Bankruptcy

When Is a Liquidation not Like a Liquidation in a Chapter 7 Bankruptcy in Arizona?

By Joseph McDaniel, Esq.

No.

Probably.

The only way "they" (not the "Men in Black") will liquidate your house is if your house is worth more than the mortgages on it, AND the exemption in Arizona. Note that there's a cap that went into effect in some cases after the 2005 Bankruptcy Amendments.

How about your car? Well, unless it's worth more than BOTH the underlying lien PLUS your exemption ($5,000 in most cases, $10,000 if you're lucky enough to be a "cripple", which is the word used in our statute, and is not defined), the trustee won't want your car.

Food? Uh, not in any case I've seen. Medicine? Unless you're a pharmacy, I don't think so.

Clothing? Have you ever gone to Park 'N Swap at the Greyhound Race Track? I don't know if it still exists (used to be referred to as "Swipe 'N Sell" by some of my buddies in the old days, when they found their tools for sale after their truck had been broken into).

But if you go to Park 'N Swap you'll see that used clothing has a fair market value of close to nothing. Not zero, mind you, but not much. And in any case less than the Arizona exemption.

Summary: the trustee only wants to grab your stuff in a Chapter 7 Bankruptcy in Arizona if it's not exempt, or worth more than the exemption plus all liens on the property. If it's worthless, you get to keep it.

But the Arizona Exemptions are generous enough that most Chapter 7 Bankruptcy cases in Arizona are what are called "No-Asset Cases", simply meaning that the trustee could not see a way to make money to pay creditors by selling an asset and paying the costs of sale and then paying the creditors.

NOTHING HERE CONSTITUTES LEGAL ADVICE RE A CHAPTER 7, CHAPTER 13, CHAPTER 11, OR CHAPTER 12. FIND AN ARIZONA BANKRUPTCY LAWYER WHO IS BOARD CERTIFIED IN BANKRUPTCY LAW, AV RATED, AVVO 10 RATED, ON SUPERLAWYERS, OR JUST VERY EXPERIENCED AND A FORMER CHAIR OF SOME BANKRUPTCY SECTION OR COMMITTEE. NOTHING HERE MAY BE USED AS LEGAL ADVICE IN CONNECTION WITH ANY BANKRUPTCY, WHETHER THAT BANKRUPTCY IS IN PHOENIX, GLENDALE, TEMPE, MESA, SCOTTSDALE, OR ANYWHERE ELSE.

Full post as published by Arizona Bankruptcy Attorney Blog on June 05, 2009 (boomark / email).