Even if you are faced with a bankruptcy, it may be comforting to know that some of your assets may be protected by bankruptcy “exemption” laws. If some of your assets fall into these exempted categories, then you as the debtor will be allowed to keep these assets after filing for bankruptcy. The asset, however, can only be protected if the court determines that the asset is within the allowable values as per state regulation. Some states follow the federal government’s list of bankruptcy exemptions. Arizona is a state that has its own exemptions, and the list of exemptions and maximum value limits is much friendlier to debtors in Arizona that in states that follow federal guidelines. Arizona allows more assets with a greater allowable value than many other states.

One of a debtor’s most important assets is, of course, the family home. Under the homestead exemption, the home of a single or married debtor is protected providing that the home is the debtor’s primary residence. The home can even have as much as $150,000 in equity and still be exempt. However, any equity above this amount is not protected so a debtor might be ordered to pay the amount of excess equity to the court in order to keep the bankruptcy from being dismissed. Your bankruptcy trustee might decide to force a sale of the home. If this happens, the debtor is still entitled to $150,000 in equity. Any remaining moneys will be distributed to the creditors. This exemption may only be used once in a bankruptcy.

The vehicle exemption allows a bankruptcy filer to keep his vehicle as long as it has less than $5,000 in equity. A married couple who files for bankruptcy protection can use two, $5,000 exemptions toward two vehicles. Any vehicle equity over those amounts will be treated as it would with the homestead exemption.

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A debtor must qualify for two different assessments in order to file for a chapter 7 bankruptcy. The bankruptcy trustee first applies the median/means test, averaging the debtor’s income over the previous six months. Under the requirements of Schedule J of the bankruptcy petition, the trustee also will analyze the debtor’s current income and compare it to the current expenditures. If the trustee determines that the debtor qualifies under both of these analyses, then filing for a chapter 7 bankruptcy is allowed.

The first part of this analysis, the median/means test, is a very straightforward look at the debtor’s income. Bankruptcy rules take several factors into consideration, including the county where the debtor resides and the size of his or her family. From here, the trustee determines the amount that the debtor’s gross income must be under in order to qualify for chapter 7 bankruptcy. If this income is under the allowable amount, the result of the means test is fulfilled. However, even if the income exceeds the allowed amount, the debtor may still be eligible via the means section of the test. The means test compares six months of the debtor’s expenses to six months of his income. If the latter is less than the former, this test is satisfied.

The other income analysis that the bankruptcy trustee will consider involves Schedule I and J of the bankruptcy petition, which address the debtor’s current monthly income and current monthly expenses. He or she will be looking to ensure that a debtor does not have much disposable income with which to make monthly payments toward debts. If the debtor has disposable income that is sufficient enough to make significant monthly payments toward creditors, the debtor’s case will likely be dismissed if filed with the court. This is a judgment call by the trustee and does not involve a black-and-white analysis as the median test does.

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A bankruptcy trustee uses two different analyses to determine whether or not a debtor is eligible for a chapter 7 bankruptcy. Using the median/means test, the trustee averages the debtor’s income for the previous six months. In addition, the trustee will look at a debtor’s current income and compare this to the current expenses as required under Schedule J of the bankruptcy petition. A debtor must qualify using both of these assessments in order to file for chapter 7 bankruptcy.

The first part of this analysis, the median/means test, is a very straightforward look at the debtor’s income. Bankruptcy rules take several factors into consideration, including the county where the debtor resides and the size of his or her family. From here, the trustee determines the amount that the debtor’s gross income must be under in order to qualify for chapter 7 bankruptcy. If this income is under the allowable amount, the result of the means test is fulfilled. However, even if the income exceeds the allowed amount, the debtor may still be eligible via the means section of the test. The means test compares six months of the debtor’s expenses to six months of his income. If the latter is less than the former, this test is satisfied.

The other income analysis that the bankruptcy trustee will consider involves Schedule I and J of the bankruptcy petition, which address the debtor’s current monthly income and current monthly expenses. He or she will be looking to ensure that a debtor does not have much disposable income with which to make monthly payments toward debts. If the debtor has disposable income that is sufficient enough to make significant monthly payments toward creditors, the debtor’s case will likely be dismissed if filed with the court. This is a judgment call by the trustee and does not involve a black-and-white analysis as the median test does.

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A debtor must qualify for two different assessments in order to file for a chapter 7 bankruptcy. The bankruptcy trustee first applies the median/means test, averaging the debtor’s income over the previous six months. Under the requirements of Schedule J of the bankruptcy petition, the trustee also will analyze the debtor’s current income and compare it to the current expenditures. If the trustee determines that the debtor qualifies under both of these analyses, then filing for a chapter 7 bankruptcy is allowed.

The median/means test is a straightforward analysis of a debtor’s income. The bankruptcy rules take into account the county in which the debtor lives and his family size. It then sets an amount that the debtor’s gross income must be under in order to qualify for a chapter 7 bankruptcy. If the debtor’s combined gross income is under that cutoff amount, then the means test is satisfied. If the income calculation is over this amount, the debtor may still qualify under the means portion of the test. This will compare the six month average of his income to a six month average of his expenses. If the former is less than the latter, the test is satisfied.

The bankruptcy trustee also determines eligibility under Schedule I and J of the bankruptcy petition. Where the median/means test is a more black-and-white analysis of the debtor’s financial situation, the analysis under Schedule I and J are more of a judgment call. The trustee looks to see whether the debtor has enough disposable income to make significant monthly payments to his or her creditors. If the trustee determines that the debtor does have sufficient disposable income, the debtor’s case will likely be dismissed by the court.

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Although filing for bankruptcy will remove much of your unsecured debt, there are still several types of debt that cannot be eliminated. Rules regarding bankruptcy specifically identify the following items as exempt from release per Section 523(a) of the Bankruptcy Code.

If you have filed a Chapter 7 bankruptcy, the following debts still must be paid:

Alimony or child support

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