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Bankruptcy Can Permit You to Keep Your Stuff

Many people work hard to build a comfortable life saving and live within their means only to have sudden unanticipated events shake the financial foundation upon which they have built their life.  Families may spend a lifetime acquiring their possessions.  Sometimes sudden unexpected events including an economic downturn, unanticipated job loss, serious health issue or other adverse event can overwhelm and financially devastate a family.  You may hesitate to seek bankruptcy protection because you believe that you will not be able to keep your stuff.  However, a substantial number of our clients keep most if not all of their possessions when they seek bankruptcy relief.

There are two principle types of consumer bankruptcy – Chapter 7 and Chapter 13.  A Chapter 13 bankruptcy involves making payments toward obligations over a 3 or 5 year period and receiving a discharge of remaining unsecured balances at the end of the payment plan.  If you successfully complete the repayment plan under a Chapter 13 bankruptcy, you will keep your stuff even after receiving a bankruptcy discharge.  A Chapter 7 bankruptcy, also known as “liquidation bankruptcy”, is more commonly what people think of as a bankruptcy where they surrender their possessions. 

While in theory a bankruptcy trustee who oversees your bankruptcy may be able to sale assets and distribute proceeds to creditors, this is reasonably rare in Chapter 7 bankruptcy proceedings.  The only assets that are subject to liquidation and distribution are “non-exempt” assets.  Those that file bankruptcy in most states must choose between the federal and state exemption schedules, but Arizona follows another approach permitting use of the Arizona exemption schedule and use of applicable amounts in the federal non-bankruptcy exemptions.  Generally, a married couple will file bankruptcy jointly and frequently both spouses can claim the full amount of the exemptions doubling their value.  The scope of the exemption system is extensive so that skillful use of the exemption process can mean that you keep your stuff – all of your possessions.

Some of the most commonly utilized exemptions include the following:

  • Keeping Your Home: The homestead exemption protects income from sale of one’s home up to $150,000 in equity up to eighteen months after the sale or until a new home is purchased.  This exemption may not be doubled.
  • Family Vehicle: A motor vehicle may be kept up to $5,000 in value or $10,000 if the vehicle is not running.  This exemption generally applies to a vehicle that is paid off or has a substantial amount of equity.  Most financed vehicles have negative equity and can be kept by formally or informally reaffirming the debt.  An experienced Arizona bankruptcy attorney can advise you regarding the best strategy for keeping any motor vehicles.
  • Household Furnishing: Your household furnishings including furniture, pictures, televisions and other household item may be kept up to a value of $4,000.  This is not the purchase price of the item but more akin to garage sale value so in most cases this will permit those who file to keep most if not all of their household furnishings.  If the value of your household furnishings exceed this threshold, there may be other exemptions that can be used to protect the balance of your household items.
  • Retirement Plans: Many types of retirement plans are protected including but not limited to defined benefit plans, tax exempt retirement accounts, 401K accounts, SIMPLE IRA accounts, IRAs and Roth IRAs up to a certain monetary limit, certain public employee retirement accounts, ERISA plans and other retirement or deferred compensation accounts.  Because these can be substantial assets, it is important to consult with an experienced Arizona bankruptcy attorney to determine if your plan is exempt from bankruptcy.
  • Tools of the Trade: Equipment and tools used in an occupation up to a value of $2,500.
  • Funds from Public Benefit Programs: These include welfare, unemployment and worker’s compensation benefits.

While this is only a partial list, it provides some idea of the scope, variety and value of items that may be exempt from bankruptcy proceedings.  An experienced Arizona bankruptcy attorney can help you maximize your use of the bankruptcy exemptions system so that you keep your stuff.  While you cannot simply give items away or engage in sham sales, there are valid ways to convert non-exempt assets to exempt assets subject to bankruptcy protection. 
Our Arizona bankruptcy lawyers are committed to helping debtors protect their assets and keep their stuff when filing bankruptcy.  We believe that the bankruptcy process is more than simply filing for bankruptcy protection; it is about effective asset management and asset protection. 

The Rosenstein Law Group PLLC offers customized bankruptcy solutions tailored to your individual needs and designed to help you protect your assets and keep your property so contact us today at 480-248-7666 today.

 

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  • Rosenstein Client received notice from their employer that their paycheck is about to be garnished. By filing bankruptcy our attorneys were able to stop the wage garnishment immediately.

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8010 E. McDowell Rd.
Suite 111

Scottsdale AZ 85257

Telephone: 480-248-7666
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Rosenstein Law Group in Scottsdale, serves clients from throughout Maricopa County, Pinal County, Pima County and nearby, in communities including Phoenix, Tempe, Mesa, Paradise Valley, Peoria, Glendale, Chandler, Gilbert, Fountain Hills, Queen Creek, Casa Grande, Cave Creek, Anthem, Surprise and Buckeye.