Arizona Bankruptcy Exemptions: What You Get to Keep

Arizona is an opt-out state: under A.R.S. § 33-1133(B), you cannot choose the federal bankruptcy exemptions found in 11 U.S.C. § 522(d). If you file Chapter 7 or Chapter 13 bankruptcy and you have lived in Arizona long enough to use its exemptions, you must protect your property using the Arizona state exemption set. The one major upside of that rule is Arizona's unusually large homestead exemption. After voters passed Proposition 209 in 2022, Arizona's homestead exemption rose to $400,000 in equity in your primary residence (A.R.S. § 33-1101), and that figure is adjusted for inflation each year. That is far more generous than the federal homestead exemption, which is only about $27,900 per filer. Because these dollar amounts are now indexed, you should confirm the current figure with the Arizona statute or the court before you rely on it.

Why You Must Use Arizona's Exemptions, Not the Federal Set

Federal law lets each state decide whether bankruptcy filers may pick between the federal exemption list and the state list. Arizona has "opted out," meaning Arizona residents are locked into the state exemptions. You do not get to mix and match Arizona exemptions with the federal § 522(d) list, and you cannot simply choose whichever set is larger.

There is one important exception. Even in an opt-out state, you may still use the federal non-bankruptcy exemptions in addition to Arizona's. Those protect things like Social Security benefits, most ERISA-qualified retirement plans, veterans' benefits, and certain civil-service and railroad benefits. So the practical rule is: Arizona state exemptions plus federal non-bankruptcy exemptions, but never the federal bankruptcy exemption list.

A residency wrinkle matters here. To use Arizona's exemptions at all, you generally must have lived in Arizona for at least the 730 days (two years) before filing. If you moved recently, the bankruptcy code may send you back to the exemptions of the state where you lived during the earlier look-back period. Anyone who relocated to Arizona in the last two years should get this checked before filing.

The Arizona Homestead Exemption

The homestead exemption protects equity in the home you actually live in, whether it is a house, condominium, mobile home, or in some cases a mobile home plus the land it sits on. As of 2026 the protected amount stands at $400,000 in equity under A.R.S. § 33-1101, with annual inflation adjustments under the Proposition 209 framework. Because the number moves each year, treat $400,000 as a floor figure to verify, not a permanent ceiling.

Key points about how it works:

• The exemption covers equity, not the home's full value. If your house is worth $600,000 with a $300,000 mortgage, your $300,000 of equity is fully protected.
• You do not have to file a separate homestead declaration to claim it in most situations; the protection is automatic on your residence.
• If you sell or lose the home, the exempt sale proceeds stay protected for a limited period (historically 18 months) while you reinvest in a new homestead.
• Married couples in Arizona generally share a single homestead exemption on one residence rather than stacking two.

The homestead does not block every creditor. Consensual liens such as your mortgage and certain other obligations can still reach the property, and Proposition 209 changed how some judgment liens attach to homestead equity. Do not assume the homestead defeats a specific lien without confirming.

Vehicle Exemption

Arizona protects equity in a motor vehicle under A.R.S. § 33-1125(8). After Proposition 209, the vehicle exemption rose to roughly $15,000 in equity, and up to about $25,000 if the debtor or a dependent has a physical disability. As with the homestead, this protects equity, so a financed car with little equity is usually safe regardless. Because these amounts are inflation-indexed, verify the current cap before counting on a precise number.

Household Goods, Personal Property, and the Bank-Account Allowance

Arizona does not have a broad "wildcard" exemption like some states (the federal set has one; Arizona does not). Instead it provides category-by-category limits, several of which Proposition 209 increased substantially:

• Household furniture, furnishings, and appliances (A.R.S. § 33-1123): an aggregate limit raised to roughly $15,000.
• Money in a bank account (A.R.S. § 33-1126): Proposition 209 raised the single-account cash exemption to about $5,000, up from the old $300.
• Clothing, musical instruments, books, pets and domestic animals, and engagement/wedding rings: each protected up to its own statutory dollar cap under A.R.S. § 33-1125.
• Tools of the trade used in your work, and prostheses, wheelchairs, and certain health aids.
• Most retirement accounts, including IRAs and ERISA-qualified plans (A.R.S. § 33-1126 plus the federal non-bankruptcy protections), are broadly exempt.
• Certain benefits such as life insurance proceeds, health and disability benefits, and child or spousal support, within statutory limits.

Because the per-category caps were revised by Proposition 209 and several are inflation-adjusted, do not rely on an old chart. Confirm each figure against the current statute.

Wage Garnishment: How Arizona Compares to Federal Law

This is not strictly a bankruptcy exemption, but it is the rule most consumers ask about. Federal law (the Consumer Credit Protection Act) caps garnishment of disposable earnings at 25%. Arizona historically matched that 25% figure, but Proposition 209 lowered the cap for most consumer debts to roughly 10% of disposable earnings, and raised the income floor below which wages cannot be garnished at all. That makes Arizona notably more debtor-protective than the federal baseline. Some debts (such as child support and certain taxes) follow different rules.

How to Claim Your Exemptions

In a bankruptcy case, exemptions are claimed on Schedule C of your filing. You list each asset, the statute that protects it, and the value you claim as exempt. If the trustee or a creditor disagrees, they can object, and the court decides. Practical steps:

• Inventory everything you own and estimate fair market (resale) value, not replacement value.
• Subtract liens to find your equity in each asset, since exemptions apply to equity.
• Match each asset to the correct Arizona statute and cite it on Schedule C.
• Keep proof of value and of any disability that increases the vehicle exemption.
• If you moved to Arizona within the last two years, confirm which state's exemptions apply.

Where to Verify the Current Figures

Exemption amounts in Arizona now change with inflation, so always check a current source before filing. The exemption statutes live in the Arizona Revised Statutes, Title 33, Chapter 8 (sections 33-1101 through 33-1133), available through the Arizona State Legislature's official website. For consumer-protection questions, debt-collection complaints, and scam alerts, contact the Arizona Attorney General's Office, Consumer Protection and Advocacy Section, which handles consumer issues statewide. For the bankruptcy process itself, the U.S. Bankruptcy Court for the District of Arizona publishes local rules and forms. Because bankruptcy permanently affects your finances and the dollar amounts shift annually, consider consulting a licensed Arizona bankruptcy attorney before you file.

This article is general information, not legal advice. Your exact exemptions depend on your assets, your equity, your residency history, and the figures in force on the day you file.

Official Arizona Sources

This page is based on Arizona law. Limits and deadlines change — verify the current details directly with the official Arizona sources below. This is general legal information, not legal advice.

• Arizona Attorney General - Consumer Protection and Advocacy Section — official Arizona agency.
• File a Consumer Complaint - Arizona Attorney General
• Arizona Revised Statutes 44-1522 - Unlawful practices (Consumer Fraud Act)

Federal law also applies. Federal laws like the Fair Debt Collection Practices Act and Fair Credit Reporting Act protect you nationwide, on top of Arizona’s own rules.