Legislative Update More

 

Personal Property Exemptions

April 2013

On April 23, 2013 Governor Brewer signed HB 2325, thereby amending the personal property exemptions available to debtors within Arizona.

Hoyt Neal

The Bankruptcy Code defines the types of property that an individual debtor in bankruptcy may exempt and affords the debtor the choice of the exemptions listed in the Bankruptcy Code itself or the exemptions available under other federal law or under applicable state or local law, this is subject to an applicable state law that specifically does not authorize the use of the federal exemptions. Thus, states are given the option to enact their own exemption schemes and forbid a debtor's election of the Bankruptcy Code exemptions.

The Bankruptcy Code provides an opportunity for individual state legislatures to determine what items may be claimed as exempt by a bankruptcy debtor by doing what is normally termed "opting out" of the Bankruptcy Code exemptions. A state thus has, by its ability to opt out, a "veto" power over the federal bankruptcy exemptions. If a state has "opted out" of the federal exemption scheme, debtors who file in that state must claim exemptions pursuant to that state's laws, for while federal law controls exemptions generally and exemption procedures, state law governs specific property that may be exempted and the value of those exemptions (11 U.S.C. § 522(b)(2)(A)). Arizona has opted out of the federal exemption scheme. A.R.S. § 33–1133(B).

Additionally, Rule 4003(a) of the Federal Rule of Bankruptcy Procedure sets forth the requirement that the debtor file a list of his or her property claimed as exempt. Rule 4003(b) allows a party in interest to file an objection to the list of property claimed as exempt within thirty days after the meeting of creditors or within 30 days after any amendment to the list of exempt property is filed, whichever is later. Id. Under Rule 4003(c), in any hearing relating to claims of exemptions, the objecting party has the burden of proving that the exemptions are not properly claimed.

Provisions

  • Removes the itemized list of household furniture, furnishings and appliances that are exempt from process.

    • Specifies that the exempted property includes household goods, including consumer electronic devices used by the debtor or debtor’s dependent and raises the monetary threshold from $4000 to $6000.

  • Raises the aggregate fair market value of exempted items to the following amounts:

    • Musical instruments: $250 to $400;

    • Domestic pets, horses, milk cows and poultry: $500 to $800;

    • Engagement and wedding rings: $1,000 to $2,000;

    • One watch: $100 to $150.

  • Expands the list of exempt miscellaneous items to include one computer and raises the aggregate fair market value for that section from $500 to $1000.

  • Raises the aggregate fair market value of exempt vehicles to the following amounts and specifies that the amount includes equity:

    • One vehicle: $5,000 to $6,000;

    • One vehicle, if debtor is physically disabled: $10,000 to $12,000.

  • Raises the value of exempt monies in a bank account from $150 to $300.

  • Raises the monetary value of prepaid rent that may be claimed as a personal property homestead from $1,000 to $2,000.

  • Expands the list of items exempt as tools and equipment of a trade to include telephone numbers or any other client contact information, marketing tools, such as a website, domain name or any other intangible work product necessary to carry on or develop commercial activity or trade and raises the monetary threshold from $2500 to $5000.

  • Makes technical and conforming changes.

 
 
 

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