When I file for bankruptcy, what exemptions do I use?
June 28, 2022
By Diane Drain Attorney & Retired Law Professor
Just because you live in Arizona when you file for bankruptcy doesn’t mean you’ll be able to claim Arizona exemptions.
As a result, you and your bankruptcy counsel must decide which state laws will determine your exempt assets before filing bankruptcy. The state exemption statute that applies to your bankruptcy is established by where you lived for the previous 730 days (two years) prior to filing your bankruptcy. If you did not live in Arizona for the entire two-year period prior to filing your bankruptcy, your bankruptcy exemptions will be those allowed by the state in which you lived for 180 (6 months) days immediately prior to the two-year period, or the state in which you lived for the greater portion of that 180-day period. Are you confused yet? Making a diagram of where you lived and when so we can talk about this issue.
For example, if a person has resided in Arizona for more than two years and files bankruptcy today, he or she may use the Arizona property exemptions. However, if that person did not live in Arizona for two years, he or she will have to rely on the exemptions of the state in which he or she spent the previous two years. It’s likely that the previous state’s exemptions are only available to residents. As a result, the individual filing for bankruptcy will have to rely on federal exemptions. In many circumstances, the bankruptcy exemptions provided by the previous state will be superior than those provided by Arizona law.
Consider the case of John. In January, John sells his Georgia home for $100,000 and relocates to Arizona. John buys an Arizona homestead for $100,000 in March of that year, obtains an Arizona driver’s license, and registers to vote in Arizona. John loses his job 14 months after coming to Arizona and declares bankruptcy. John’s bankruptcy would be subject to Georgia’s relatively limited exemption laws, and he might not be eligible for Arizona’s homestead protection (but laws change and so may this result).
By Diane Drain|Published On: June 28th, 2022|Last Updated: July 28th, 2022|
Diane is a well respected Arizona bankruptcy and foreclosure attorney. As a retired law professor, she believes in offering everyone, not just her clients, advice about bankruptcy and Arizona foreclosure laws. Diane is also a mentor to hundreds of Arizona attorneys.
*Important Note from Diane: Everything on this web site is offered for educational purposes only and not intended to provide legal advice, nor create an attorney client relationship between you, me, or the author of any article. Information in this web site should not be used as a substitute for competent legal advice from an attorney familiar with your personal circumstances and licensed to practice law in your state. Make sure to check out their reviews.*
5 / 5
“You folks are the BEST OF THE BEST in Arizona.” M.H.
You and Jay are the best attorneys I have ever had or needed and thank God for the Honorable Robert Gottsfield in recommending you folks – I would have never made it through the entire process without you and Jay and God Bless you both always and stay in touch as well. You folks are the BEST OF THE BEST in Arizona.
5 / 5
“My only regret is that I didn’t find Diane sooner.” K.H.
I can’t say enough good things about Diane. The way she handled my not typical circumstances was amazing. I was very nervous to start the bankruptcy process but Diane just has a very comforting way of explaining the whole process. My only regret is that I didn’t find Diane sooner. If you find yourself in a financial situation that you can’t correct on your own, please Call Diane Drain as soon as possible.
5 / 5
“Filing for bankruptcy can be a stressful life event” R.A.
Filing for bankruptcy can be a stressful life event, and selecting the right attorney can add to this stress. Diane and Jay were a pleasure to work with, and it is obvious that they are passionate about helping people get their life back on track. I would highly recommend them if you need a bankruptcy attorney.
We are a debt relief agency; we help individuals and small businesses through the bankruptcy process. Attorney Advertising. This website is designed for general information only. Any information you obtain from this website should not be construed as legal advice, nor as grounds for forming an attorney-client relationship. You should consult an attorney for information on obtaining formal legal advice.