Arizona bankruptcy laws combine the federal Bankruptcy Code with a set of state-specific property exemptions and community property rules that shape what you keep, what you lose, and who should file. Arizona has opted out of the federal exemption system, so filers here must use Arizona’s own exemptions rather than the federal menu.1Arizona Legislature. Arizona Revised Statutes 33-1133 – Other Exemption Laws The chapter you file under, whether you pass the means test, and whether your spouse files with you are the decisions that drive the outcome.
Chapter 7 or Chapter 13
Individuals in Arizona generally file one of two chapters. Chapter 7 liquidates nonexempt assets, pays creditors from the proceeds, and discharges most remaining unsecured debts. It wraps up in roughly three to four months. Chapter 13 keeps your property intact and puts you on a court-supervised repayment plan that runs three to five years before any remaining qualifying balance is discharged.
The length of a Chapter 13 plan turns on income. If your household income is below Arizona’s median for your family size, the plan runs three years unless the court approves longer. Above the median, you commit to five years. No Chapter 13 plan can extend past five years.2United States Courts. Chapter 13 – Bankruptcy Basics
Chapter 7 is faster and eliminates debt outright, but anything that isn’t exempt can be sold by the trustee. Chapter 13 lets you keep everything and catch up on missed mortgage or car payments through the plan. The right choice depends on your income, the type and size of your debts, and how much nonexempt property you own.
The Means Test for Chapter 7
Not everyone qualifies for Chapter 7. Eligibility starts with the means test: average your gross monthly household income over the six months before filing and compare the annualized figure to Arizona’s median for your household size. If you fall below the median, you pass.3United States Bankruptcy Court. What Is the Chapter 7 Means Test
As of April 1, 2026, Arizona’s median income figures are:
- 1 earner: $73,935
- 2-person household: $89,027
- 3-person household: $104,965
- 4-person household: $121,174
Add $11,100 for each additional person beyond four.4U.S. Trustee Program. Census Bureau Median Family Income By Family Size
If your income exceeds the median, a second phase subtracts standardized living expenses published by the U.S. Trustee Program, which vary by county. Phoenix-area filers get a higher housing allowance than those in rural counties. If your disposable income after those deductions is low enough, you can still file Chapter 7. If not, you file Chapter 13 or the case can be dismissed for abuse.
Arizona Property Exemptions
Exemptions decide what you keep. In a Chapter 7, any property not covered by an exemption can be sold by the trustee. Several of the dollar amounts below adjust annually for inflation starting January 1, 2024, so the actual figure when you file may be a bit higher than the statutory base.
Homestead
Arizona protects up to $400,000 in equity in your primary residence, including a house, condo, cooperative, or mobile home where you live.5Arizona Legislature. Arizona Revised Statutes 33-1101 – Homestead Exemptions, Persons Entitled to Hold Homesteads, Annual Adjustment A married couple sharing a home gets one $400,000 exemption between them, not two. If your equity is at or below the exemption on your filing date, the entire home is protected, and any increase in value during the case stays protected.
Vehicles, Household Goods, and Personal Items
The personal property protections most filers rely on sit in A.R.S. § 33-1125:
- Motor vehicle: up to $15,000 in equity, or $25,000 if you or a dependent has a physical disability6Arizona Legislature. Arizona Revised Statutes 33-1125 – Personal Items
- Clothing: up to $500
- Wedding and engagement rings: up to $2,000
- Firearms: up to $2,000
- Computer, bicycle, or sewing machine: up to $2,000 combined
- Musical instruments: up to $400
- Prosthetic devices and wheelchairs: fully exempt
- Domestic animals and household pets: fully exempt
Household furniture, appliances, and electronics used by you or your dependents are separately protected up to $15,000 in total fair market value.7Arizona Legislature. Arizona Revised Statutes 33-1123 – Household Furniture, Furnishings and Appliances, Annual Adjustment
Tools of the Trade and Bank Accounts
If you’re self-employed or use specialized equipment for work, up to $5,000 in tools, instruments, books, and related business assets is exempt. That category reaches intangibles like client lists and domain names, but not a vehicle you mainly use for commuting.8Arizona Legislature. Arizona Revised Statutes 33-1130 – Tools and Equipment Used in a Commercial Activity, Trade, Business or Profession You can also protect up to $5,000 held in a single bank account at one financial institution. That cap adjusts annually.9Arizona Legislature. Arizona Revised Statutes Title 33 Property 33-1126 – Money, Benefits or Proceeds, Exception
Retirement and Benefits
Most retirement savings are fully protected: 401(k), traditional and Roth IRAs, 403(b), and government deferred compensation plans under IRC § 457. Life insurance proceeds, disability benefits, and unemployment benefits are also covered under A.R.S. § 33-1126.10Arizona Legislature. Arizona Revised Statutes 33-1126 – Money Benefits or Proceeds, Exception One trap: contributions made within 120 days before filing are not exempt. Shoveling money into a 401(k) on the way to the courthouse won’t shelter it.
Doubling for Joint Filers
When spouses file jointly, each can claim a full set of personal property exemptions. The motor vehicle protection, for example, becomes $15,000 per spouse (or $25,000 each where a disability applies). The homestead is the exception: married couples share a single $400,000 cap whether they file together or separately.
Community Property and Married Filers
Arizona is a community property state, and that reshapes a solo filing. When one spouse files alone, federal law pulls community property into the bankruptcy estate alongside the filer’s separate property.11Office of the Law Revision Counsel. 11 USC 541 – Property of the Estate Jointly held bank accounts, vehicles titled to both spouses, and other marital assets can all come within the trustee’s reach even though only one spouse filed.
The automatic stay also shields community property from the creditors of both spouses, which gives the non-filing spouse some protection. Property the non-filing spouse owned before marriage, or received as an individual gift or inheritance, stays outside the estate. When community debts are significant, filing jointly often makes more sense because both spouses receive a discharge on those obligations. Whether one spouse files alone or both file together is one of the more consequential calls in an Arizona case.
Debts That Survive a Discharge
Bankruptcy eliminates most unsecured debt, but federal law carves out categories that creditors can still collect on after the case closes.12Office of the Law Revision Counsel. 11 USC 523 – Exceptions to Discharge
- Child support and alimony are never dischargeable.
- Government-backed and qualified private student loans survive unless you prove undue hardship, a standard that is difficult to meet.
- Income taxes generally must be at least three years old, with timely filed returns, to qualify for discharge.13Internal Revenue Service. Declaring Bankruptcy
- Debts obtained through fraud, false financial statements, or embezzlement are not discharged.
- Debts for death or personal injury caused by driving while intoxicated cannot be eliminated.
- Criminal fines and most government-imposed penalties survive.
- If a prior case denied you a discharge, those debts carry over.
Two timing rules catch filers off guard: luxury purchases over $500 within 90 days of filing and cash advances over $750 within 70 days are both presumed nondischargeable. Loading up credit cards right before filing backfires.
How Filing Works in Arizona
Before you can file, you must complete a credit counseling session with an agency approved by the U.S. Trustee. The session must occur within 180 days before your filing date, and you need the certificate when you submit your petition. Without it, the case gets dismissed.14United States Bankruptcy Court. Credit Counseling Warning
You file the petition (Official Form 101) along with schedules listing your property, exemptions, secured and unsecured creditors, income, and expenses.15United States Courts. Bankruptcy Forms Values must be current and creditor addresses complete; a creditor you omit may not be bound by the discharge because they never got notice.
Cases are filed with the U.S. Bankruptcy Court for the District of Arizona, with offices in Phoenix, Tucson, and Yuma. The filing fee is $338 for Chapter 7 and $313 for Chapter 13.16United States Bankruptcy Court. Filing Fees You can apply to pay in installments, or seek a full waiver if your income is below 150% of the federal poverty guidelines.17United States Department of Justice. Notice to Chapter 7 Trustees Re Bankruptcy Filing Fee Waivers
The automatic stay takes effect the moment the petition is filed. It stops collection calls, lawsuits, wage garnishments, foreclosures, and repossessions, at least for the time being.18Office of the Law Revision Counsel. 11 USC 362 – Automatic Stay Shortly after filing, the court schedules a meeting of creditors (the “341 meeting”), where a court-appointed trustee reviews your paperwork and asks questions under oath. Creditors rarely show up. In a typical no-asset Chapter 7, the meeting is under ten minutes.19Office of the Law Revision Counsel. 11 US Code 341 – Meetings of Creditors and Equity Security Holders
Before the court will grant a discharge, you also have to complete a debtor education course on budgeting and personal finance. This is separate from the pre-filing credit counseling, and must be taken after you file but before discharge.20Office of the Law Revision Counsel. 11 USC 727 – Discharge Skipping it means the court closes the case without discharging anything. In a joint filing, each spouse takes the course and files a separate certificate.
How Long It Shows on Your Credit
Federal law allows a bankruptcy to remain on your credit report for up to ten years from the date the court entered the order for relief.21Office of the Law Revision Counsel. 15 USC 1681c – Requirements Relating to Information Contained in Consumer Reports In practice, the major credit bureaus typically remove a completed Chapter 13 after seven years, though the statute permits the full ten. A Chapter 7 generally stays the full decade. Scores often start recovering within a year or two of discharge, especially when filers rebuild with secured credit cards or small installment loans.