Bankruptcy

"Can I Keep my Truck in my Chapter 7 Bankruptcy in Arizona? Because I Need It to Make a Living!" The Automobile Exemption in Arizona Ch 7 Bk

By Joseph McDaniel, Esq.

There are two possible exemptions that can be piled onto vehicles in Arizona, but first understand that you're getting shot at from two directions in most cases.

If you want to keep a vehicle in an Arizona Chapter 7 Bankruptcy, you need be consider both the secured creditor AND the bankruptcy trustee, not just one of them.

The standard vehicle exemption in Arizona is $5,000. That means that you can stack both exemptions onto one car that's paid off, and if that car is worth less than $10,000 in a married couple case, you're in good shape to keep that vehicle.

How do you figure out how much the car is worth? Go to the online bluebook, which I have in my homework assignments on this blog, and check the high private party sale price for the vehicle. That's what trustees tend to look at first for value of vehicles.

There is an augmented vehicle exemption, for $10,000, for those who are handicapped, but that's not as clear in definition as the old word in the statute, which was "crippled". In general, if you can't walk well, or you're missing a foot or leg, you get a bigger exemption. If both of you can't walk, then you can stack $10,000 twice on one vehicle. And I've used the $10,000 figure in a case where the debtor's heart was donated to him by another guy who didn't need it any longer, because the debtor in that case couldn't walk long distances.

The "Tools of the Trade" exemption is one that people often want to apply to their vehicles. In general, the trustees will object to that exemption being applied to a vehicle unless the vehicle has been so modified that it can only be used for the specific work function (think flatbed truck with welded-on pipe to carry big rolls of wire, for instance).

And you used to be able to slide the exemptions around (out of the ordinary $10,000 exemption available to a married couple, putting $3,000 on one car and $7,000 on another used to pass muster. Not so much anymore).

Now, the above rules get you past the trustee as to the equity in your car. But what about the secured creditor?

We used to be able to "ride through" a bankruptcy in Arizona, simply by staying current.

Now there's a peculiar sideways dance that seems to work best.

That I describe in another post entitled "Unexpected Compassion".

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on April 14, 2010 (boomark / email).