Generally, you will be able to keep your house and car when filing for bankruptcy.
There are specific state and federal statutes that protect your essential assets from the collection of creditors. These statutes will shield assets like your car and home from seizure. An experienced bankruptcy attorney will help you navigate these statutes.
At Stone Rose Law, we can help you keep your home, your car, and other important property if you need to file for bankruptcy. Call us at (480) 498-8998 or use our contact form to explore your bankruptcy options and to set up a free consultation.
Arizona has a generous homestead exemption that allows you to protect your home equity while in bankruptcy. In Arizona, you can protect your home from a forced sale if your equity does not exceed $425,200. The homestead exemption protects the following kinds of property:
You can exercise the Arizona homestead exemption if you have owned your home for more than 1,215 days and lived in Arizona for at least 730 days (2 years). Otherwise, the applicable statute will depend on where you resided prior.
If your home equity is valued at more than $425,200, then your property may still be sold to satisfy your creditors. If this happens, then bankruptcy law protects your interest in the homestead exemption value of the sale proceeds until you establish a new homestead with the proceeds or for up to 18 months, whichever comes first.
Note that the homestead exemption does not attach to your interests in proceeds from refinancing your homestead property.
If you have too much equity in your home, our experienced bankruptcy attorney will review other options to keep your home and successfully discharge some or all of your debts.
With some exceptions, the homestead exemption protects your home from involuntary sale under a judgment or lien. The exceptions to this protection are:
If you are using Chapter 7 bankruptcy, you must be current on your mortgage payments for the homestead exemption to protect your home from forced sale under a non-excepted lien. Otherwise, the home lender may attempt to sell your house through foreclosure proceedings, or the trustee in bankruptcy may sell your house to satisfy creditors.
The good news in this case is that the forced sale will extinguish your mortgage in bankruptcy even if a deficiency balance remains after the sale.
Arizona has a motor vehicle exemption that lets you protect equity up to $16,000 in one motor vehicle. If you have a physical disability, this exemption amount increases to $26,700.
These statutory dollar values were subject to change beginning on January 1, 2024, and annually thereafter on January 1st of each year. The adjustment is based on changes in the consumer price index that the U.S. Department of Labor publishes.
Under bankruptcy law, your mortgage and your car loan are both considered secured debts. The loan agreement is attached to your vehicle and if you default, the lender can repossess. If you file for chapter 7 bankruptcy, you must decide if you wish to keep your car or surrender the car to your lender.
If you decide to keep the car, and there is an existing loan, you must continue to make timely payments. Your car can be repossessed if you fall behind on its monthly payments after the bankruptcy. If you are willing to surrender your vehicle to your car lender, the debt you owe will be discharged in your chapter 7 bankruptcy. In that case, you are not required to continue making payments. Many people choose to surrender their car due to its current condition, interest rate, high payments, or they want another car.
If you are filing a chapter 13 bankruptcy, you can likely keep your car even if you are behind on your payments by including the car loan balance in your payment plan. The automatic stay under bankruptcy will prevent your car note creditor from repossessing your vehicle.
If your car is included in a Chapter 13 bankruptcy payment plan, you must continue making payments on your payment plan to keep it.
Our Phoenix bankruptcy attorney has several years of experience representing Arizonans through bankruptcy. We will help you make the most of the state’s bankruptcy exemptions so you can keep as many of your assets and property as the law allows.
Are you ready to stop the calls, regain peace of mind, and achieve financial freedom? Do you want to keep your home and your car? Are you ready to live debt-free? Then call Stone Rose Law today at (480) 498-8998 or contact us online today.
