Bankruptcy exemptions protect the equity in your property from creditors and the bankruptcy court—preventing the equity from being used to pay your creditors. Equity is the value of property after you subtract the amount of any liens against the property from its fair market value.

The equity in your home is one such asset in bankruptcy. And bankruptcy exemptions—including the homestead exemption—allow you to protect the property you will need to maintain a home and employment after bankruptcy.

Bankruptcy exemption amounts vary by state, so the amount you will be able to protect will depend on where you live and the type of bankruptcy you file (Chapter 7 or Chapter 13).

In Arizona, bankruptcy exemptions play a crucial role in both Chapter 7 and Chapter 13 bankruptcy filings. The homestead exemption in Arizona allows individuals to protect up to $150,000 of equity in their primary residence from creditors. This means that if the equity in your home does not exceed $150,000, it generally cannot be sold to pay off unsecured debts in a bankruptcy proceeding. It's important to note that this exemption applies to the equity in the home, not the home's total value. Other exemptions exist for personal property, such as household furniture, clothing, and vehicles, with specific limits on the value that can be exempted. The amounts and types of exempt property are governed by Arizona state statutes, and it's essential to consult with an attorney to understand how these exemptions apply to your specific situation and to ensure that you are maximizing the protections available to you under Arizona law.