There are many different chapters of bankruptcy therefore there are many differnt ways that the bankruptcy court will deal with a debtor who is inheriting from a will, trust, or estate. One should absolutely discuss inheritance or the possibility of inheriting with their bankruptcy attorney. An inheritance could be at risk of being attached by creditors.

The most common types of bankruptcy are chapters 7 and 13. In chapter 7, 99.9% of the time, the Debtor is looking to get a discharge order from the bankruptcy court which would relieve the Debtor’s obligation to certain debts. Most often than not, these debt’s are “general unsecured non-priority” debts. When you seek this type of relief, the bankruptcy court allows you certain exemptions, that is, items that may not be attahced by creditors. Inheritance does not get an exemption. If a debtor has or will inherit from an estate, will, trust within 6 months of filing for chatper 7 or 13, this must be disclosed to the bankruptcy trustee appointed to the bankruptcy case.

The worst case scenerio is that a creditor, or creditors will attach a debtors entire inheritance. This unfortunately happens when a Debtor is inadequately represented, or if a Debtor foolishly decides to represent him/her self.

Just this morning I had a phone call from a prospective client who filed chatper 7 representing themselves, and did not disclose the fact that they were intitled to inherit from an estate. The Debtor received a discharge, and the case was closed. Later the bankruptcy trustee had the case reopened, and is now looking to recover the inheritance. THis could have all been avoided had the debtor discussed the case with an Ariozna bankruptcy attorney.

If you have any concerns about inheritance and you are considering bankruptcy, TALK TO AN ATTORNEY who is experienced with the bankruptcy code.

Here at the Yontz Law Group, we’ve dealt with this situation many times and can answer any questions you have about bankruptcy.

Call for your free consult: (480) 447-1554

Bankruptcy Exemptions in Arizona: What is the Arizona Vehicle Bankruptcy Exemption?

The Vehicle Bankruptcy Exemption in Arizona:

A.R.S. 33-1125(8) provides that a bankruptcy debtor(s) may exempt;

“equity in one car not greater than $6,000. If debtor (or

debtor’s dependent) is physically disabled, the fair

market value of the motor vehicle must not be greater

than $12,000. (Equity is the fair market value of the

motor vehicle minus debt to secured creditor).”

This bankruptcy exemption applies to the debtor, the debtors spouse, and the dependent (s) of the debtor(s). Both you and your spouse are entitled to one $6,000 exemption each, which can be used on two separate vehicles, or both used on one vehicle.

Examples:

Assume you and your spouse are filing a joint bankruptcy case in Arizona, that you have 2 vehicles, one valued at 5,500, the other valued at $6,000. In this situation, you both could use your vehicle exemption on each of the vehicles, and they would not be available for creditors.

Assume that you and your spouse have 2 vehicles one valued at $10,500, and another valued at 22,000, with $25,000 owed and a perfected lien on the vehicle for the amount owed. In this situation, both spouses could combine their $6,000 exemptions on the vehicle valued at $10,500, and would not have to use an exemption on the vehicle valued at $25,000 because there is a lien on the vehicle, giving them no equity in said vehicle.

Debtors need to be careful using the Arizona Vehicle Bankruptcy Exemption, and should always seek the advice of competent Arizona bankruptcy attorney.

Call for a free consultation: (480) 447-1554