While recent federal laws attempted to unify bankruptcy laws across the states, there are still differences from one state to another. If you are considering filing for bankruptcy in Arizona, here is what you need to know.

Bankruptcy Exemptions

Arizona follows state exemptions, not federal exemptions. These exemptions are as follows:

• Up to $150,000 for your homestead
• Up to $4,000 worth of furniture and appliances
• Six months' worth of food, fuel and provisions for yourself or your family
• Certain personal items, as outlined by state bankruptcy law
• Life insurance cash surrender value, up to $25,000
• Live insurance proceeds, up to $20,000
• Up to $5,000 for your vehicle
• Up to $500 in animals, including pets and farm animals
• Up to $500 in clothing
• Retirement funds
• Up to $100 for a watch
• Up to $250 for a musical instrument
• Up to $150 in a personal bank account
• Up to $250 for books and personal documents
• Up to $500 for your personal tools, firearms and burial plot
• Up to $2,500 for farm equipment and animal feed
• Up to $1,000 for engagement and wedding rings
• Up to $2,500 for tools of the trade
• Up to $1,000 or a half-month of rent for non-home owners

Remember that the homestead value only refers to the equity in the home, not the amount still owed. Also, car loans must be reaffirmed if you intend to continue paying that particular debt. Failure to reaffirm the car loan results in repossession if the value is above the exemption.

Chapter 7 Bankruptcy Information

Chapter 7 bankruptcy takes all of your non-exempt assets, sells them to repay your debt and then wipes out any remaining debt. You must pass the means test to qualify for this type of bankruptcy. This test requires your income to be at or below the median level for your area to file Chapter 7.

Chapter 13 Bankruptcy Information

Under Chapter 13 bankruptcy, your trustee will help you set up a repayment plan that allows you to pay back some or all of your debts over three to five years. If you do not qualify for Chapter 7 or have a large asset, like your home, that you wish to protect, this is a better option. It still provides court protection against collections actions.