People file bankruptcy in Arizona to discharge most debts. The Arizona bankruptcy exemptions allow a debtor to retain certain property. This is called exempt property, and it is protected. Debtors must understand the Arizona bankruptcy exemptions to know which assets they may retain.
Proposition 209 was an Arizona initiative that was overwhelmingly passed by the voters. Although it increased the Arizona exemptions, it has caused confusion.
One common asset many debtors own is some type of life insurance policy. One of my tasks as an Arizona bankruptcy lawyer is to determine whether a debtor’s life insurance policy has a cash surrender value and whether such money will have to be surrendered to the bankruptcy trustee. Recent case law has made this analysis much more complex.
Most debtors can keep their vehicles when they file bankruptcy. A complication arises when a debtor has a vehicle loan. A competent Arizona bankruptcy lawyer will advise that to retain the car, the debtor may have to stick his neck on the line and reaffirm the car loan, making the bankruptcy null and void with respect to a huge debt. But there may be some alternatives.