Bankruptcy in Arizona
Are creditors constantly calling, or has your debt become impossible to manage?
For many Arizona residents, financial pressure builds slowly until it suddenly feels unmanageable. If you’re behind on bills, facing wage garnishment, or worried about losing your home, you’re not alone. Bankruptcy may offer a way to reset.
Arizona has its own set of bankruptcy exemptions, separate from the federal system. These rules determine which assets, such as your home, car, or personal belongings, are protected during the process.
If you’re considering bankruptcy, don’t try to figure it out alone. An experienced Arizona bankruptcy attorney can walk you through your options, explain how state laws apply to your case, and help you make informed decisions.
Types of Bankruptcy in Arizona
Bankruptcy offers a legal way for individuals and businesses in Arizona to get back on stable financial ground. By eliminating or reducing certain debts, it can relieve the pressure of mounting bills and collection efforts.
To qualify, you’ll need to show that a genuine financial hardship is preventing you from meeting your obligations. It’s important to know that not all debts can be wiped out—child support, alimony, recent tax debt, and most student loans typically remain enforceable.
If you’re falling behind and struggling to catch up, filing for bankruptcy may be the next step. The right chapter—whether it’s Chapter 7, 11, or 13—depends on your income, the assets you want to protect, and how you plan to move forward.
Each option comes with its own set of rules and benefits. To make an informed decision and avoid costly mistakes, it’s smart to consult a qualified bankruptcy attorney who understands both the law and your financial goals.
In Arizona, all bankruptcy cases are handled by the United States Bankruptcy Court for the District of Arizona. The court has locations in Phoenix, Tucson, and Yuma, and it oversees filings throughout the entire state.
Chapter 7 Bankruptcy
Chapter 7 bankruptcy can be a practical solution for people in Arizona who need a clean financial slate. It’s often a good fit for those who don’t have the income or resources to repay their debts. But before you file, it’s important to take a hard look at your finances.
Most people who qualify for Chapter 7 have limited or unstable income and can no longer keep up with their financial obligations. While this chapter can discharge many types of debt, it may come at the cost of losing certain assets, such as your car, home, or other valuables.
Once your case is filed, an automatic stay goes into effect, which temporarily halts most collection actions, including foreclosure and wage garnishment. However, this protection doesn’t cover everything—debts like child support, criminal restitution, and some fines remain enforceable even after you file.
To qualify for Chapter 7 bankruptcy in Arizona, you must pass a means test that compares your income to the state median for a household of your size. If your income falls below the median, you typically qualify automatically. If it’s above, the court will look at your allowable expenses and disposable income to determine if you have enough left over to repay your debts.
As of 2025, the median income thresholds for Arizona residents applying for Chapter 7 bankruptcy are as follows:
- 1-person household: $70,919
- 2-person household: $85,476
- 3-person household: $102,909
- 4-person household: $113,286
For households larger than four, an additional $9,900 is added for each extra member.
Chapter 11 Bankruptcy
Chapter 11 bankruptcy is more involved than other forms of bankruptcy and is most often used by businesses or individuals with significant income or complex assets. It allows filers to create a court-approved repayment plan that reorganizes their debts into manageable terms, typically spread over four to 18 months.
One of the key advantages of Chapter 11 is that it doesn’t require you to sell off your property to pay creditors. Instead, it offers the chance to negotiate with creditors, restructure what you owe, and stay on track.
Filing for Chapter 11 bankruptcy in Arizona begins with submitting a voluntary petition. This petition must be accompanied by detailed financial disclosures, including a full list of assets and liabilities, a breakdown of monthly income and expenses, and a statement of financial affairs. If you’re filing on behalf of a business, the court also requires recent operating statements, a balance sheet, and a cash flow statement.
In addition to the petition, you’ll need to submit a complete set of bankruptcy schedules and a creditor matrix, which lists the names and addresses of everyone you owe. You’ll also be required to propose a reorganization plan that outlines how you intend to repay creditors over time.
Chapter 13 Bankruptcy
Chapter 13 bankruptcy, often referred to as a wage earner’s plan, allows individuals in Arizona to reorganize their debt without giving up their property.
After you file, the court appoints a trustee to review your financial situation, looking closely at your income, assets, and overall ability to repay what you owe. Unlike Chapter 7, this type of bankruptcy sets up a repayment plan that typically spans three to five years.
The structure of your plan will depend on your income consistency and the assets you wish to protect. Chapter 13 can help you catch up on missed mortgage or car payments while keeping those assets in your name.
Chapter 13 bankruptcy differs from other types, like Chapter 7 or Chapter 11, because it’s based on repayment rather than liquidation or business restructuring. Instead of selling off your assets to pay creditors, you’ll propose a repayment plan that lasts three to five years, depending on your income level. This plan must be approved by the court and is overseen by a trustee.
The filing process for Chapter 13 also involves different eligibility requirements and court procedures. You’ll need to show that your income is high enough to support the proposed plan and that your secured and unsecured debts fall within certain limits. In contrast to Chapter 7, which can be completed in a matter of months, Chapter 13 requires ongoing court supervision and compliance for several years.
The Bankruptcy Process in Arizona
There’s rarely a perfect time to file for bankruptcy, but if your debt load is more than you can realistically pay off within five years, it may be time to consider it. Filing can stop the financial bleeding, reduce long-term damage, and give you a structured way to rebuild your financial future.
To get started in Arizona, you’ll need to organize your full financial picture. That includes listing your monthly expenses, total debt, assets, and yearly income. This documentation helps the court evaluate your eligibility and determine the best course forward. Leaving out key details or submitting incomplete information can delay your case or cause it to be denied altogether.
In Arizona, the bankruptcy process is governed by federal law, but it applies state-specific exemptions that determine what property you can keep. When you file, you must use the state’s exemption system—opting for federal exemptions is not allowed.
Arizona law protects up to $400,000 in equity in your primary residence, up to $15,000 in a vehicle (or $25,000 if you have a disability), and reasonable amounts of household goods, clothing, and tools of the trade. Most retirement accounts and certain public benefits are also exempt. These protections play a crucial role in both Chapter 7 and Chapter 13 filings, helping you maintain essential assets while you work through the bankruptcy process.
Work With an Experienced Arizona Lawyer
If you’re facing overwhelming debt in Arizona, bankruptcy may offer the relief you need to protect your income, your assets, and your peace of mind. Whether you’re exploring Chapter 7, 11, or 13, understanding how Arizona’s laws and exemptions apply to your situation is the first step toward making a smart financial decision.
Submit a request online or call us today at (866) 345-6784 to get in touch with an experienced bankruptcy lawyer in your area!
About the Author
Aaron is a professional legal writer with a B.S. in English Education from Southern Illinois University – Carbondale. He has written, published, and edited thousands of legal articles for RequestLegalHelp, which has connected over 5 million people to legal help in the United States.
With over five years of experience writing thousands of legal articles for law firms across the U.S. and Canada, Aaron specializes in covering federal, state, and city-level legal issues ranging from auto accidents to wrongful terminations.
We offer coverage on other areas of Arizona law if your search has led to more questions:
