Bankruptcy

So, Which Exemptions Do You Get to Use in Arizona? Think Fast!

By Joseph McDaniel, Esq.

And now....sigh.

Well, it's not a sob! But it is a sigh.

My personal observation is that trustees are waaaaaaay more aggressive than they were even five years ago, much less thirty years ago, in Arizona.

And I've seen that recently when I saw a very smart, very nice, and very professional trustee sweetly explain to a debtor that it was nothing personal, but she was going to object to apparently exempt surrender value of an insurance policy because the beneficiaries were the debtor's children. But they were grown children, and there is some case law from other states suggesting that if the children were grown, they couldn't qualify as "dependents" under that exemption statute, so she was going to take a run at objecting to the exemption.

Yeah, it got fixed. But there are simply more items that have to get fixed these days than in the good old days. Formerly known as "these trying times".

And I've pointed out that, even though the specific statutes permit it, I normally advise my clients against having a liquid fund of money which is exempt homestead proceeds, because trustees tend to ignore a house in this economy, but trustees are drawn like moths to a flame by a liquid money fund.

But what if you move to Arizona too recently to take advantage of the good old Arizona Exemptions in bankruptcy?

Well, you have some non-choice choices, or some non-choice options with some non-alternatives in bankruptcy.

And I call them non-options and bad bankruptcy alternatives that don't work because many people can't afford to stick around in a new state getting sued, garnished and harassed by phone calls until they may qualify for the local state's exemptions.

Which, of course, is the outcome desired by the folks who gave us the 2005 Amendments to the Bankruptcy Code.

So when you file a bankruptcy and you aren't able to use the Arizona Exemptions, whatcha gonna do?

Are you forced to use the exemptions of your home state, or the Federal Bankruptcy Exemptions?

Or do you file a bankruptcy in Arizona and get to use...no exemptions at all?????

Well, it all depends, as usual.

On the darn tests and rules.

And those tests include the 730 day rule.

And then there's the ever-popular 180 day rule.

And maybe no state exemptions, at all, apply in your case.

In which case, you can wait to file, which is generally a little like being King Kong on top of that big 'ol building with the airplanes shooting at you like little irritating airplanes, or you can go ahead and file, if you have done the analysis with the 730 day rule, and the 180 day rule, and our old favorite, 11 USC § 522(b)(1)(3)(A)!

We'll discuss this later.

I know its hard to believe, but this stuff is actually a little complicated, and I don't want to overwhelm you at one sitting.

I just want to whelm you, you know?

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 July 09, 2010 (boomark / email).