Phoenix’s Expert Bankruptcy Attorneys Explain The 2021 Bankruptcy Exemptions


Whether you file Chapter 7 or Chapter 13, you should be aware of Arizona’s exemptions before declaring bankruptcy. Bankruptcy exemptions vary from state to state and change yearly, so make sure you are up-to-date on your exemptions before filing your bankruptcy petition.

When most people think of consumer bankruptcy, they think of Chapter 7- it is a debt liquidation that is typically completed within 4-6 months. Many of our clients initially assume they don’t qualify for Chapter 7 because they have income and own assets. Chapter 7 actually has income limits, as well as exemptions to apply to property. Any assets that aren’t protected in a Chapter 7 bankruptcy can be seized and sold to pay the debts of the bankruptcy estate. You will need to make sure the value of your assets fall within appropriate bankruptcy exemptions for the state of Arizona before declaring Chapter 7 bankruptcy. Arizona, unlike some other states, doesn’t allow bankruptcy filers to use federal exemptions to protect their assets in bankruptcy.

Phoenix's Expert Bankruptcy Attorneys Explain The 2021 Bankruptcy Exemptions

You probably have a good general idea of the value of some of your assets. You can visit websites like Kelley Blue Book and Zillow to monitor the approximate value of your car and house, respectively. You may need to hire an appraiser for other assets that you know hold significant value. Many of your possessions will be valued based on their resale value, not their original purchase price.

Cash On Hand / Funds In Bank Accounts

This is a highly important exemption to take note of if you declare Chapter 7 bankruptcy in Arizona. There is actually a limit to how much money you can have in your bank account(s) and on your person on the day your bankruptcy petition is filed. For an individual filer, this amount is $300. This limit is increased to $600 if it is a married couple. You should inform your bankruptcy attorney of you and your spouse’s paydays so that your case isn’t filed on one of those days, as the trustee may demand any amount over the applicable exemption later on in your case.

Homestead Exemption

The homestead exemption in Arizona is $150,000. Exemptions apply to how much equity you hold in your assets, so you may keep a home worth more than $150,000 in a Chapter 7 bankruptcy depending on the balance of your mortgage. The homestead exemptions can be used on more than just houses- it can also be used to protect your condo, townhome, trailer home, and more.

Motor Vehicle

For an unmarried individual filing Chapter 7 bankruptcy in Arizona, the motor vehicle exemption is $6,000. For a married couple, that limit is increased to $12,000 for one vehicle or $6,000 each for two vehicles. The exemption is increased to $25,000 for those who require specialty equipment for a disability in their vehicles.

Prepaid Rent

This exemption can also be applied to your security deposit for a residential rental property. In Arizona, the prepaid rent exemption for 2021 is $2,000.

Household Goods & Furnishings

This is one of the exemptions where it’s important to keep in mind that you are using the resale value, not the purchase price. This exemption, which can be applied to furniture, appliances, dinnerware, and more, is $6,000 in Arizona.

Food, Fuel, & Provisions

There is no exact number used for this exemption in Arizona. You can have up to 6 months worth of groceries, gas, and other household necessities on the day that you file your Chapter 7 bankruptcy petition.

Domestic Support: Child Support & Spousal Maintenance Payments

Domestic support such as spousal maintenance and child support generally are exempt in bankruptcy. Any amount that you receive will be exempt in an Arizona Chapter 7.

Life Insurance Proceeds

It may not be wise to file Chapter 7 bankruptcy if you are expecting a life insurance payout in the near future. There is a limit of $20,000 of life insurance proceeds that can be protected in Arizona.

Home Library

Book collectors and avid readers may actually have a sizable asset when their personal library is valued as a single unit. The exemption for a personal library in Arizona is $250. A debtor may use other exemptions to protect books in Chapter 7, especially if they use these books in their profession.

Tools Of The Trade

This is an alternative exemption a filer can use to protect books used in their career. This exemption can also be used to protect power tools, equipment, safety gear, and other assets necessary to run their business. The total limit for exemption for tools of the trade in Arizona is $5,000.

Clothing Exemption

Regardless of how many members are in your family, the Arizona exemption for clothing is $500. Your wardrobe should be safe, as long as you don’t show up to your 341 Meeting of Creditors decked head to toe in designer gear.

Engagement & Wedding Bands

Your wedding jewelry is protected up to $2,000 in an Arizona Chapter 7 bankruptcy. You may need to have this item appraised by a jeweler before proceeding with your bankruptcy.


One watch worth up to $150 is protected in Arizona.

Household Pets & Livestock

This exemption, which can be applied to dogs, cats, goats, horses, cows, reptiles, and more, is $500 in Arizona.

Musical Instrument

Unless you are a professional musician who can protect your instruments with the tools of the trade exemption, the 2021 exemption for musical instruments in Arizona is $400.

Bicycle, Burial Plot, Computer, Family Bible, Firearm

This exemption, which can be used on a wide array of assets, is set at $1,000 in Arizona.

Contact Our Bankruptcy Law Firm In Arizona Today

Whether you’re unsure about Arizona’s bankruptcy exemptions, need to check your qualification for Chapter 7, or have any other bankruptcy questions, our lawyers are here to assist. Our experienced bankruptcy attorneys in Phoenix will represent you through an efficient and effective bankruptcy. We even offer payment plans- you may qualify to start for $0 down! To learn more, call or use our online form to schedule your free consultation today.


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