than federal law. Under Arizona law most people are able to protect their home, car, household furnishings, and retirement accounts among several other exemptions provided to Arizona residents.
If you file bankruptcy in Arizona, but have not lived in Arizona for the last 2 years, you will still be able to protect property. You would either use the exemption laws of the state you lived in previously, or if the prior state does not allow you to do so, you will still be entitled to use the federal exemptions. Either way, you will be able to protect essential personal property and real estate that will be vital to starting a sound financial future.
For your FREE consultation, call Benjamin Skinner, experienced Arizona bankruptcy attorney! (480) 648-8975.