Filing for Bankruptcy in Arizona

In Arizona, the bankruptcy process begins when a debtor realizes they cannot pay off all their bills without some kind of debt relief. There’s often an unfounded fear of filing bankruptcy due to myths and misinformation. It is a drastic measure, but it doesn’t guarantee you’ll lose your house or have bad credit forever.

Arizona bankruptcy courts recognize that debtors need a fresh start. The purpose of bankruptcy is to clear your dischargeable debts, not to destroy your life. Arizona statute provides state-specific exemptions to help debtors keep their homes, essential property, and household items.

If you’re considering filing for bankruptcy in Arizona, it’s a good idea to consider getting legal assistance from an Arizona bankruptcy attorney. Bankruptcy laws are complex, and an attorney can ensure you keep as much of your exempt property as possible.

Arizona Bankruptcy Law

Arizona’s property exemptions are not the only guarantee of a fresh start, as section 362 of the Bankruptcy Code also plays an important role. When you file for bankruptcy, an automatic stay goes into effect that immediately halts things like:

• Repossession
• Wage garnishment
• Foreclosure
• Lien placement
• Eviction
• Creditor harassment

Other features of Arizona bankruptcy law include a protected repayment period in a Chapter 13 and an immediate debt discharge in a Chapter 7. If you file Chapter 13, you have up to five years to catch up on mortgage payments and take care of other delinquent secured debts. Chapter 7 eliminates most credit card, medical bill, and other unsecured debt in only a few months, but will have a more negative effect on your credit rating.

Chapter 7 Bankruptcy

A Chapter 7 bankruptcy, or liquidation bankruptcy, can discharge many unsecured debts. Some debts are not dischargeable, such as certain taxes, most student loans, and debts involving fraud. To file for Chapter 7, debtors must:

• Pass the means test: If your annual income is below the median income for your state, you should pass the Chapter 7 means test. A case can still be dismissed for abuse in some situations. This figure is adjusted annually. If your income is above this amount, you can still qualify based on other factors in the means test.
• Complete a mandatory credit counseling course: You must complete this course within 180 days before filing the bankruptcy petition. This is a necessity.
• Complete a financial management course: These are intended to help you better manage your money. Most courses are inexpensive.

The means test determines if you can make the monthly payments required by a Chapter 13 bankruptcy. If you do not have sufficient income, you can still file a Chapter 7.

In a Chapter 7, your non-exempt property is sold to pay your unsecured creditors. If you have no assets to pay your debts, many unsecured debts may be discharged. Liens on secured debts often remain unless the court removes them. A Chapter 7 will not discharge student loans, tax debt, and government loans.

Chapter 13 Bankruptcy

In a Chapter 13 bankruptcy, your debts are reorganized. Rather than discharging your debt immediately, you and the bankruptcy trustee will develop a repayment plan that pays off your creditors over the next three to five years. The automatic stay remains in effect during this time. At the end of the repayment period, any remaining unsecured debts are discharged.

Chapter 13 bankruptcies have the same requirements as Chapter 7 cases. As of 2026, the maximum debt ceiling is $526,700 in unsecured debt and $1,580,125 in secured debt.

Chapter 13 debtors must have sufficient income to make their monthly payments. If your financial situation will not let you make the required monthly repayments and meet your living expenses, you cannot file for Chapter 13.

Arizona Bankruptcy Property Exemptions

Arizona is an “opt-out” state. Bankruptcy filers must use the state property and homestead exemptions rather than the federal options. The residency rule for exemptions requires that you have lived in Arizona for at least 730 days to use the state’s exemptions. If you haven’t, you’ll use the exemption law of the state where you lived previously.

The following are possible exemptions:

• Homestead exemption: You may exempt up to $425,200 of your equity in your primary residence (this figure is adjusted annually)
• Motor vehicles: Up to $15,000, or $25,000 for disabled individuals
• Personal property: Up to $15,000 in household goods, furniture, and electronics in aggregate, while other personal items, such as clothing, musical instruments, and books, have separate exemptions
• Retirement accounts: Exempt under Arizona laws.
• Social Security, disability, and other government benefits: These are fully exempt under Arizona law (most wages are not)

Arizona does not have a “wildcard” exemption. Married couples filing joint bankruptcy can usually double personal property exemptions.

Get Legal Advice From an Arizona Bankruptcy Attorney

Bankruptcy forms are available online, and you’re legally allowed to file bankruptcy without legal assistance. At the least, it’s a good idea to have an attorney review your paperwork before you file. If you’re uncertain about filing a Chapter 7 or a Chapter 13, an attorney can explain the difference and help you decide which is a better fit.

While bankruptcy cases are filed in federal court, all judges have specific state details they need to see in bankruptcy filings. An attorney will know the local rules required by your court. Meet with an Arizona bankruptcy lawyer to protect your assets and ensure you get the debt relief you need.