Jump To Navigation

Court Ruling Could Help Arizonans in Chapter 7 Protect Assets

Posted on October 15th, 2015

Arizona residents who file for Chapter 7 bankruptcy do not necessarily have to surrender annuities or life insurance policies, according to a federal appeals court ruling dating back to 2012. The decision has relatively limited impact nationally because the court relied upon the provisions of Arizona law pertaining to exempt property.

A person who seeks debt relief by filing for Chapter 7 bankruptcy must surrender all assets of value to the bankruptcy trustee but may retain assets that are exempt under state law. For example, an Arizona resident may retain ownership of numerous assets, including a car worth no more than $6,000, a bicycle, one gun, and wedding and engagement rings valued at under $1,000, among other things.

The assets at issue in the federal appeals court case were life insurance policies having a cash value of $40,000 and an annuity valued at $33,000. The trustees argued that the bankruptcy law made the assets subject to liquidation because the beneficiaries of the insurance policies and the annuities were adult children who were not dependents of the debtor. The appellate court judges agreed with the trustees about the bankruptcy law, but they ruled that Arizona law does not limit the exemption to dependent children.

Chapter 7 bankruptcy offers a person who is struggling with debt the opportunity for a fresh financial start. As this story illustrates, a person does not have to surrender everything they own to escape the burden of overwhelming debt. A bankruptcy attorney can review debt relief options that are available to a person and explain the benefits, limitations and eligibility requirements of each. 

Source: Arizona Daily Star, “Annuities, life policies get shield in bankruptcies,” Howard Fischer, Aug. 25, 2012

Contact Us for a Free Consultation
Office Locations

Phoenix Office One
Wright Law Offices
2999 N. 44th St., Ste 600
Phoenix AZ 85018

Telephone: 480-845-0145 / 866-703-3287
Phoenix Law Office

Phoenix Office Two
Wright Law Offices
668 N. 44th St., Ste 320
Phoenix AZ 85008

Telephone: 480-845-0145 / 866-703-3287
Phoenix Law Office

Scottsdale Office
Wright Law Offices
7135 East Camelback Road, Ste 230
Scottsdale AZ 85251

Telephone: 480-845-0145 / 866-703-3287
Scottsdale Law Office

Tempe Office
Wright Law Offices
2238 S. McClintock Dr.
Tempe AZ 85258

Telephone: 480-845-0145 / 866-703-3287
Tempe Law Office

Avondale Office
Wright Law Offices
12725 W Indian School Rd, Suite E-101
Avondale AZ 85392

Telephone: 623-258-4480 / 866-703-3287
Avondale Law Office

Prescott Office
Wright Law Offices
1129 Iron Springs Rd
Prescott AZ 86305

Telephone: 623-258-4480 / 866-703-3287
Prescott Law Office

Mesa Office
Wright Law Offices

4856 E. Baseline Rd.
Suite #104
Mesa, AZ 85206
Telephone: 480-845-0145 / 866-703-3287
Mesa Law Office

Glendale Office
Wright Law Offices
20325 N. 51st Ave., Suite 134
Glendale, AZ 85308
Telephone: 623-258-4480 / 866-703-3287
Glendale Law OFfice

Facebook IconTwitter IconVisit Us On Google+Visit Us On Google+