There are several things that are related to financial matters. A few common reasons include unmanageable debt, divorce, sudden illness, foreclosure, or sudden unemployment.

In fact, the average credit card debt in Arizona is a whopping $4,919 per person. In addition, foreclosure rates are also as staggering, one out of every 2,609 AZ homes is currently in foreclosure.

If you find yourself struggling with similar situations, then you are more than likely facing other personal issues that come with dealing with debt. The fear of losing your vehicle, home or your money can drain a person physically. You may have even considered Filing Chapter 7 or Chapter 13 Bankruptcy .

If you are thinking “Should I File Bankruptcy?” you are definitely not alone. Almost 1 million people file bankruptcy each year in America. Bankruptcy is a tool provided by the US Government to help struggling Americans find relief from heavy debt. You may want to consider personal bankruptcy if it’s best for you.

What Is Bankruptcy?

Bankruptcy offers people the chance to get out from underneath considerable debt while still working with lenders in a legal capacity. It is started by a person filing a Petition with their nearest bankruptcy court. The Petition can be filed by a person or by spouses jointly. When the bankruptcy is done, the filer will ‘exit’ and will have a chance for a fresh start on their finances.

During a bankruptcy, a trustee is appointed to oversee the deatils of the case. His or her responsibilities will vary and depend on whether the individual has filed for Chapter 7 or Chapter 13 bankruptcy.

Did you know that Arizona ranks #21 in the nation for bankruptcy filings. In 2017 the number of personal bankruptcies was approximately 305 out of every 100,000 residents.

What Is The Difference Between Chapter 7 And Chapter 13?

Individuals or couples in Arizona, who claim bankruptcy, will elect to file under Chapter 7 or Chapter 13 of the U.S. Bankruptcy Code. Want to know the difference? Look below for more information

Chapter 7

In exchange for dissolving all past due debts, the trustee of the bankruptcy will liquidate the assets, such as cars, homes, and other property of value in a Chapter 7 Bankruptcy proceeding.

The proceeds collected during liquidation will be used to repay debtors that were listed on the bankruptcy filing.

Chapter 13

If you have the means to pay some of your debts, a chapter 13 bankruptcy plan may work for you. You will be allowed to keep your valuable assets over a 3- to 5-year period.

In order to decide which chapter a person will file, he or she will have to determine their ability to repay under the Bankruptcy Means Test.

What Is A Bankruptcy Means Test?

The ultimate goal of the Bankruptcy Means Test is to determine who is eligible to apply for debt forgiveness through a Chapter 7 Bankruptcy. It takes into account your:

  • income and expenses
  • household size and composition
  • debt-to-income ratio

If you do not qualify for Chapter 7 bankruptcy, you will be able to file for Chapter 13, as above-described.

What Are Bankruptcy Exemptions?

The federal bankruptcy exemptions are a list of exclusions by Congress that are available to filers in specific states. These exemptions will determine what you are able to retain throughout and after Chapter 7. In a Chapter 13 situation, the exemptions will determine what amount you will have to pay certain financial institutions in your repayment plan.

Unless otherwise noted, all law references are to the Arizona Revised Statutes.


  • Up to $150,000. Includes apartments and mobile homes; and sale proceeds up to 18 months after sale, or new home purchased, whichever occurs first. Husband and wife may not double. May record homestead declaration. §33-1102.

Personal Property

  • Wrongful death awards.
  • Funeral deposits up to $5,000.
  • Household furniture and appliances not covered by other exemptions, up to 6,000 total.
  • Food and fuel for 6 months.
  • Motor vehicle up to $6,000 (or $12,000 if disabled); clothing to $500; pets, horses, milk cows and poultry to $800; books to $250; wedding and engagement rings to $2,000; musical instruments to $400; watch to $150; health aids; and up to $1,000 total for bicycle, sewing machine, typewriter, computer,burial plot, firearm, and bible.
  • Proceeds for sold or damaged exempt property; prepaid rent or security deposit to lesser of $2,000 or 1.5 times rent (only if not claiming homestead); bank deposit to $300 in one account.


  • 75% of earned but unpaid net wages or 30 times the federal minimum hourly wage. 50% of wages for support orders. Judge may allow more for low-income debtors.


  • Tax exempt retirement accounts (including 401(k)s, 403(b)s, profit-sharing and money purchase plans, SEP and SIMPLE IRAs, and defined benefit plans).
  • IRAS and Roth IRAs to $1,283,025. (This amount is set by federal law. See Federal Bankruptcy Exemptions for updates on this dollar amount.)
  • Police officers.
  • Firefighters.
  • Members of board of regents as well as administrative officers and faculty under the board’s jurisdiction.
  • ERISA-qualified benefits, if deposited more than 120 days before filing. IRAs & Roth IRAs.
  • Retirement and disability of state employees.
  • Rangers.
  • District employees.
  • Public Safety Personnel Retirement System.

Public Benefits

  • Unemployment compensation.
  • Workers’ compensation.
  • Welfare benefits.

Tools of Trade

  • Teaching aids of a teacher.
  • Tools, equipment and books up to $5,000; Farm machinery, utensils, instruments of husbandry, feed, seed, grain and animals up to a total value of $2,500; and arms, uniforms and equipment you are required by law to keep. (Subject to doubling)


  • Fraternal benefit society benefits.
  • Life insurance proceeds if you have owned it at least 2 years and the beneficiary is a spouse or child.
  • Group life insurance policy or proceeds.
  • Life insurance proceeds if beneficiary is spouse or child, up to $20,000. Disability, accident or health benefits. Proceeds or cash value of life insurance or annuity contract if the beneficiary is a dependent member of the family and the contract has been owned longer than 2 years.


  • Alimony or child support. Minor child’s earnings if debt is not for child.

Want to know if you can include Student Loans in Bankruptcy or Medical Bills in Bankruptcy? Check out our Bankruptcy FAQ’s section.

Filing Bankruptcy Alone vs. Filing With An Attorney

Current laws do not require filers to hire a lawyer to declare bankruptcy relief. People are allowed to represent him or herself as a pro se debtor. You will simply contact the local bankruptcy court and obtain all forms and requirements directly through them. Filing alone is not an easy task.

Filing Bankruptcy without an Attorney

A basic Chapter 7 Bankruptcy that doesn’t have a lot of debtors or assets may be easy to manage on your own.

A basic bankruptcy that doesn’t involve an attorney might look like:.

  • Your income is below the state median;
  • You have no property;
  • Your debts will be considered dis-chargeable.

Working With An Attorney

For most people, it is usually in one’s best interest to work with a bankruptcy attorney. A bankruptcy lawyer is there to represent you and not in the interest of creditors.

An attorney is also accustomed with exemption laws. In addition, they can come up with creative strategies to keep your assets through practical repayment strategies that are fair to everyone involved.

While you may have the fight and ability to manage a Bankruptcy on your own, it tends to make things a lot easier on an already stressful situation, especially when there is so much at stake.

What Does Bankruptcy Include?

Once you file for bankruptcy in AZ, the courts put in place an order called an Automatic Stay. This order will stop debt collection calls, wage garnishments, and additional claims. Keep in mind that payments regarding child support and criminal cases will still need to be made during this time.

In any event, Bankruptcy will be able to include:

  • credit card debt
  • protection from eviction
  • avoidance of foreclosure
  • utility bills
  • medical expenses

Again, unless you are filing a complex Chapter 13 case, you will lose all assets associated with a Chapter 7 Bankruptcy protection. You will, however, be able to prevent any and all collections from occurring as long as they were incurred before the date of filing and discharge.

Final Thoughts And Considerations On Filing For Bankruptcy In Arizona

As you can see, there a lot of information associated with successfully filing for bankruptcy and then exiting it unscathed or satisfied. Only a licensed bankruptcy attorney can guide you through this arduous process, particularly when it comes to complex cases. Be sure to hire someone you respect and trust.

Bankruptcy Courts In Arizona

James A. Walsh United States Courthouse
38 South Scott Avenue
Tucson,AZ 85701
Arizona Bankruptcy Court

United States Courthouse
230 North First Avenue
Phoenix,AZ 85003
Arizona Bankruptcy Court

John M. Roll United States Courthouse
98 West 1st Street
Yuma,AZ 85364
Arizona Bankruptcy Court


Additional Arizona Resources

Foreclosure Help Program

Disability SSDI Benefits